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Countrywide Short Sale Process to Follow

By Michael Schindler

Mortgage and Lending with Your IRA guy!

October 03, 2008 04:15 AM

I have heard a lot of realtors talk about the short sale process and, while every lender is bombarded with requests currently, we were told last week at our regional meeting that Countrywide receives 100,000 short sale requests A MONTH. So obviously, that department is overloaded with work. That said, if you set reasonable expectations with your cliets and follow the steps that has been laid out by the lender you are dealing with, you will make it through the process without too many hang ups. To make the process as fast and easy as you can for everyone, when submitting a short sale request, include a full package of everything that is required by the lender.

Below is the Countrywide process. If you have anyone that is looking at buying a foreclosure or short sale, please keep my services in mind!

Countrywide Short Sale - Borrowers

In a short sale, Countrywide Home Loans allows a property to be sold for less than the amount owed on the mortgage and takes a loss. The borrower's credit rating may be hurt in a short sale, but for less time than in a foreclosure.

The Short Sale Support Team handles inquiries from borrowers, their agents, or CHL associates. Each potential short sale is reviewed on a case by case basis. At this time, short sales are only being considered the borrower's primary residence.

The approval of a Short Sale in a specific case can only be discussed between the homeowner, seller, or their agent and CHL's Short Sale Support Team.

Steps to Receiving Approval for a Short Sale - Borrowers

Step

Action

The borrower or their authorized Agent must contact the Short Sale Call Center at (866) 880-1232.

The Short Sale Call Center explains the Short Sale process and requests needed documentation that must be faxed to CHL to begin the process.

Note:

The borrower must show hardship, documented with a hardship letter.
The loan must be delinquent (or the borrower must supply documented eminent hardship).

The borrower or their Agent must fax the required documentation to the Short Sale Department at (888) 491-4947:

Minimum required documents to start the short sale process:

Signed Purchase Contract
Listing agreement
Preliminary HUD-1

Within 2 days of the Short Sale Department's receipt of the faxed documents, the Short Sale Department orders the interior appraisal and provides the Agent with a confirmation of receipt.

Within an additional 3 days of the Short Sale Department's receipt of the faxed documents, an appraiser will be assigned. The appraiser contacts the borrower or their Agent to schedule an appointment to conduct the appraisal.

Approximately 10 to 15 days after the appraisal is ordered, the Appraiser provides the results of the appraisal to CHL.

Upon receipt of the appraisal, CHL will conduct an analysis to determine if the Short Sale Offer is aligned with Market Value.

Note:

As the Short Sale Department is making the assessment of Market Value, some items may be negotiated:

Purchase price
Requesting changes to the HUD-1
Participation from the borrower via cash and/or Promissory Note
Request for the borrower to sign a deficiency letter
Any combination of the above

In order to determine the potential of the negotiated items above, CHL may require additional information to be submitted which may include, but is not limited to:

Explanation of hardship
Most recent month's income verification (or P&L statements for the last 3 months, if self-employed)
Most recent month's bank statements
Most recent year's tax returns

Once all parties (including additional lien holders) have agreed to the negotiation, CHL and/or its investors/insurers will render a decision within 5 business days.

The Short Sale Department will communicate the decision to accept or decline the short sale to the borrower and/or their Agent within 48 hours of the decision.

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Michael Wayne Jackson

Coldwell Banker - Novato, CA

Broker - Seniors Real Estate Specialist Novato

The monthly number keeps growing. Now it's 100k per month for short sale requests?

Oct 03, 2008 04:33 AM

Rich Mielke

REMAX Results, Frederick MD - Frederick, MD

REALTOR, Frederick Maryland Real Estate

Michael, Does Countrywide hire an appraiser or do they have an agent do a BPO? I had a short sale with another lender fall apart because the lender hired an agent to do a BPO and he used sold comps that were over a year old. By the time the lender actually hired an appraiser, the buyer gave up and withdrew the offer.

Oct 03, 2008 04:41 AM

Michael Schindler

Your IRA guy! - Galesville, WI

According to the chart I recently posted, an appraiser is a big part of the process-they are mentioned in steps 3-7).

I don't believe a BPO is able to be used for value's on a short sale but I do know they are used when we are dealing with pricing our foreclosures....

If I were personally a lender, I know I wouldn't rely on a BPO....appraisers have a lot of classes they have to take as well as CE to determine the most realistic value of a homes current value-a BPO, an opinion, is only as good as the realtor doing it and yes, I have seen some that were way off.

Oct 03, 2008 04:58 AM

Anonymous

Karen Catania (Lyon Real Estate)

I wish your timeframe was correct! I have had an offer in for review for over 60 days. Appraisal was not completed until day 45. And I was just told it's another 45-60 days for the negotiator and investors to approve or decline the offer. It's not for the faint of heart! Advising clients of this short time frame is a real detriment and will only lead to upset buyers and sellers!

Oct 06, 2008 10:37 AM

Michael Schindler

Your IRA guy! - Galesville, WI

I don't know what to tell you, this is the guidelines they gave out to us. I do know a lot of times it is hang ups with not submitting full packages that is the main cause of delay although, perhaps with the current work load, the dates may need to be pushed out?

As I mentioned, they are receiving at last count, 100,000 requests a month so they are doing the best they can but, it isn't quite as easy as someone looking at a request and saying yes or no-as you know.

Countrywide is also at the mercy (so to speak) of the investor that has bought the loan so, response time is also dependent on what investor each mortgage (example-fannie, freddie, ginnie) has-and what type of mortgage it is (primary, investment). There are different response times from them.

