Short Sale - Want To Bet It Ever Makes It?

By
Mortgage and Lending with Guild Mortgage Co - Oak Harbor WA

I have a customer that I am working with on a short sale. The property is a definite starter home but more is owed against it than it more than the offer. The offer is the maximum the client is able to pay for the property and qualify for the loan at current interest rates. The property has had no offers to purchase, one of the reasons is that it is in a flood zone so there is extra cost for the flood insurance. So it isn't a case of someone trying to steal it just to get a good deal. It is a case of making a reasonable offer for a property based on ability to pay for it and marketability.

All pretty straight forward, isn't it? Well, the offer went into the bank before Thanksgiving. So that means we are over 6 weeks from the offer date. Knowing that the acceptance of the offer would not be quick, being an intelligent loan officer, I locked the rate (to make sure she would still qualify for the loan after we got the accepted offer) for 60 days. Obviously, in hindsight, not long enough get the loan done.

Today, after constant requests for status by both the listing and selling Realtors, we got the answer from the bank holding the note. The answer, "We are backed up and it will be at least another six weeks before we have an answer." Now, that is just asinine. Don't they know that the unemployment rate is 7.2%. Hire more people. That does two things, it gets things done at the bank and lowers the unemployment rate. A win-win situation.

Needless to say, my client is out looking at other property and when and if, the bank makes up their mind, she will be long gone. Stupid is as stupid does. Another chalk up to the inefficiency of the
Short Sale marketplace. I have to ask, is this a way to keep worthless paper on the books as a viable asset instead of taking the write down generated from the sale? Why would they take so long to decide if it was the right thing to do?

My advice, if you are looking to get a good deal, buy a home that isn't a short sale. I could be wrong, but until these are handled in an expeditious manner, they will continue to be a problem. In the time it takes a bank to make up their mind, the interest rates could have gone up, the house could have burned down or the buyer could have found somewhere else to buy, had three children and two of them started college.

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Location:
Oregon Lane County Eugene
Groups:
Realtors®
1st Time Buyers
First Time Homebuyer
Club Chaos
Short Sale and Loan Modification Nightmares
Tags:
mortgage rates
purchase real estate
mortgage interest rates
short sale
negotiating mortgage
bank information

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Ambassador
273,493
Eleanor Thorne
Equity Resources - Cary, NC
Equity Resources 919-649-5058

Amen from the choir!  Keep my fingers crossed for you!

Jan 13, 2009 03:51 AM #1
Rainer
172,065
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Sing it Sister, sing it loud!

Jan 13, 2009 03:55 AM #2
Ambassador
2,879,712
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

I think if you haven't done one as an agent for the buyer it would best meet your buyers needs if you refer them to an agent who has done multiple ones successfully. 

Seems crazy to have the blind leading the blind down a curvy path.

Jan 13, 2009 05:18 AM #3
Rainer
172,065
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Tammy - I think you are right about using an agent that has done it successfully before, but that still doesn't help with the bank will not respond.

Jan 13, 2009 07:41 AM #4
Rainer
55,339
Cecily Parks
iMove Group, Knipe Realty NW, Inc. - Salem, OR

Unfortunately, short sales are a large part of our market and will be for quite some time so we all better learn how to deal with them. That's why it's important for the listing agent to try to get the short approved before the offer comes in. 

Jan 13, 2009 09:23 AM #5
Rainer
172,065
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Cecily - I think that would be a great way to get it done, but do you think the banks are going to go for that? Too many bean counters and not enough people really making the hard decisions. Let's hope we get this working properly soon.

Jan 13, 2009 09:25 AM #6
Rainmaker
99,135
Gerry Suarez Jr.
Jet Home Loans NMLS 1660135 - Maitland, FL
FL Mortgage Guru

Fred,

We have been dealing with the short sales for some time in Florida (unfortunately) and Cecily has it right on. If you are dealing with an accomplished short sale listing agent, they will usually be pushing the bank for an acceptable price as soon as the property is listed. Some banks also respond better than others so that can obviously make a difference. Like everything else in our industry, experience usually holds the key to making things happen. I've been fortunate, or unfortunate enough to have a number of short sale and foreclosure closings under my belt. I hate to say it but foreclosure deals are quicker and cleaner.

I've got a buyer now that's one week behind yours on another short sale deal. I DON'T expect to close until February and I have complete underwriting approval except for my property conditions!

Such is our world these days...

Gerry Suarez, Jr.

Your FHA Loan Pro!

Jan 13, 2009 10:55 AM #7
Rainer
172,065
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Gerry - Experience and persistance and also know which banks will work with you and which ones won't. The hell of it is, that no one benefits from the delay.

