Not a day goes by that I don't hear the same question from an agent, "Why would the bank do that to my short sale?" It's really quite simple...BECAUSE THEY CAN!
I could write a book about everything the lenders won't tell you about the short sale process. However, it would be worthless the moment it is published. The business changes every day, every hour, every minute. The lenders, investors, collections agencies, government agencies and everyone involved in this mess are still trying to figure out what happened, let alone what is happening right now.
ANYONE THAT TELLS YOU THEY KNOW THE SECRETS OF DOING SHORT SALES, RUN FROM THEM AS FAST AS YOU CAN! AND HERE ARE THE REASONS WHY...
1) The lenders still are not sure that what they are doing is right FOR THEM. They are constantly changing their short sale and loss mitigation process to figure out what will make the most return on the loss. It will change at the whim of those assigned to review the pipeline disaster that is their loss mitigation. And, time and time again, the changes usually are not for the best. They only further complicate the process. The banks are in the business to lend money. The whole loss mitigation and short sale business is still a blur to them. Think about how absurd this business is...they will forgive $300,000 on the property without blinking, but will kill a short sale for the remaining $5,000.
2) The property is ONLY A WIDGET! The lender will never see or visit the home. The only one that cares about how the home looks is the homeowner. The lenders and their investors DO NOT CARE ABOUT THE FEELINGS OF THE BORROWERS/HOMEOWNERS. They have NO emotional attachment to the property. However, they want to assure that the borrower absolutely HAS an emotional attachment. Remember, those lovely photos in the appraisal are only seen by an underwriter that initially approved the loan. The actual lender does not care for photos and will never see them. THE PROPERTY IS SIMPLY A WIDGET.
3) Lenders and investors make secret deals for billions of dollars every day behind your back! Many agents remain shortsighted on the housing industry, alltogether. They only want to see and believe that their real estate transaction is the only way the lender can move the property. In fact, this is not by any means the principal manner of unloading their inventory. REO's, performing and non-performing notes account for the majority of their swaps. However, those sales are never recorded in public records. Most of them are sold for pennies on the dollar.
4) The housing crisis is NOWHERE NEAR A BOTTOM! The biggest reason for this is the tremendous amount of inventory. And I'm not simply talking about the inventory in the lender's hands. I'm talking about inventory yet to be taken back. There are millions of homeowners living in their homes for free. I have clients going on 2 and 3 years without a mortgage payment. The lenders and their investors are simply overwhelmed by this crisis and they would rather see someone in the property taking care of it. Once they foreclose, they are responsible for all the bills on the house. Only 30% of the lender inventory is even available for sale. Nearly three times the current inventory is pending foreclosure. And unless everyone behind on their payments gets back to work and starts paying their mortgage, the crisis will not be going away any time soon.
Be sure to read Part 2: http://activerain.com/blogsview/1183207/what-the-lenders-won-t-tell-you-about-your-short-sale-part-2
****************
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VERY SIMPLE: 1.75% per transaction or $1,850 minimum!
Contact Me: (561) 337-5789
I would suggest you write that book . . . you'll make a mint!!
Good post, and I wrote a blog recently: "Banks Become Chefs . . . and Cook the Books"
Felix I believe you are correct in your blog but you are only scratching the surface. The banks have no idea what they are doing! I had a house go to foreclosure this week with the bank refusing a $4,000 short sale! This home has been on the open market for over a year at a price of 118,900 and they refused an offer of 114,000 with 4,000 closing costs. This is only one of many examples but it just happened this week. I really think these lenders need to wake up and figure out what they are doing.
Yeah Carla nailed it I think in her book-cookin' post ~ and I'm thinking that the more shorties I do (and I do not seek them) the more I realize I was right the first time - don't do them unless there is a damn good reason to . . .
Great points!! I am referring this post to many of my clients!
Intersting information! Great info to put out for everyone to read! Kuddos to you!
Angie Lowell
Professional Land Title
251-968-2700 Office
Felix,
I noticed your add on the last line, do you see that TRANSACTIONAL FUNDING is a form of fraud to the Bank?
Think about it...
It is so difficult to explain this to the average Joe and have them accept it as accurate. It makes no sense, it just CAN'T be how it is...
Great post, especially #4. I have friends, clients, acquaintances and so forth living for free too and the banks aren't moving on them at all so we know there are waves of foreclosures on the horizon and the numbers are huge. The faster these get foreclosed on and purchased by paying citizens the faster this market will cycle through. I just can't believe people think this is the bottom. How could it be?
Ben Sanderson, how in the WORLD is transactional funding a fraud on the bank? Before you go around crying "Fraud!" please explain yourself.
My experiance with over 72 short sale approvals is the lender do know what they are doing. In fact, I believe it is not in their best interest to complete some short sales as SERVICERS for the investors. I have had conversations with VP's of several servicing companies and the lead attorney for Fannie Mae. I think as agents we need to work these short sales harder and smarter. I also was told that some reasons for failures on short sale approvals include huge loss mitigation fees, people trying to flip short sales and homeowner failure to provide requested documents. I have had some good experiance with the servicers/lenders I work with on a daily basis. Yes this is not easy and maybe some want this to be as easy as traditional sales.
It's funny that I just read this post. I entered into my first Short Sale back in mid May and I figured it would be a 2 month ordeal. Today I got word that the lender has accepted the offer, due in part, that the owner(s) is serving in Afghanistan and they cannot foreclose on him due to the Soldiers and Sailors act. I am new to short sales, but this is definitely a learning experience. Thanks for the post Felix......
