Part 2 - WHAT THE LENDERS WON'T TELL YOU ABOUT YOUR SHORT SALE!

By
Real Estate Agent with CHANE REALTY INC 3230505

     My last post opened up a flood of comments!  I also received numerous calls and emails from many of you.  Therefore, I am expanding on the subject with this second part.

     Now, I know some of my comments are going to get readers all riled up.  Some lenders and their representatives have been secretly reading Active Rain and this post. 

     Please note that I do not sugarcoat the short sale process.  Our firm represents the homeowner in the negotiation process and therefore has their best interest in mind.  This process should be treated as a business decision and not a personal one.  The lender certainly has no personal attachment to your client or the property.

5) Prepare Your Clients for the Long Haul!  I ask all my new short sale clients, "are you in a hurry?"  If they are, our firm is not a good fit for them.  Please note that there is a difference between working quickly and efficiently and being in a hurry.  The lenders are in no hurry to process your short sale file.  Plus, if the homeowner is basically living for free in the home, what hurry is there to move out and start paying rent?  The process provides them a good opportunity to stabilize themselves financially.  And always remind them: A HOUSE DOES NOT A HOME MAKE!  Home is your family and friends, not brick and mortar.  Home will go wherever they go.  The lender, on the other hand, will take every opportunity to attach an emotional response to that building, even if it is unsalable collateral.  Don't let your clients fall in to that trap.

6) Every Lender Has Issues!  As I mentioned in Part 1 of this post, never assume that the lenders have their short sale process down to a science.  It's a work in progress for them.  This is still their worst nightmare and they are just hoping it will go away when they wake up.  They still think this housing mess will end tomorrow.   Their loss mitigation staff is a temporary solution to the problem and there is a heavy turnover of employees along with a huge backlog of files.  The same underwriter that approved your loan was offered a job as a so-called "negotiator."  And, he/she is still working with the same mentality... "the bank is in control!"  Unfortunately, you have to let them believe that.  REMEMBER, YOU HAVE THE BUYERS FOR THEIR HUGE MESS!

7) Make a Buck Not a Friend!  We've all heard the saying, "the squeaky wheel gets the oil."  With the current state of the loss mitigation industry you need to be as squeaky as possible.  You need to be noticed; otherwise, your short sale file will be delayed time and time again.  One of the worst culprits right now is Countrywide/Bank of America (and that's a whole other post or two).  They are a real mess and overwhelmed with files.  Turn-time on newly received faxes is taking at least ten days, and that's assuming they find your fax.  Send your fax two or three times if necessary!  Yes, that may only add to the backlog of faxes, but if it means they will find YOUR fax and YOUR file nearly two weeks later you've accomplished your goal.  If you are calling and don't like the answer or attitude of the short sale representative, hang up and call again!  Trust me, the answer will change every time you phone.

8) The BPO Is EVERYTHING...For Now!  It amazes me that lenders depend on a half-assed appraisal called the BPO (Broker Price Opinion) to make their biggest investment decision on your file.  To put it bluntly, your BPO can be sabotaged by any green-eyed, angry broker with an attitude.  Always be sure to meet with the evaluator at the property if at all possible.  And, be sure he/she receives a copy of your contract.  The lender certainly didn't provide them a copy.  You already have a good idea for what the property should sell.  Be sure you convey your thoughts and opinion to that person.  Remember, the BPO is simply a range in value.  The negotiator or bank representative will usually try to trap you with the highest value in the range.  Let them know that you will NOT pay the top of the price range.

9) Tough Love...Credit Means NOTHING!  I'm still amazed how many borrowers ask me how badly their credit will be impacted by a short sale.  The answer...SIGNIFICANTLY!  Your short sale client should not be worried about how his/her credit will be impacted by their current financial and housing situation.  It should be the last thing on their minds.  I'm astounded that there is always some expert trying to put foreclosure vs short sale into tidy perspective for someone that is finding themselves in the worst financial crisis of their lives.  There is really no difference.  A 450 score or a 500 score is still a lousy score.  For the most part your client must be in a foreclosure status with the lender before they will even consider a short sale.  And, whoever tells you different is flat out lying.  Credit reporting agencies and the lenders that use them have been telling us for years that our credit rating is the most important thing in our lives.  They've spent millions of dollars on campaigns to remind us of that.  This has simply been a scare tactic and it has worked magnificently...until now.  I've seen clients scrape and borrow money, or completely eat away at all their retirement savings just to keep up with a worthless investment property.  All because they fear how it will affect their credit rating, even at the expense of really important matters like food, utilities, and medical necessities.  Your credit will always bounce back.  Plus, the lenders will need all those who are suffering from this crisis back into the fold in a few years when they are ready to really lend again and we are ready to borrow.

Be sure to read Part 1 of the Post: http://activerain.com/blogsview/1171787/what-the-lenders-won-t-tell-you-about-your-short-sale-

My next post... "SHORT SALE HORROR STORIES!"  I hope you'll share your short sale nightmares, too.  And, I won't shy away from naming lenders.  Stay tuned!

