Help! My short Sale's Fallen And Can't Get Back Up! (Need Advice For My Client ASAP)

Real Estate Agent with Five Star Real Estate

This is not my typical light and fluffy fun posts that I enjoy writing. You may realize my week was not anything near fluff and fun. In fact it was a week of frustration, and well, throwing in the towel when I really didn't want to.

This post is really more of a few questions posed to those of you with expertise in the area of short sales.

The background: (while much more involved I tried to keep it short)

I was very recently working on a short sale for a home owner in Grand Rapids Michigan. We were in the middle of negotiating a rather good offer for the bank. It was actually accepted by the bank but not quite through some negotiating on inspections. In order to make a long story a shorter one, I will just say that there was negligence on the banks negotiator in loss and mitigation, where the ball was completely dropped and the buyer ended up walking. After numerous attempts to contact her, I resorted to trying to contact her supervisor and getting the run around each time for my efforts there. Not because they did not agree with me but because the personal system is inept. Everytime I would finally get an actual person to speak to I would keep getting transfered to the next person on the chain of command (and on and on) until the last one would say that a supervisor would contact me in 24 - 48 hrs. That was over 2 weeks ago and several tries in between with the same response. 

Just today, my homeowner got through to someone there and as she explained our frustration she was told that she would no longer be able to do a short sale on her home because as of Mar. 28 the bank had changed their policy in regards to a  part of the policy that affected her situation. The offers that we submitted (4 different offers) were submitted well before that date. They told her that her only options were to do a deed in lieu or to let it fall into foreclosure. She (owner) and I are so frustrated because we both worked hard to bring them what they needed in the way of an offer, to nearly satisfy the debt. She also wanted to try to make good and protect her credit the best she could. She even agreed to pay off the 2nd that she had with them of 12,000. I can not believe that they can not see how much they will lose by not getting there act together and following through with us on a short sale.


My questions to those of you who know the game is this:

1. The bank told my client it would be better for her credit if she did a deed in lieu over a foreclosure. Is this true? How does that all happen and will they go after her later for what was outstanding?

2. Do any of you see any other alternative for my client? She has a first and second and was willing to sign a 12,000 promisarry note on the second with the short sale deal we put together. Now I do not know what she should offer tham if anything?

3. If the property does go into foreclosure is there a good way for me to pursue getting the listing? (Why would I want it you ask? because I have a growing list of buyers who want me to show it to them). I don't typically pursue these kinds of properties so I do not know the ropes of how to try to obtain a specific listing. I am just thinking that if I could at least earn something from this thing after all the work I put into it


I appreciate your help. I am frustrated with this one.

Sue Prins

Five Star Real Estate

Grand Rapids Michigan


Comments (13)

Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!
Hi Sue, We're featuring this post in the Greater Grand Rapids, MI Real Estate Group and I hope that you get some assistance.  I am surprised that the bank bailed out of this deal based on what you described in your post.  We really are in the Wild, Wild West era of real estate these days.
Apr 12, 2008 02:07 PM
Sue Prins
Five Star Real Estate - Forest Hills, MI
Realtor- Greater Grand Rapids, MI

Hi Lola, Wow, thank you for such a nice comment. How wonderful to be featured. I am excited about that but I am also hoping to get some assistance through this post. I am really frustrated over this one. My client wants to do the right thing and the bank is causing her to go down a road she would rather not. It is a mystery to me why they would not want to work with us. It will save them from further financial loss. They will lose far more by having it go to foreclosure having a first and second from the same company.  UGH!

Apr 14, 2008 12:51 AM
Rob Jacobs
Short sale pathways - Rockwood, MI
Short Sale Specialist

HI sue, In order for me to give you a thorough breakdown of why the lender acted the way they did, I have a few questions for you.

1.)What bank is holding the notes?

2.)Is this a second home or investment property?

3.)When is or was the auction?

4.)Was your clients loan somewhat new?

5.)Does your client have equity is homes, stocks or cash other than the $12,000?

6.)How much deficiency was left on the table?

7.)What did the lender BPO come in at as opposed to the offer?

8.)What was the timeline between getting the negotiator assigned, the offer accepted, and the buyer walking. At the point that the buyer walked form the deal, where were you in relation to talking with the loss mitigator, having the deal accepted verbally and the March 28 change of policy. (this reaks of countrywide to me)

These short sales can be tricky. Some lenders like to run you through the gauntlet before making a decision or for no good reason other than avoiding you.  I have a seminar to do later this morning so, I'll check in after for your response. Rob

Apr 14, 2008 01:43 AM
Sue Prins
Five Star Real Estate - Forest Hills, MI
Realtor- Greater Grand Rapids, MI

Hi Rob, I sure appreciate your help. I will call or email you the name of the company. Though I have ill feelings towards this company due to theoir unprofessionalism, I would rather not disclose the co. name publicly on AR in order to protect myself from any potential repercussions from doing so. The answer to your other questions are:

2. My seller lost her job here in Michigan and had to move out of the state. She was able to rent the home out for some time and ended up purchasing another home in the state she was living. The renters eventually moved out and she was not able to rent it or sell it. So after a lengthy time of trying to sell it we called the bank to get an agreement for a short sale which they did agree to it. I don't know how the property would be categorized at this point. They knew her story and accepted her hardship from the get go.