Great post. It is truly mind boggling. Had a friend try to short sale a house. They worked with the bank for 6 months to get them accept a purchase agreement at $445,000. Bank refused to acknowledge that the offer was ever received. Three months later the house sold for $339,000. The bank lost $106,000 and waited an additional 3 months. Makes no sense.
Liked your energy level! Like Damon I have a similar situation, its all so frustration; they will let a big fish go and kill the little ones. My guy owed $188,000, we have a $164,000 cash offer with assesments($9,000) being paid by the buyer; the bank has not moved on this since June 7. Frustrating - Frustrating - Frustrating
Good post, as a home stager, I feel for sellers, and those poor homes that sit vacant. This is a critical issue, thanks for addressing it.
www.stagingsecrets.net
I would like to point out a recent discussion with Fannie Mae and a FAR article. FLIPPING SHORT SALES IS CONSIDERED FRAUD. FLIPPING SHORT SALES IS CONSIDERED FRAUD. Some disagree strongly but Fannie Mae and a various title insurance companies consider this fraud. Most of my short sale approval letters state "no sales within a 30 day period".
WOW! Thanks
Excellent info. Thanks Felix. I watched a program on CNBC last night where some top guy at ReMax and also at Coldwell Banker were both interviewed. One of them said they are going in to talk with Congress memebers to tell them they need to get the banks to get their act together and figure out a common sense and streamlined way to do Short Sales.
The other said they were lobbying to get a $15k tax credit for any one buying a house, no income or first time limit, as this last one has worked so well, but now we need to shake the move up buyers out of the trees!
Both great ideas, I think the later has the best chance of moving forward though.
Diane Wolta, Denver, CO Your Castle Real Estate
Great post Felix,
Although not a realtor, in working with this industry from several other angles, I agree. We are far from bottom.
There is a great deal of properties that are "hidden" from view that are non-performing but not currently in foreclosure. Supply and demand is a simple law of economics that cannot be ignored.
There is a great deal of opportunity in more creative transactions (that although completely legal AND ethical) are being overlooked right now. The financial industry is simply not working right now. The actions of the Federal government right now will have a huge negative impact as well. The "stimulus" is not working to move this real estate market forward.
In my opinion, if the rebound in real estate is real then we will continue to see improvement even after the summer buying is over. If numbers start to decline substantially after August....watch out.
So a question to the group. How do you buy and sell real estate WITHOUT the bank and WITHOUT cash-only deals? That is quickly becoming the reality is it not?
Great post! I would add a #5, Banks spend the time to look for assets....Just because the client wants to walk away short, doesn't mean that there aren't any assets. A trusted friend of mine that worked for a larger bank in the area doing foreclosures and shorts (even before this mess) made finding 'hidden' assets his priority. It pays to prep the client and let them know that they have to be very transparent and the Bank will not act as a charity, or the pain may really drag out.
Deja vu!
I felt that had I written your article I would have expressed the exact same frustrations! Agents (and participants) need to understand that the 'rulebook' such that it is, is at best just a general guideline that constantly morphs from minute to minute -and deal to deal. As they say in investing "...past performance is no guarantee of future success!" Not a business for the non-committed or impatient!
I read what is considered fraud is not an investor buying it then flipping it but them having the seller sign the deed over and the investor finds a buyer at a higher price and has a simultaneous closing and pockets a nice chunk of change.
Great Post, thank-you
Felix,
I noticed your add on the last line, do you offer any funding outside of flordia??
Thank you for the post.. I've been working on a short sale for my buyer since March and we still haven't gotten the full approval. Very frustrating!! Your information is very true and useful, thanks again!
One must comply with the lenders requirements and right now one of the only banks putting the 30 day clause in is Bank of America. BY all means when dealing with Bank of America one should not re-sell within 30 days.
If you could point me to Fannie Mae's article, not the association of realtors article, I would be very interested to know what their requirements are. Fannie Mae has told me directly, during a recent conversation, that they were "thankful for investors in this market because many properties otherwise would never sell due to their condition".....she also acknowledged that most of those properties would be re-sold in a short time period.
If the lenders stop doing BPO's on their own and start accepting "off the street" values for determining whether to approve a short sale, I'd say there would be more of a case to commit fraud by not disclosing the accurate value. Otherwise, the banks are free to accept or deny any offer that comes their way and BY THE WAY - highest and best is not always best when you are a lender/servicer - CASH speaks volumes and many investors are cash buyers.
There are certainly people out there treading on thin ice with disclosure and properly documenting their short sale transactions, but the actual FUNCTION of flipping a short sale is NOT fraud. It's the person who lies to any party involved in the transaction that is the guilty party.
Facinating and terrifying at the same time. You think, it is only going to get worse?
I'm always interested to know where some stats come from. Could you tell me your source for, "Only 30% of the lender inventory is even available for sale. Nearly three times the current inventory is pending foreclosure." BTW - I've never had a short not get accepted eventually, then again, I've only done about 10, on both the buyer's and seller's side. I think complicating the offers in any way - such as having a 'middleman' buyer, and a double closing, is more likely to see it fail.
I too feel Felix is more correct than he knows. Geez, if we had a business and were to manipulate the books the way banks are being allowed to now we'd all be wearing orange jump suits and having our meals and housing being taken care of compliments of the feds! As much as we don't like it or want to believe it, in the big picture look at things there is just no motivation for the bank to take a short sale. Until the banks are required to report the non performing assets (foreclosed properties and the related expenses for acquiring them) to their shareholders in the same way they show other losses or report to the shareholders the non performing notes in the same way they are required to report other bad investments nothing will change. Personally I believe negatively affecting their bottom line is the only way to get their attention. Do this and we would see this problem correct itself almost overnight.