Jan 13, 2009 11:04 AM #8
Rainmaker
400,528
John Cannata
214-728-0449 http://TexasLoanGuy.com - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

What company are you working with?  There are many many shorts sales out there, as you know.  The lender is not the one that makes the call in most cases.  The investor has to be contacted.  Im sure you have worked short sales before and are aware of this already.  Anyway, I use to work on the servicing side of short sales and the process itself is pretty simple.  The problem is that most companies focus on the properties with foreclosure sales days, accounts that are seriously delinquent, and then all others.  Depending on where your property sits, its no surprise that it takes this long.  Im not saying its right, but the mortgage companies are all pretty consistent with how they focus their attention.

Hopefully it wont take that much longer.  We have a lender we are waiting on as well.  It has been well over one month since it was submitted and there is no end in sight.

Jan 13, 2009 01:59 PM #9
Rainmaker
116,561
Leslie Stewart
Oregon Licensed Broker with Berkshire Hathaway HomeServices Real Estate Professionals - Stayton, OR
Realtor, ABR, CRS, Oregon Licensed Broker

Yeesh, I must be tired... you made me giggle out loud... With unemployment at 7.2% there must be some intelligent folks out there who need a job and can make a good decision regarding a short sale! 

I guess I am fortunate, I had a counter offer back from the bank in 3 days on a short sale.  They came back just shy of full price.  Unfortunately, the house now has a renter, who is beating the devil out of it and the value diminishes daily.  We countered the banks offer. 

Jan 13, 2009 02:08 PM #10
Rainmaker
643,145
Marchel Peterson
Results Realty - Spring, TX
Spring TX Real Estate E-Pro

Fred, as a listing agent I have done two of these and I personally think they should be called long sales not short sales.  Both took an incredibly long time.  The last one I lost two buyers along the way but the last one that showed up closed in a week.  (You can tell that was a while ago as closing in a week is a thing of the past).

Jan 13, 2009 02:22 PM #11
Rainer
73,686
Pam Pugmire
Silvercreek Realty Group - Meridian, ID
Meridian Idaho Real Estate

Short sales are definitely NOT for everyone, that's for sure!!! 

I think your idea of Banks hiring people is GREAT!  Didn't the banks just get a boat load of $$$ to bail them out?  The gov't should require the banks to hire, instead of them just giving huge bonuses to the bozos who caused this all! 

Jan 13, 2009 04:45 PM #12
Rainmaker
671,751
Sandy Shores FL Realtor®, Melbourne Real Estate
M & M Realty of Brevard Inc. - Melbourne, FL
Brevard County Real Estate, Florida's Space Coast

Hi Fred, I hear your frustration loud and clear. You know it seems that many of the banks are not moving their feet quickly on the short sales right now. They have picked up pace on many of the foreclosures as their are so many on the books, but forget it with some of the short sales - that is not currently their #1 priority!  I feel your pain!

Jan 14, 2009 12:45 AM #13
Rainmaker
178,651
Kevin Vitali
EXIT Realty- Massachusetts Short Sales & Residential Sales - Tewksbury, MA
Helping Massachusetts Home Buyers and Home Sellers

Short Sales and foreclosures can lead to a lot of heartache for buyers.  No matter how much time I tell them it will take they get antsy after a few weeks.  Foreclosures..... we will save that discussion for later.

Jan 14, 2009 12:50 AM #14
Rainer
172,065
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

John - The whole thing comes down to which banks are responsive and which ones aren't.

Leslie- That is one of the problems with make the process longer, too often the security deteriorates over the time it takes to get it done.

Marchel - Yes, "Long Sales" it is from now on. Everybody pay attention. Too bad you aren't here, we can still close in a week, but it really needs to do that to pull out the stops.

Pam - Yes they did and are probably going to get a boatload more shortly.

Sandy - That is really funny because I think they will lose more on a foreclosure than on a short sale.

Kevin - That is the thing about buyers, when they decide to buy, there is a sense of urgency. I look forward to your discussion of foreclosures.

Jan 14, 2009 02:26 AM #15
Rainmaker
2,189,950
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

I see a lot of listings in MLS that say: short sale approved but the buyer walked. I go after those because I know the approval time is shortened to about 2 weeks. And I think the lenders know that. They don't care anyway.

Elizabeth Weintraub Land Park Real Estate Agent in Sacramento

Jan 15, 2009 05:45 AM #16
Rainer
172,065
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

That is good advice Elizbeth. Always thinking, aren't you? Very good for your clients.

Jan 15, 2009 06:31 AM #17
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