Clients need to be told that this is not a quick process/turn around and that they need to turn in complete packages, follow up needs to be done with the person they are working with, and to be patient. That's really the best advice I can offer.

Oct 06, 2008 11:25 AM

Anonymous

S Peterson

I have seen these steps published by others and I know from experience, that they number of days are no longer accurate. It took me 45 days for an appraisal after the initial BPO was done. Now we are told that CHL is doing a Title Search. I have not seen this step in any of the post regarding the process but I am told that this is one of the last steps. I sure hope so since it has been 65 days since my offer was submitted.

Nov 29, 2008 01:36 AM

Michael Schindler

Your IRA guy! - Galesville, WI

I really think a lot of it has to do with the individual file itself, if the package submitted is a complete one, etc..... and, keeping in mind 100,000 short request a month is a long list-and Countrywide isn't alone, just one of the biggest.

I'm not sure why 45 days after an appraisal but, there's usually other factors involved like I said.

I would assume they always do a title search but that takes what, 2 days after its ordered?

Nov 29, 2008 08:12 AM

Anonymous

Jenny

From the buyers standpoint, we have had our offer with CW for 67 days now, and like the above it was 45 days until the appraisal was even ordered. BTW: CW also informed the sellers realtor that the file was lost in the computer system for about a week and in the process information was lost, they (CW) admitted to this! We were then told on Nov. 24th our file had been submitted to the Investor on the 18th and that they had 21 business days to response. This week the story has change - go figure! Our file now has to be reviewed by the #1 negotiator for 2 to 7 business days and then she will forward it to the #2 negotiator to do whatever!!!! The negotiator informed the sellers realtor that she was placing the file in "expedited status", I have been told that this is just CWs game of smoke and mirrors and I have also been told that we can expect to get our approval letter in writing within 2 weeks, once this status has been applied and if the offer is approved.

I simply don't know what to say other than I will never, what so ever use Countrywide for any reason in the future. Their whole handling of this process is so un-ethical on so many different levels. I understand that they are backlogged, but the honest truth, a step-by-step, individual-by-individual process explanation and a realistic timeframe would be greatly appreciated on all parties. Not to mention, quit changing the rules in the middle of the game!

Dec 11, 2008 04:25 AM

Michael Schindler

Your IRA guy! - Galesville, WI

I'm sorry Jenny but......let's be candid here for a moment shall we......

CW (like many other lenders from what I hear) receive about 100,000 short sale requests a month-that number was from July and I'm sure it's up more now. 100,000.... think about that for a moment shall we. I personally can't even think of that workload........Next-If the packages came in complete and in order and the investor turned everything around quickly, title was clear, etc..... then maybe the process would go a little quicker but, many people start out without knowing what they even need to submit. I've seen Realtors just send in a purchase agreements and expect it to just go through and then complain and blame the lender for being slow when they maybe didn't follow procedure. How much extra time does it take files when files are not complete, when it's missing information......now multiply that by 100,000+ a month....

All I know is with a mortgage, a contract was made to borrow money to buy or refinance a home with a promise to repay the monies over time. The contract (mortgage/deed) is pretty boiler plate cut and dry and if people didn't know or understand their terms, then maybe they should have read them. Too many people just want to walk away and that lousy attitude is what is continuing to steam roll our economy into the toilet. When my parents bought their house, you did what you had to do....you gave up eating out, you cut corners......you make a budget, you did what you had to do to protect your home. When someone walks away, it affects every neighbor and every neighbors home value that person had as a friend-but no one really cares about anyone else anymore do they...... The excuse is everyone else is doing it so....why not!

I council people everyday on their options and pretty much no one wants to hear tighten your belt, cut down on eating out, cancel cable, get a roommate, do what you need to do, etc.... I've had people get offended when they were told to maybe they should look for a roommate.......No, the banks are just supposed to take huge write offs and this is supposed to fix our economy.....guess how many pensions, 401k's, IRA's, etc. have real estate bond funds inside of them-as well as bank stock holdings. When everyone just walks away it has a continuing ripple effect on everyone-we as a nation lower rates to help people out-which lowers CD rates for retired people-decreasing their income, lower rates force foreign investors to invest in other nations where they can get a better return.

We as a nation have to decide to take accountability or we will continue in this economic tailspin....If a house is worth less now than in 2006, it sucks but, such is life....When I buy stock, and it goes down in value, I don't get to just walk away without a loss so why is it OK to do that to a mortgage?

We as real estate professionals need to stop telling people how they deserve to just walk away, that they are victims...stop telling them to dump their homes and walk away. We need blunt honesty "hard love" I think it's called but of course, this industry is commission based so we can't say what we may feel because it'll kill a sale won't it!

There's special hardship cases yes....there's always been those but we as a nation have the wrong attitude.

Just don't talk to me about anyone at a bank being "unethical' in this situation....... As more banks suffer losses, they cut jobs, go out of busienss, and this takes out more jobs which places more people in the job marketplace which takes away from others already looking for a job.....

OK, went off a bit there didn't I.....I guess I'm a proud person and am really tired of my industry being ripped apart everywhere I turn-and people continuing to dump houses..........I know it's hard to sit by and wait-but you can always pay what the seller's owe if you want it to go faster right? Just try to be patient with the process, it's not perfect......No one in any lending position, the government, etc. EVER expected anything like this.

Jenny, I wasn't aiming this venting response at you....just at society in general. Congrats on your eventual home purchase.......

Dec 11, 2008 03:38 PM