"ANYONE THAT TELLS YOU THEY KNOW THE SECRETS OF DOING SHORT SALES, RUN FROM THEM AS FAST AS YOU CAN! AND HERE ARE THE REASONS WHY..."
So, are home sellers in need of a short sale supposed to go to an agent who says he/she knows nothing about how to short sale a home? There are no secrets, but there is a process. Home owners do need to fnd out what experience a brokerage has with short sales before they commit...
You matter of fact and straightforward thoughts really made me think.
Excellent post! This is troubling because these Banks are not transparent and they receive Gov't money. If they would cooperate with the short sales and get the inventory into good home buyers hands it will create a positive effect on our market and help the housing.
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Great article Felix. To be sure the problem will continue to worsen until Congress changes the laws. It's still far too easy to get a loan with bad credit. Even as soon as one year after a bankruptcy.
Great post I find that no matter what the offer we give the banks counter. We had one where it was in need of quite a bit of repair and my buyer got estimates and factored the estimates into the offer price which was above the asking price the bank took our offer but made it as is. We were floored, both the listing agent and myself tried to explain to the REO guy what we were looking for to no avail. The deal busted and to the bank it would have been a full price offer. They later sold but at a loss of over 15000.
I just wanted to add a comment on this matter and the stupidity of the lenders in this matter.
While I believe in due diligence on the banks part this same ridiculous process was occurning in the early 1990's when I was hired to help close banks for the FDIC through a subcontractor.
Many banks went under because of all the REO properties they got stuck with and could not unload.
It seems that the mortgage lenders have NEVER learned a lesson from the past on loss mitigation.
So we have mortgage lenders bleeding real money and houses staying empty.
What a formula for good business practices.
Remember agents and brokers, YOU MUST STOP SEEING THE SHORT SALE AS ANYTHING MORE THAN A SALE/SWAP OF INVESTMENT BY THE BANK. The bank/lender/investor does NOT care about that property. They only care about the return on their investment, which is the contract between them and the borrower.
The property you are selling is a tangible item and only served (and the key word is served) as the collateral on the investment. However, THE BANK TOOK A RISK ON THAT INVESTMENT AND IT NO LONGER SERVES ITS PURPOSE TO A WHOLE. The contract the borrower signed with the bank is a RISK FOR BOTH PARTIES. Therefore, they must do what they can to recoop the LOSS ON INVESTMENT. You will never hear an investor talk about the property. They only talk about their investment.
YOU = Tangible, BANK/INVESTOR = Intangible
Also, for those of you who don't understand the business of flips, swaps and transactional funding, just know that it has been happening behind your backs for years. Simply bring that to the retail side of the business. It may sound as strange business to you all, however, the lenders know full well when an investor is buying the property to sell it at a profit. Just as the majority of their inventory is sold to investors without the real estate industry ever knowing about it.
Firms like ours buy and sell millions of dollars in inventory every day and you never know about it. Transactional funding is used in the secondary market everyday and the real estate agent/broker will never know about it. You only see that property when we are ready to sell it to the general public and need the expertise of a sales professional.
Fannie Mae, Freddie Mac, HUD and all government sponsored institutions have NEVER said a flip is illegal. You are mistaking investment flips for mortgage fraud flipping which is very illegal, and is to a small degree the culprit of the overpriced market that ran amok here in Florida.
In fact, the law is quite clear that once a purchase has been made, what the new owner does with the property is his/her business. They may sell it in one hour, one day, or one month. I know of several lenders/servicers that have started placing the 30-day clause on their approvals. Those will slow their short sales for a while, and like they've done before, will change the requirement. However, it would never hold up in court as the law on property is quite clear. It simply shows you the ignorance of the bank, lenders, and servicers.
Finally the BPO/Appraisal completed by the lender for your short sale IS ONLY AN ESTIMATED RANGE AND NOT AN EXACT AMOUNT. The agent/appraiser never gives the lender just one figure. If the lender offers you an amount, I can promise you it is the top of the range. In fact, if you are paying any more than 90% maximum of the BPO you are paying too much for your short sale and doing a disservice to your client, as that property and the surrounding area will continue to drop in value and should be taken into consideration when making an offer to the lender.
AGENTS: STOP TRYING TO MAKE REASON OUT OF CHAOS!
Very interesting information! I know in our area there are a lot of misunderstandings of what is legal and what is ethical. BUt instead of talking with who is directly involved so many are gossiping and talking amongst themselves...and assuming they know what is going on rather than talking to the right people involved....thus they have incorrect or incomplete information that is being spread amongst Title, Lenders, and consumers. I have been accused wrongly of many things in recent months...as I watch consumers houses being sent back to the bank over and over. It is very sad for sure!
Deborah
so very true and I have seen this.
I good not agree more with you. Unfortunately these types of deals make up 50% of my offices business so although I don't understand what the banks are doing, it is a nessecary evil. As long as you are on the subject of Lenders...can someone tell me why 3% of the realtors in this country get to list 80% of the bank owned properties?
Insightful points made.
I'd like to add my own points in regards to your 4:
•1) It seems to be accurate that the lenders are not sure what is right for them, and the changes we see don't seem make much sense either - to a reasonable thinking person. The banks are in the business of lending money - correct; but even more important is that they are for profit! They need to make money at this. It is absurd how bad they are at managing the short sale process, and their willingness to take a $300K loss and conversely kill a deal over $5K. Any other business would self-correct very quickly - heads would roll!