3. The auction has not happened

4. The loan was from 1997

5.My client has no equity in either home. No cash. She has fair income now but not enough for 2 house payments. She has some money put away from a 401k I think (abt 5K) to put towards the 2nd and would agree to a promisary note for the remaining on the 2nd.

6. The total deficiency was only about 19-20K There was around 12K on the 2nd and the remainder on the first

7 BPO came in at 104K the offer was 106K with 3k towards closing costs and my seller would agree to pay the 12k on the second by promisary note at close

8. It took abt 1 month for assignment, another month to get acceptance. I had an issue with the negotiator about some unprofessionalism on her part after the acceptance. This is when the ball was dropped on her part. I asked to speak to her supervisor and that is when the run around occured and around that time is when we were told about the policy change of Mar. 28. I still have not gotten any responses and in the mean time they want my seller to agree to do something she would rather not do (deed in liew) when we all know it is best for all parties to try to salvage the deal. If I where the investors I would be furious.  I am not sure though who is holding the bag at this point. How can I ever get to the real decision makers with this kind of response or lack thereof.

I appreciate your thoughts.


Apr 14, 2008 04:44 AM
Rob Jacobs
Short sale pathways - Rockwood, MI
Short Sale Specialist

The lender/servicer that your client has her note with will no longer do a short sale on any home other than the primary residence. (That alone gives away the lenders name). It sounds to me as if you had the offer accepted by the lender previous to their policy change which should have secured a successful closing for you.

The problem here is that you had an issue with the negotiator that compromised the deal. Most of the loss mitigators at this lender really do not much care if the deal closes or not and, the cheaper the property the less effort they put into it. I happen to know a person that does loss mitigation at this bank and they do make a small commission off of their successful short sales. So, here you have a person that you have had issues with. She probably has 250 deals on her desk and many of these are California and Florida homes selling for 3 times the price as yours. I.E. 3 times the commission for her. The policy change just gave her a reason to bury your file into REO.

It can be very difficult to work with many of these companies. Calling a "supervisor" can sometimes get things done but, it is comparable to complaining to the night manger at taco bell that your Tostada was cold. They could care less. Next time you have an issue with a negotiator immediately try to resolve it with that person or go over their head without them knowing. You always want to remain in good standing even if you disagree. Keep on good terms and call for a supervisor to step in and mediate. I know that these people can be arrogant and ignorant. Most of them have little or no experience in real estate or the mortgage industries. There are roughly 10 of these companies that are nearly impossible to work with and, short sales in general are an exercise in patience anyway.

You are probably now asking yourself "why won't they sell short on 2nd homes when they are going to lose their butts in REO"? I'm glad you asked that. My professional opinion is that

1.) they want to force people with 2nd homes to empty their bank accounts to catch up on the loans.

 2.)Cramming a deed in lieu down the throats of the less than fortunate (like your clients) will get the property secured much quicker and much-much cheaper than foreclosing.

3.)They are so overloaded with short sales that they can't keep up.

4.)They make more money servicing the REO  for the investor than doing the short sale.

And finally, this one will start a hailstorm of controversy.

5.)This is only phase one of the lending industries evil master plan of weaseling their way into our world of real estate. (Somebody better call NAR)

Now that that's off my chest. A deed in lieu may be their only option at this point. They should have an attorney look it over to make sure that their is no sneaky language that sticks them with the deficiency. You may not have much luck getting the REO either. They have a huge referral network of Realtors already set up but, you can apply to become one on their website.

I keep thinking of the kids cartoon movie Madagascar. The comical penguins were surrounded and their leader says "Smile and wave, boys... smile and wave". Thats what it's like working with these lenders. Regardless of how wrong they are, all that you can do is "smile and wave".

Hope this helps -Rob

Apr 14, 2008 12:46 PM
Sue Prins
Five Star Real Estate - Forest Hills, MI
Realtor- Greater Grand Rapids, MI

Hi Rob! Wow! what a wealth of info. you have shared. I should have had a conversation with you prior to getting involved. I will be remembering you in the future. You seem knowledgable on this subject.

Yes, I did have an "issue" with the negotiator. I hate to get into it but I think you should know at this point. She tried to cut my commission, wait! let me retract that, she faxed over a document for me to sign agreeing to a commission cut, only it was after the acceptance, after we had agreed on everything (including commission), after all parties were given the thumbs up.  I told her that I felt it was unfair and wrong for her to do such a thing and in the manner that it was done. found out about it the day after acceptance by way of a fax. She knew what the commission was to be. I put it in writing and she did see it because she asked for all of the costs to be spelled out on a HUD. I even specified the commission with a bold marking. She let me know she got it and that it was all reviewd. Though there were negotiating, to be sure, commission was never negotiated on her part. I know that commission cuts are usual and expected with many banks- I have had to do it before,  but I have always been warned first or had it negotiated during an offer. I explained that to the negotiator and let her know I did not appreciate the way it was done underhandedly. She then threatened me with "if you don't except it then it is a done deal." I did not tell her I wanted that to happen as I did not want the deal to fall for the sake of my client, I just ask if I could speak to her supervisor about any options we might have with the lender, as she was not offering any options. She said I had that right, but she would have her call me back. HA! HA! My seller signed an addendum to have presented to the investors asking for the agreed upon commission which was never presented. Trust me the investors were doing well on this deal as it were. They were not losing much at all.