****************

 

Comments (16)

John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Great follow-up to your original excellent post! Good information and good advice in dealing with out short sale clients. We will be dealing with short sales for quite some time to come.

Aug 05, 2009 08:49 AM
Chris Mackey
www.SanDiegoHousingSolutions.com - San Diego, CA
San Diego Housing Solutions

Felix,

Great post! However, you are wrong on one thing: the borrower does not need to be in a foreclosure status with the lender in order for the short sale to be completed. We have negotiated and closed numerous short sales for our clients who had no missed payments. The key here is to prove that foreclosure is "imminent".

Chris Mackey

www.SDSSE.com

Aug 05, 2009 10:00 AM
Betty Smith
Richmond, VA

Hi Felix,

Thanks for a great blog post. Is there anything I can do as a buyer's agent to speed up the process or do I have to wait for the listing agent to hopefully be the squeeky wheel?

Aug 05, 2009 02:01 PM
John Secor
EXIT Real Estate Results - Winter Springs, FL

Felix,

Interesting perspective.  Oh the stories of bank ineptitude we could share.  Short sales should be renamed long sales, they're like a foot dragging contest where no one wins with the possible exception of the patient, VERY patient buyer.

Aug 06, 2009 06:13 AM
Anonymous
Dawn Uselding - A New Dawn Real Estate Services

Again...a very good blog post.   And again I have a few things to add.

5.  You are so right, be prepared for a long haul.    However, it is not only the seller that needs to understand this.  The buyer agents need to prepare their buyers as well.  They also need to understand, while a short sale is a great way to get a house at a discount, it is also not a short process.  They need to be informed of this from the get go.  One of my recent short sales went through 6, yes 6, offers before we finally closed.  The first 4 walked away(took to long)  the 5th lost his job and therefore his financing, and finally the last offer closed.  These offers were all basically comparable.

6. Again... you are so right!  My mother worked for Wells Fargo as a loss mitigation negotiator. She was a mortgage broker but the brokerage she worked for closed down.  She applied at Wells and they hired her right away.  3 weeks of training later she was given 75 files and entered into the rotation which gave her an additional 7-12 files a week.  Did you know that negotiators are paid a bonus for how many files they clear in a specific period.  If you have ever wondered why your Wells Fargo files seem to never get into the system.. that's why.  If it is not complete it gets denied, one more file cleared.  My Mom also shared that in the 3 months she lasted (the job proved to be much too stressful) she worked under two different supervisors, who each wanted the approval paperwork to be submitted differently.  So if it seem you get a different answer each time you call, your probably right.

7.  I have found it essential to make sure that we record the date, time and number of pages faxed in the notes for every fax we send.  Then call 48 hours later and verify that the fax was received.  I always make them check the fax log.  They do have one, and if you get a new person who doesn't know how to access the log ask to be transferred to some one who can.  Many times I have resurrected faxes that supposedly were not received.

8. It can also  to be helpful the agent doing the BPO to supply them with any pertinent facts about the area, like the dump hidden by the hill behind the house, the crack dealer that sells at the corner each night or repair estimates for the roof that needs to be replaced or the furnace that won't pass the FHA inspection.  But not all agents or inspectors want your input, so don't be surprised when it happens.  And YES, supply them with the contract.

9. You are right on.  I can't add anything to that.

 

Dawn Uselding  -A New Dawn Real Estate Services - Virtual Short Sale Assistant

Aug 06, 2009 01:27 PM
#5
FELIX SANTIAGO
CHANE REALTY INC - Palm Beach, FL

DAWN,

Thank you for your great comments.  I especially like your Mother's story of working for Wells Fargo.  It's a very interesting perspective that I've heard from other insiders.

*************

BETTY,

I wish I had a good answer for you.  As the buyer's agent there is not much you can do to follow up with the lender regarding the short sale.  However, you can be the "squeaky wheel" with the seller's agent and/or the representative overseeing the process.  MAKE SURE YOU GET THE NAME AND CONTACT INFORMATION FOR THE INDIVIDUAL ACTUALLY IN CHARGE OF THE SHORT SALE PROCESS.  Many agents/brokers hand that off to their office staff.  Before the contract is signed be sure to ask where they stand in the process and if all the seller's documents have been gathered and are ready to submit to the lender.

Good luck!

Aug 07, 2009 03:11 AM
Anonymous
Jacques Girard, Ph.D.

Bravo Felix for another inciteful post!

As I asked you before: do you provide your transactional funding at the rates you stipulated OUTSIDE of Florida? 

I could get you LOTS of applicants, as my partner - a CA Broker with NO "attitude" LOL - and I help Listing Agents and Brokers (nationwide) "get out from under" the yoke of frustrating S.S. negotiations at NO cost---AND make sure that they earn a Full 6% commission at closing (on the listing side) PLUS another 3% (on the buying side), if they also provide an end buyer.