•2) Correct about their view of the property as a widget. It is a product and therefore no reason to have an emotional attachment, other than the bottom line. However, the consequences, emotional and otherwise, to the buyer and homeowner are all too real and frustrating, plus the bottleneck to commerce.
•3) Ah, big business and their wheeling's and dealings that us little people don't know about and never will. Not sure if it's fair to call it shortsighted; agents are just trying to hack out a living, like everyone else. It would be informative to know more about those secret deals and how it works, but does it help much?
•4) Seems to make some sense that the lenders would rather have someone living in the property, and expecting it will be taken care of. But, the lenders should hire more people to GET THE JOB DONE!! What ever happened to the business mantra "Get the job done - whatever it takes!"
Felix,
I think this is a good post. But I do think buyers/sellers should seek someone who has experience with short sales. Many of the issues with short sales may not be avoided but you should know some of the things that causes the delays and challenges to a successful short sale. For example: is this the property owner occupied or investment property, is the mortgage current or in default, who is the investor? All of these items impact the speed and potential success of a short sale.
With this information you can let you buyer/sellers know what kind of timeline they can expect. Information and communication on short sales is critical!!
Ken
Southern Calif
Great Post. I will have my clients read this. It is what I explain to them.
Truth is...we all wish short sales would go away, don't we. Not going to happen for a while.
What bugs me, as an agent, is that a short sale is more work for less pay. Lenders force us to take a commission reduction in many cases. I educate my buyers on the time and difficulty and expense involved in buying a house that is a short sale. If the buyer wants to buy the property anyway, it is because they think the price is attractive. I make sure that they understand that part of this attractive price is a fair wage to their agent. Also, that the total expense to them may involve additional cost to pay off a recalcitrant 2nd lender who is willing to let a house go to foreclosure rather than take a relatively small additional loss on top of the loss they are faced with on their loan.
Not for the faint hearted but two recent short sales that I closed made first time home owners very happy.
Write it. I'll buy it!
I agree... the banks think that houses are widgets. They are, they are a commodity. A 3/2/2 has a value based on other 3/2/2's in the neighborhood. Isn't this how buyers of a property should think as well? It keeps them from overpaying.
I've commented before that banks holding on to inventory are doing so as not to depress an already depressed market. It is the same way a mutual fund that is looking to sell-off holdings of a particular company will not "dump" all the shares it owns at the same time. Doing so will cause a dramatic decline in share price. It is done systematically to impact the overall market as little as possible. Only this way will maximum value be realized. Banks are a business with goals and metrics to achieve, they are not your "friends" they are not your "partners", whoever told you they were lied to you.
Not to be the wet blanket, but can you explain more about your "clients" who have gone 2 and 3 years without making a mortgage payment. What kind of clients are these and did you counsel them to take this approach to real estate? Are you saying that in 3 years they couldn't come up with even one mortgage payment, or did they just decide "to hell with it, let someone else carry my water"? Sorry if I sound condescending.. I'm just not familiar with that mindset. I guess if you know you're out of the house, why bother.
I completely agree - whenever I hear an agent claiming they have the 'back door' into the banks and all the major decision makers - I know that they are speaking to hear their own voice echo back to them. An agent is a master facilitator in a short sale - the 'banks' make the decision - when I hear agents saying they negotiate for their clients and always close short sales - like you said I know it is time to start lacing up my running shoes -- thanks for the post!! Good job!!
I didn't get all the way through the comments, but read many. I find it very interesting that I am hearing realtors saying lenders don't know what they are doing or whatever is going on. I know and agree it's frustrating, but I've also heard a lot of bad stuff from lenders about realtors. I mean, come on, we're all in this together. I think a mindset change might help, but that will never happen. If these lenders truly didn't know what they were doing, I believe they would accept anything no matter what. Does anyone really know everything about someone else's job? It's definitely an interesting time, but I guess everyone else is clueless, in the minds of certain people.
If there was an actual, streamlined process that banks used with short sales it wouldn't be such a nightmare. Unfortunately, they've been pretty inept to this point so it's not something I'm holding my breath waiting for!
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Felix,
I agree with your assessment of the short sale process with these banks. I am currently working a short sale and the appraisal was done on July 8th. The bank still has not acknowledged that they have the appraisal. The appraiser said they returned it to the back by July 14th. So, at this point they have not assigned a negotiator to my client’s loan. I have sent two offers to the bank since June and both buyer have since withdrawn their offers because the process takes so long. This property has had at least 40 showings. Short sales are not for those buyers with limited time or money. Every bank seems to have a different process. As Felix said, any agents claiming to be an expert into the banks are speaking to hear their own voices.
Bobby Nathan
Ambrose Real Estate
www.BobbyNathan.net
Some good points here, but I would be interested where you came up with the claim that only 30% of the foreclosures are on the market. I've heard a lot of stories of what's to come, but that would seem to be the most daunting claim I've heard. Please divulge your source.
Very good points. I wish all Realtors were on the same page. It seems like clients get conflicting information regarding foreclosures, short sales etc.. and in the end don't know what to believe. In the end they believe what they want to believe but it sure is nice to see truth's like this being published.
I have looked through a few real estate notes and can't find anything that spells out what is supposed to happen in a short sale situation. It is as if the short sale process doesn't really exist. Maybe that is one reason why lenders do not handle them so well.
