Many of us realized that lenders and mortgage servicers are giving short sales a “cold shoulder”. It simply doesn’t make sense that lenders and mortgage servicers don’t seem to care for success of short sales, as they don’t seem to have incentives (!) to do so. A good friend of mine and even better broker sent me a link to the excellent article from Money magazine – “WHY MORE HOMEOWNERS AREN’T GETTING HELP? It is an eye opener.
Did you know “that servicers have financial reasons for not helping homeowners who fall behind? As middlemen, they are paid a small percentage - usually 0.25% - of the principal of each loan they administer (0.5% for subprime loans). That's about $250 for every $100,000 borrowed, about $21 a month. But when borrowers fall behind, late fees alone can be $25 or more and exceed what servicers may be paid to maintain an up-to-date loan.”
Mortgage servicers do have a little incentive to do so. One my wonder, why the same happens with lenders who do both, keep loans and service them. The answer to it might be quite easy. Loss mitigation, foreclosures and loan servicing are done by different departments. Those of us who have a corporate background know very well that corporate departments are measured on departmental goals and not on corporate goals (most of the time). Thus, being from different department might separate loan mitigation, foreclosures and loan servicing departments well enough for all of them not to share the common goal – helping their clients to keep properties.
Additionally, loss mitigation and loan workout cost money. Obviously, neither lender not mortgage servicers like the idea of spending money to loose money through short sales and other option. However, what they have to realize, that they will loose much les money, than through foreclosures. So, someone in the loan industry has to wake up. Helping homeowners helps you (I hope it does not sound to novel!). To find out more about pain, despair and confusion among homeowners facing loss of their properties check also Credit Consequences of Short Sales
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Artur, I guess there is so much involved with their decisions that we just don't know. Lately though I seem to be having much more success at least with the communication side of things. I make initial contact with the loss mitigation departments at time of listing and they are actually calling me now looking for a contract!!! How's that for change in attitude. I currently have short sales on the table with:
Wells Fargo
Countrywide
HomeEq Servicing
5th 3rd Bank
And all 4 have been very very responsive, thus far. I've been pleasantly surprised with their new attitudes.