When I finally spoke to a supervisor (not the one I was waiting to hear from- the one above the negotiator) they saw that the negotiator wrote in the file that we wanted to drop the acceptance and have the case closed. NOT TRUE! When I explained everything to that supervisor, she agreed that this was bad behavior and that I had a right to speak to her supervisor. I was told she would be calling, within 24 hrs. That was 2 week ago. I have gotten the same response everytime I have called there to no avail. In between all of that, the buyers were waiting to hear from the bank in regards to an inspection problem (water showed up on the day of inspections in the basement from a hard rain and we were curious what would happen with the property as the bank had it secured) The buyers agent eventually sent an addendum saying they walked. When my home owner contacted the bank in regards, sharing her own frustration, they just told her they were no longer interested in working with her on a short sale due to policy changes.

The last  "supervisor" that I spoke to said no matter what we would still have to start all over with the 30 day time frame until we could even get it assigned again but that it would probably no longer be accepted due to the policy change.

Whew! that is a mouthful - but there you have it. It is all such a shame because my client was willing to do her part. I did my part bringing the investors what they needed to have very little loss. I wonder if the investors really knew the whole story - what they would do about it? Or do they care anymore. Banks- this one in particular- better quite crying about their losses if this is how business is being done. They deserve this loss anyways.

I just want to get beyond it now and advise my client the right way which is really why I wrote this post.

Thanks for ALL your input Rob. So kind of you to assist.

Apr 14, 2008 02:09 PM
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!
Rob & Sue...Thank you for an education for all of us!  This type of exchange is what makes blogging and Web 2.0 such a valuable resource.  Best Wishes Sue.
Apr 15, 2008 12:18 PM
Sue Prins
Five Star Real Estate - Forest Hills, MI
Realtor- Greater Grand Rapids, MI

Hi Lola- Thanks so much for the nice comment. I really didn't mean to give everyone THAT MUCH of an education but it has definately been a learning experience for that I hope will help others if they should run into these kinds of problems. And my bet is they will. It is the game we are in. Blessings! And thanks again for the feature.


Apr 15, 2008 01:44 PM
Shelley Frody
CITY2SHORE - Jenison, MI

Hey Sue

Steve and I have re-named Short Sales. We call them Long Sales, because ther is nothing short about them! Send me an e-mail and let me know what lender it was. We are dealing with one right now and it is starting out a little like your story. I hope it's not the same one!


Shelley Frody

Apr 16, 2008 04:53 PM
Rob Jacobs
Short sale pathways - Rockwood, MI
Short Sale Specialist
Thank You Sue & Lola. I am a newbie to active rain and I love it. I do short sale seminars around the region and I have been telling Agents that I meet to get online and join our forum. Knowledge is power and in our new world of real estate, it takes more than a few good people to make a difference. Good luck with everything and keep me in mind if you have any other questions or issues. Rob
Apr 17, 2008 10:37 AM
Sue Prins
Five Star Real Estate - Forest Hills, MI
Realtor- Greater Grand Rapids, MI
Thanks for the comment Steve and Shelley- please keep me posted on your short/ Looonng sale. Love to here how it goes. I am also praying for you and your client. Hope it is a happier ending than mine.
Apr 17, 2008 01:49 PM
Sue Prins
Five Star Real Estate - Forest Hills, MI
Realtor- Greater Grand Rapids, MI

Rob- You are welcome my friend. I will be keeping you in mind. I was very impressed with your knowledge on this subject. I will probably be writing a follow up to this one. It's sad really, but we move onward.

Apr 17, 2008 01:52 PM
Therese VanderMeer
Midwest Properties of MI - Grand Rapids - Jenison, MI
Realtor-Greater Grand Rapids, MI area communities

Hi Sue,  Working with these Short Sales can not only be frustrating but even painful at times.  It was great for Rob to stop by with such helpful information!   The lender I dealt with actually told me their Loss Mitigation Dept received approx 6000 papers through fax daily...a person then tries to organize them and pass them out to the appropriate parties!  No wonder we got lost and had to repeatedly re-send docs.  I believe Rob ...they are so over whelmed and really just don't/can't care for there are so many and our clients are simply more paper to them.

I actually wrote a Blog on this also..."I feel Like I'm Battling a Dragon during this Short Sale", stop by and read it if you have a moment for it has much in common with yours.

Hey, Tammy Van't Hof's son is now playing soccer with mine!  It's been really great catching up with her after all these years.  :-)   You and I should get together for coffee sometime....what do ya think?

All the Best!


Apr 22, 2008 11:57 PM