Larry,
youHuge.com
Felix the nail has been hit on the head! Especially with the "they'll lose $300000 but cancel the deal for $5000". WTF is going on with these banks? Why don't we regulate them?
Brian, the source for the stats is RealtyTrac. I don't want to push a membership...lol, but they do offer the highest quality statistics on the industry and are used quite extensively.
Hope that helps!
Excellent post. Similar to the 1900's vintage REO markets, we are in unfamiliar territory on every side of these transaction. The banks strategies change weekly as the market reacts, government intervenes, and inventories mount.
What's exciting is the opportunity to improve the process, as a trailblazer. for those of you who've jumped in to help solve problems it's a chance to be part of something larger than yourself. To be part of a movement: wecome to the event!
http://tinyurl.com/kpewlq
to continued success
Allan S. Glass
http://allanglass.featuredblog.com
From personal experience I know that #4 is absolutely true. I have a friend who quit making payments and moved out. Two years later she moved back in since the home was still in her name.
Felix,
Great article.. I have done and attempted to do several short sales with some of the larger banks and it is like pulling teeth. My broker specializes in REO or Bank Foreclosed homes and according to him the average REO costs the bank about $30K not to mention the loss of the loan. Many times the property sets vacant for months while the bank pays insurance, taxes and they take a risk of the property being vandalized. This is an example of what happens when businesses get too big. The right hand doesn't know what the left is doing.
I look forward to more of your blogs....
Allen Deaver - allenwdeaver@yahoo.com
Great post! I like everyone's comments. I would like to share that there are a handful of questions to consider when doing a short sale which can help set the expectations on the length of time it may take to facilitate the sale of the property. Perhaps many of you already know this but hopefully there may be something you hadn't considered.
First and foremost, has the listing agent contacted the bank to get an authorization letter? Many listing agents will post their short sale on the MLS and then start the short sale approval process with the bank. Which means if they haven't even prepared the property, you can bet that you will encounter long delays from the get go. Are there mulitple liens on the property? Some properties have a first and second mortgage on them so not only will you need to work with the main lienholder but you'll have to claw your way with the second as well which could be with a totally different lender. Are they're any offers on the property? Banks want to get the most money for these short sales. So, rather than accept the first offer despite how close you are to their asking price, they're taking their time in responding because they want to see if any more offers will come in. Some offers on short sales come in low because buyers get the impression they're able to get a steal on that short sale property. However, handling it in that manner will cause delays in your deal so be sure you get your client to making their highest and BEST offer.
Has the listing agent submitted a hardship package to the bank? This is crucial because the loss mitigator will be reviewing this and if the package is incomplete in any way, they will immediately kick that back to you and now you're looking at added delays for your deal. Which leads me to say has a loss mitigator/negotiator been assigned? If not, you need to find out when. Has the BPO been ordered or completed? If not, more added delays for your deal. Has a bank acceptance letter been received? As a listing agent, you'll need to work very closely with the bank in order to determine what amount they will be willing to accept. You sometimes find these listings on the MLS where it will state that the bank has agreed to a specified amount for the sale of the property. So, you shouldn't be negotiating the price unless you want to see your offer completely rejected. The bank knows they'll take a loss on the sale of the property so the amount they've agreed to is where they're most "comfortable" to sell the property at. Find out how long the lender will give to close the deal once an offer is accepted. Because the lender will keep to that closing date. If you fail to meet it, you'll lose the deal. They don't take kindly to extensions. And, you should also find out if the lender may charge you a fee in the event you can't close on time. Some lenders will as a form of incentive to get you to meet their deadline.
If done right, short sales can be very lucrative for your business. I know it can be difficult, frustrating and time consuming but today's market requires us to reinvent ourselves and how we do our business. I agree that there should be a better way to do this but for now it is what it is. We can either steer away from it and only look for those "traditional" deals which are getting harder to find these days since lenders are tightening their qualifying guidelines, or we can embrace this change in our marketplace and increase our knowledge about short sales and distressed properties and become part of the solution while earning our commissions along the way.
If we were just entering real estate school and part of their teachings were focused on short sales and distressed properties, we would be fairly okay with this now because we would have been prepared for this in advance. But for many of us who went to RE school a while back it wasn't part of the chapters and now we're left to learn about this all on our own. Right now, distressed properties will be the norm with a few traditional ones thrown in here and there. However, being a well rounded agent will promote your business in a way most others are not willing to tackle. And because of that your portfolio of prospective clients will double. As will your commissions. Make the most of what you got. A little of something is a lot better than a whole lot of nothing.
Good info, thank you!
Great Post, I avoid Short Sales if all possible for the reasons you mentioned.
Ginny TheRiot
www.GinnyTheRealtor.com
You're very welcome Barbara and Ginny. I also forgot to mention that when short sale offers are presented and your client fails to put their best foot forward, the lender will basically reject your offer and move on the the next one so don't be expecting a counter offer. But, if you happen to get one, fantastic! Good luck to you all!
I received two short sale listings from a client/investor 2-3 weeks before their foreclosure sale date. By the time, I had authorization in place to talk to the bank, I only had a week and half to get a contract on it. The bank would not refer it to the short sale department without a contract, and would not hold off foreclosure without some form of payment arrangement. Since the owner could not make any payment, both were sold to foreclosure. The banks used to hold off if you could show the property was listed. You never know what they are going to do anymore.
I don't show short sales to my clients/buyers unless they are investors and can afford to wait for an answer- or never get one. Also because of the Hidden Costs (transactional funding fees and others) that are usually passed on to the buyer.
