Short Sales, short tempers

Real Estate Broker/Owner with SUTTON HOMES REALTY, LLC 200504066

There have been rumors of the banks, such as Countrywide, stating that they are attempting to streamline the short sale process in order to get more completed in a shorter amount of time. As soon as the completed short sale packet and offer is submitted to them, they want to see 30 day turn-around time on the release and offer response. Wouldn't that be awesome?!

From my perspective, this is not only impossible with the current process, but is only going to get worse for awhile, not better. With the increasing quantity of short sales, the lenders are being overloaded and do not have the manpower to handle them. They are also being forced to hire relatively untrained staffing to help, which is creating a mess of lost or misfiled paperwork. Personally I have had banks lose or misfile my paperwork more than once for the same deal, forcing the time frame back at least 3 days per incident, and now I am told that it will be another 30 days before I am even assigned a loss mitigator!

The ramifications are not good...lost offers not having the patience to stick it out or they find something else, buyers agents not wanting to show or put offers on short sales, more foreclosures occurring because the time ran out and the bank fails to postpone, BPOs and appraisals becoming invalid, and of course fewer agents wanting to take short sale listings. Most of us in real estate are stressed enough already, and it is only going to get worse.

So then what can be done? I believe three things need to happen in order to help stem the tide...

1) Only trained brokers should take on short sales. Incorrect or incomplete paperwork can blow a deal. I don't believe that they need to spend a ton of money for this, just be sure to at least get the basics down and have a highly knowledgeable principal broker on hand to go over everything. At this time there are still no accredited, aknowledged or officially certified courses available that I know of, and that should be one of the first things our MLS and Realtor Associations should consider doing.

2) Lenders should postpone the foreclosure date if a valid short sale is in progress.

3) Lenders should pre-approve all short sales, being instrumental in establishing the listing price. This would prevent many short sales that are both under and overpriced. Too low of a listing price causes unfair issues with competing properties and are often turned down by the lenders anyway, causing deals to foreclose or simply waste time. Too high and no offers come in forcing the foreclosure.

I believe this could work if the lenders were willing to get the BPO/appraisal done up front as soon as the listing agent submits the short sale packet. At the very least it would save everyone time, and in turn save the lender money in the long run. Perhaps it would even help keep the market prices up by leveling the field.

Unless we can get this to happen, I believe we are in for a very frustrating time with short sales. Consider carefully before taking a listing, even so far as ordering a preliminary title search before accepting it. Sellers don't always tell you everything up front, and often they don't even know.



Comments (6)

Joetta Fort
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder

If lenders would pre-approve all short sales, like you said, it would be a whole different ball game. One other idea would be for them to hire additional paper pushers - and why not hire some of those real estate agents who are looking for part time work? They understand what needs to get done, and what's at risk, and could kick the process into gear!  Maybe the one million real estate agents in this country could get together and publish an open letter to the banks in all major newspapers . . . oops! There I go, dreaming again!

May 29, 2008 09:18 AM
C Tann-Starr
Tann Starr & Associates, Inc. - Palm Bay, FL

Hi Londi-- great talking points. Enjoyed your post. You make some excellent points and we could definately use all the help we can get to expedite these packages. It's frustrating not being able to get a straight answer when a Realtor or homeowner calls a lending institution for information. You rarely ever get the same person twice and sometimes you feel as if you are starting from scratch each time you contact the bank. 95+ days later, one of my clients still has not received an answer regarding his loan pay off amount from the lender.  Go figure...

May 29, 2008 09:23 AM
C Tann-Starr
Tann Starr & Associates, Inc. - Palm Bay, FL

Hi Joetta-- great idea! I hope someone in authority gets to read your post on the subject. It would make a great talking point for a new blog entry. You should expand upon that thought. C.

May 29, 2008 09:26 AM
Collette Lee
Tower Realty - Riverside, CA

Wow if we could only get all of those ideas that you stated above to happen.  It is very frustrating dealing with the banks to get the information.  It would be very beneficial to them to speed up the process so they could get some of these foreclosures off their books, as well as extend the foreclosure date if they have a pending short sale.  I agree with you 100%, I hope that your post gets read by someone with authority as well, you make a great point....

May 29, 2008 09:38 AM
Londi Sutton

Thanks for the comment. I am attempting to have these ideas make their way up to the powers that be. I have already heard of Fannie Mae either considering or actually doing some short sale pre-approvals. We just need to get somebody to step up and do it, then it would spread like wildfire.

We have a panel of area principal brokers attempting to make order out of the chaos of the short sale fiasco, but the meetings so far have produced only more chaos. There is no standardized method of processing a short sale, at least within our region.

Can't afford to be shy if you something worth saying...

May 30, 2008 02:41 AM
Karen Cooper
Karen Cooper | Sr Mortgage Loan Originator ! NMLS # 223305 | First Federal Bank of Florida, Ocala, FL - The Villages, FL
Helping Homeowners w/Home Loans in 27 US States

Welcome to AR, Londi. Good info on a hot topic!

Jun 03, 2008 03:52 PM