The negotiations are done by members of our group who are ex-loss mitigators who worked for major banks for years. They have many personal friends and contacts inside today's Banks and their personal track record and reputation helped speed up the process while resulting in a "better price" which gives us the spread that empowers us to offer Realtors Full Commissions and pay our Profesionals. We have RE Attorneys and a very efficient Title Company who complete the "Team".

Since we time the double closings on the same day, we could use your transactional funding availability as mentioned above. Please let me know, either via email : jacques.girard@yahoo.com,  or call me at: (800) 701-1924. Thank you and, again: Congratulations for your pragmatic input!

Cordially Yours,

Jacques Girard, Ph.D.

Aug 11, 2009 07:48 AM
#7
Anne Hensel
South Beaches Real Estate Professionals - Saint Petersburg, FL
Realtor - Broker - St. Pete Beach, Treasure Island

I agree, the BPO in a short sale is very important and yes, ofcourse Imeet the broker at the property and give them the comps etc. I personally rather have a BPO done from a local real estate broker that knows the area and the market situation than a full appraisal by an appraiser that comes from 50 miles away and knows NOTHING about the home or the neighborhood or the local real estate market.

Aug 13, 2009 03:18 AM
Michael Lanoza
"Lanoza Knows" Real Estate Solutions - Duluth, GA

Hi Felix,

Fantastic post, both this and Part 1. You are spot on across the board on this. The word needs to get out there.

Anyone that's been around for a while (at least in my market area) should see a clear repeat from the initial foreclosure crush 4-5 years ago. Same thing all over with short sales- and unfortunately they didn'y learn from the past.

Aug 28, 2009 08:42 AM
Anonymous
Marcia Bowen

I have been working on a sort sale since Jan w/ B of A.  Of course, at the beginning they were Countrywide.  The change in April started a whole new set of problems.  The above is absolutely correct in that you can get a different answer on the same question every time you call.  I have been diligent in keeping date and time as well as name everytime I have called and still a 2nd phase negotiator closed out the file for "lack of documents"  whoch were received in July, with confirmation.  Negotiator was supposed to be in contact with me with in 7-14 business days and for 60 days never returned a phone call or e-mail.  Not happy with Bank of America!!!

Sep 01, 2009 07:56 AM
#10
Dawn Uselding
A New Dawn Real Estate Services, LLC - Manitowoc, WI
Short Sale Assistant

Hello Marcia,

I actually like working with BOA.  They know that there is a problem and they actually have set a system in place to deal with the issue.  As long as you have solid facts to back up your complaint, and it sounds lile you do, you can email the department set up to deal with these issues.

Email your request for an escalation and review of the file to 3rdpartyadvo@bankofamerica.com.

Sep 01, 2009 02:23 PM
Thad Emmons
Guilott Realty, Inc. - Bandera, TX

Felix,

Great post, we are just now seeing short sales come into our market, and your post plus others on Active Rain have really helped in more ways then one. Thank you for sharing your knowledge.

Thad

Sep 03, 2009 03:36 AM
Mary Jo Quay
EXP Realty - Minneapolis, MN
I Move You Home

Great post.  What are we doing to help all of our clients who have short saled or foreclosed get back into a home?   I'm thinking of teaming up with a credit repair attorney to help clients get back on track, and with a rental agency so they can find a home that they can afford.   In two years they can be back on track, but a lot more savvy.

Sep 05, 2009 02:51 PM
Paul Francis
Francis Group Real Estate - Las Vegas, NV
Las Vegas Real Estate Agent - Summerlin Homes

I specifically like that you brought up #9. People seem more obseessed with FICO scores then understanding an Income Statement and working on their Net Worth. Doing short sales certainly opens up your eyes to just how much debt people are in and why we are in this mess.

Sep 14, 2009 04:52 AM
Paul Francis
Francis Group Real Estate - Las Vegas, NV
Las Vegas Real Estate Agent - Summerlin Homes

I specifically like that you brought up #9. People seem more obseessed with FICO scores then understanding an Income Statement and working on their Net Worth. Doing short sales certainly opens up your eyes to just how much debt people are in and why we are in this mess.

Sep 14, 2009 04:53 AM
Keith Shoemaker
Florida Homes Realty and Mortgage - Jacksonville, FL
Keith Shoemaker

Good common sense appoach to the many problems associated with Short Sales.

 

Uncle Sam could put in place some guidelines for banks to streamline the process, but we know how good Uncle Sammy is at making things worse.

 

The problem will not go away in 6 months, until unemployment goes back below 7.5% at least and overall ecomony gets a solid uptick. 

Most of the uptick in the market this year is companies cutting costs and jobs, not bottom line revenue growth.

Wasn't Timmy G. suppose to be the answer to this question?

Nov 18, 2009 08:21 AM