Great Blog! Now it seems that the lenders have sent the short sale process to someone else who is just another roadblock. Can't get lenders to comment on whether the client can do a short sale until we get an offer. So we can do all the work and get an offer and then get refused just because the lender just wants to put the whole thing off until later. This whole think is like living in a Kafka novel.
"a concerned Realtor" wrote: I would like to point out a recent discussion with Fannie Mae and a FAR article. FLIPPING SHORT SALES IS CONSIDERED FRAUD.
Again, a wholly baseless rant with no corroborating evidence or links to credible sources. Fraud my big toe.
How do the 10/31 exchanges fit into the investment flips. They are required to buy another within 30 days. They can then buy and sell again. Perfectly legal.
I do agree that Florida has not seen the bottom but do you think the prices will go up a bit come fall and winter then go way down next spring and summer? Or do you think there will be a steady increase of inventory resulting in a decrease in asking prices?
Lenders can be rather obnoxious on these issues. In response as to not being able to get lenders to comment on a short sale unless an offer comes in, if the BPO or valuation hasn't been completed, they don't know the market vaule of the property to base their decisions on so they'll force agents to get offers in as a starting point and once they do get the value of the home then they'll sift through the offers that came in and accept the one that either comes close to, right at or over the amount they are looking for. And, unfortunately as part of the short sale deals that are working can fall through should the lender decide to do so. Again, the lenders are weighing their odds on if a short sale or foreclosure will be in their best interest that will garnish the most return. If foreclosure is the better call for that particular home, then it'll go into foreclosure. One thing to keep in perspective is that 80% of short sale deals fall through. Which means they never close. So, if you have a buyer looking for a deal and short sales are in his best interest, ask the questions I shared earlier to the listing agent and you'll immediately know if they're an expert (or claim to be) in short sale processes or at least know what to do in order to move the transaction along. Because if they don't know what a loss mitigation representative is, you're better off looking for another property for your client.
I recently listed a short sale through a loss mitigation company. It went to auction and was sold to another bank that I think the Loss mitigation company introduced the buyer to the lender. Of course I didn't get any commision and wondered if I should have. Anyone know about that?
I'm not Ben but i would like to say this is how banks think "they can charge whatever they want but we can't" if they want to call an apple fraud it is fraud when it comes to short sales..., there are no rules they make it up as the go to fit the situation I even had the lovely experience with a bank that was eatin up by B Of A saying This loan is conventional, fannie mae is a goverment like FHA. (we all know conventional means it is either fannie or freddie and meets these guidelines to be sold on the seconary market) therfore becuse it is conventional it is not elgible for the garrented commission from fannie mae oh no i hope they don't read these post cuz for sure i'll be blackballed
Felix,
Good post. But, it's been awhile since we have truly had any short sales in Toronto. Our market now is higher than it's ever been.
There were only a limited number of power of sales at the height of the recession.
Brian
All great stuff. I am going to use this for my customers.
One concern, the FLIPs are the Simo closings without the Lien holder knowing is the Fraud they are talking about. When the investor is the filter finding the end buyer and the agent is listing the house for the investor/trustee that deosn't own the house. Hmmm...I call the FAR legal hotline and they said get as far away from that as you can.
The Fannie May Fraud Report on Simo Closings.
I hope this helps some of you!
First of all, I would like to say that the comments of Felix and Michael are right on. I have done short sale flips. They are not fraudulent. As long as you disclose exactly what you are doing, there is no fraud. All my contracts state that I am going to flip the property. Therefore, the short sale knows exactly what is going on. If they do not like it, I move on to the next deal. However, I have closed many short sale flips disclosing to everyone what I am doing. Many lenders do not have a problem with it.
If you are flipping a short sale property and reselling the same day you buy it, the best technique is to use a transactional lender. Essentially they are lending you the money for a matter of hours. What happens is that the short sale seller, lets call him "A" sells you the property, lets call me "B". I then turn around and sell the property to an end buyer, lets call him "C". So you have an A to B and then "B" to "C" transaction. The transactional lender will give me the money to fund the "A" to "B" transaction knowing they will be paid back immediately after the B to C transaction closes. That is why they are called a transactional lender. They do not care about the borrowers or the property, they just have to be convinced the transaction you are setting up will work. Some times property flippers try to skip getting their own funding. That is fraud. They will try to use the proceeds from the B to C transaction to fund the A to B transaction. If your end buyer gets an FHA loan, you have to hold onto the property for 90 days. FHA requires 90 seasoning, which puts a delay in flipping.
As Michael said, short sales can be frustrating and time consuming, but with persistence, they can be done. I would encourage realtors not to shy away from them. I have helped realtors obtain short sale approvals apart from flipping deals.
www.longislandmortgagetoday.com
Per The Fannie Mae Mortgage Fraud Program
Mortgage Fraud News: July 2009
Preforeclosure Sales Abuse
Fannie Mae has become aware of a new variant of property flipping involving preforeclosure (short) sales.
The trend we have observed involves a perpetrator who submits a short sale offer to purchase a preforeclosure property at a price less than the current indebtedness. This perpetrator locates a second buyer, who may not be arms length, to purchase the property at a higher price simultaneous with the short sale or in rapid succession, concealing the second (higher) transaction from the lender approving the short sale. The second transaction may involve a new loan based on an inflated appraisal.
In some cases, the perpetrator convinces the homeowner to deed the property into a land trust, with the perpetrator (or his accomplice) as trustee.
Example:
We have been advised of instances where the perpetrator is the listing agent, and the agent presents his/her short sale offer as the "best" offer, even though the agent has received other, higher, arms length offers.
As this trend has gained momentum, some title companies have begun to refuse to close the simultaneous transactions. As a result, a second version of this scheme has evolved in which the closing involves only one transaction: from the homeowner to (the perpetrator's) ultimate purchaser. The perpetrator is paid out through or outside of closing. Some of the tactics observed include a second mortgage filed by the perpetrator against the property immediately before closing, and inflated real estate commissions.
These flips can potentially be identified and thwarted by either the pre-foreclosure lender or the lender financing the second (inflated) transaction. Fannie Mae recommends the following best practices in assessing preforeclosure sale activity:
Confirm the ownership status of the property:
oIs the title held in trust? Was it an allowable transfer? (Servicing Guide, Section III, Chapter 4)
Review marketing efforts such as the MLS listing
Condition approval on disclosure of all contracts pending on the property prior to mortgage payoff
Validate the purchaser's loan approval, deposit and funds to close
Condition approvals for preforeclosure sales on review of the final HUD-1 Settlement Statement
oReview the sales price and payouts against the purchase offer
Fannie Mae recommends the following best practices to avoid financing inappropriate property flips:
Validate the purchaser's deposit and funds to close
Use reliable appraisal valuation sources
Review the final HUD-1 and do not allow excessive seller concessions to be paid to the purchaser
Question excessive sales commissions
Validate that the seller holds clear marketable title to the property
Fannie Mae partners with a wide variety of industry groups, with law enforcement, and with our customers in mortgage fraud education and prevention efforts. If you have any questions or suggestions about this information, please contact Fannie Mae's Mortgage Fraud Program or your Customer Account Manager.
I believe Lenders/Banks are holding on to their money. They are reluctant to close on a foreclosure because then they have to pay out. They want to hold on to their money for as long as possible. Obviously they don't care about the poor seller who is about to be foreclosed on. Short sale properties spiral down fast when no one lives in them to take care of the home, espeically during these hot summer months if no A/C is on i.e. mold and mildew grows. These homes are subject to petty thiefs who break in just to get what they can i.e. appliances, cooper pipes, HVAC etc.
AND what about all the sub prime loans with ARMS that are about to balloon soon? We have definitely not seen the end of this. With properties appraising for less than the loan amount I believe we will continue to see more and more foreclosures. My questions: ?why is it taking the banks and govt so long to "catch on"? Until the sub prime loans get off the books this whole mess will continue. Recession is inevitable unless the government figures out a "bail out" for these poor folks stuck with homes and loans they can no longer afford......... Thank you Felix for your great insight. Keep up the good job and keep us posted!
KIM, here is the correct link direct to Fannie Mae news:
https://www.efanniemae.com/utility/legal/pdf/fraudnews/mortgagefraudnews0709.pdf
However, I will word this as politely as possible. On my blog I would appreciate it if you do not call other's work fraud unless you are completely prepared to be called out for it.
Good post Felix, Thanks for the information.
Can you link to what Fannie and Freddie say about flipping. I'd like to read it in context.
thanks !
Well, I'll throw in my 2cents on the current tussle. On the Fannie contract my buyer signed today there is 3 month moratorium that the buyer cannot transfer the property to anybody for any reason. So I guess that's how they settled that BUT ....
What does that have to do with your post? I don't like the verbiage you used of agents being shortsighted. They only see the problem close at hand and work for the owner and the bank simultaneously. You work in short sales so who do you work for in the transaction? I'm confused which side of the couch your sitting on guy?
Felix, RealtyTrac stats are a joke depending on how foreclosures are categorized by state, judicial wise. There are 3 different steps to foreclosure in Illinois, and each house is counted 3 times here. Wow that's cooking those stats! Do a check of a foreclosure by address and you'll see what I mean.
Lyn,
I am an investor. I represent myself, my investors and my firm in not just a short sale transaction but all our real estate investments and transactions. Along with other services, our firm offers transactional funds for a variety of real estate transactions, short sales being one of them.
The point regarding Fannie Mae was raised by another individual and has to do with a "new variant" of property flipping dealing with a non-arms lengths transaction. AN IMPORTANT NOTE TO ALL, FLIPPING IS NOT THE ISSUE IN QUESTION, RATHER AN IMPROPER AND ILLEGAL FORM OF IT.
There are borrowers that are purchasing back their homes after the short sale for much less than they owed. The so-called investor is faciliating the transaction and therefore committing mortgage fraud. In addition, the homeowner is convinced to deed the property to a land trust with the perpetrator as the trustee.
Great post! Had one successful short sale, seller was so grateful he lost the house to a successful buyer but lost all equity, fortunately the house wasn't destroyed either. A good sale. But for many its a nitemare! I always warn buyers to put on their Big Girl or Big Boy panties when going in for a short sale. Once the process is described as pullinng yourself through a knothole backwards most usually opt out! Even Investors have little patience for the shennagins lenders and assett managers are pulling these days, but can you imagine working the stacks of paperwork? Can we get a statement from one of these actual Assett Managers? Anyone out there?
thank you Felix! I'm a broker here in South Florida and I can tell you we know what FRAUD is! And having the homeowner sign over the deed or create a trust is a red flag in our office. We also have had our title agent and attorney do presentations so that our agents understand that most flips are not fraudulent.
We have so many condo's that are in foreclosure here and the investors doing short sales is most of the business. The investors that "flip" or do "simultaneous" closings are the ones moving the market.
thanks!
I have been a lender since 1995. Back in early 2005 I saw the lending standards lowered to scary levels. Peter Schiff called the mess years ago when nobody beleived him. We will be dealing with this problem for many many years. The people that I have talked to know that they can stay in the home for several months without eviction. For those that want to stay in the home and lower their payment and interest rate then the lenders should not appraise the property to refinance. They should be happy that someone wants to keep paying on a depreciating asset.
Great post...altho Item #4 is the last thing one wants to hear! At least here in GA we don't have the people staying in homes. We are a non judicial foreclosure state...they can simply sell it on the courthouse steps when you are behind on your mortgage.
I have a short sale that the listing ends on Friday...and it's going to foreclosure. While I know I probably did not do all the right steps, every time I tried to get the bank to do any of the steps you mentioned, or that I read in comments, the reply was always, "We will not do anything until you send in an offer!"
So off to foreclosure it goes....how stupid is that!
Whew! Lot's of comments on this one. Good post, Felix. I'll wait for the book!
Very informative and insightful. The Truth hurts but it is what it is and someone had to say it. Thanks Felix.
Hey Thom. I fully understand where you're coming from in terms of the lender not being cooperative. It can be frustrating when you're trying to help them but they don't seem to be all to receptive in wanting our help and shy away when we ask for theirs. Which is why doing short sales isn't for everybody. Short sales requires persistence and patience and it took a long while for me to feel comfortable wanting to do them. But for now they're here to stay so we may as well get ourselves into the game rather than watching from the sidelines.
Consider learning this trade as a form of continuing education that will only strengthen your skills and broaden your client base.
Felix, you apparently opened up a can of worms, judging by all the varied responses I read above. You have certainly stimulated many challenging thoughts, opinions and remarks. Good for you!
I am a private investor and my business partner is a CA. RE Broker - both AR Members. We are associated with a large group of short sale negotiators, ex-loss mitigators, RE Attorneys, private investors, and work with our own Title Company.
We have been offering any Realtor with one or more short sale listings (Nationwide) to buy the latter after we evaluate the deal to ascertain that we could possibly negotiate enough of a "spread" to be able to do the following:
1- pay our seasoned team of seasoned negotiators, Attorneys, first closing costs, and various other liens and debts on the subject property; 2- Take over all the negotiations at NO COST to the listing Agent; 3- Offer the listing Agent a Full 6% commission at closing on the listing end (instead of the pallid 2.5-3% usually paid by the lenders) PLUS another 3% at the buying end, should the Agent also care to bring us a qualified end buyer. This potential 9% total commission could comfortably buy a couple of extra lobster dinners, wouldn't you agree?
To thusly eliminate endless, wasted hours of sheer frustration, waiting for lenders' call backs that never come, and of all the other irritants mentioned throughout the comments above, we are proud to have become instrumental in SAVING Agents precious Time they were now able to render profitable by doing that which they were trained to do Best: List and SELL Houses!
And, at the same time, do our share in helping our economy by moving properties back into circulation, helping the real estate market regain its momentum while (finally) rewarding Realtors with just, professional level commissions denied them by ungrateful lenders!
Perhaps this bit of positive news about what has become a thorn in many Realtors' sides: negotiating short sales ad nauseum will also serve to help you, my fellow AR Members, cheer up, regroup and overcome the stressful short sale monster! :o)
Cordial best wishes to all!
Jacques Girard, Ph.D. (800) 701-1924, Ext. 7
Has anyone had a negotiator verbally agree to a set price ($136K) then to have the 2nd stage negotiator up it to ($147K) and again verbally agree to the sales price, then at the last second before sending in the short payoff to title uping it again to ($163K). We agreed to the $147K since the properties market value is $155K. But we told the them to fly a kite on the $163K. We are not interested in paying above market value. This is the first time I have had them keep uping the price after a verbal agreement. Is this happening to anyone else? Thanks, Brian
A lot of people don't seem to understand the concept of a bank forgiving $300K and then killing a deal over an additional $5k.
Banks can and do buy insurance on mortgages behind the scenes. This has *nothing* to do with PMI.
If the bank's net proceeds of this insurance plus what they feel they can get for the house in foreclosure exceed the net proceeds of a short sale transaction even by a small amount they will let the home go to foreclosure. They have a fiduciary responsibility to their shareholders just as we have a fiduciary duty to our clients. If you were in the bank's position would you do anything different ?
In the ideal world, BPO's would always reflect accurate market values. In the real world, a badly done BPO is all that is required to trigger a bank into making a bad business decision. Of course, responsibility for bad BPO's land squarely on our profession.
Or in other words, the banks do know what they are doing. Whether the person who answer's the phone on any particular day knows what they are doing is entirely a different matter.
As far as regulating them they are already over regulated. Congress *mandated* they make loans to people who could not realistically pay them which greatly increased housing demand and drove prices sky high and inflated the housing bubble (Google "Community Reinvestment Act"). Given the choice of either being fined out of existence or holding bad mortgages that they could not individually resell and therefore would bankrupt them out of existence later they chose option C. They worked with Wall Street and packaged these loans together into Collateralized Mortgage Obligations. This was done to reduce their risk (as individual banks) by spreading the risk across a much deeper and wider investor pool. CMO's were not created on a whim to create wild and risky speculation profits for greedy wall street mouth breathers as many in the media would like you to think. Again, if you were in the bank's position, would you do anything different ?
Few of us knew at the time that Congress in it's progressive class warfare stupidity of the Community Reinvestment Act had legislated a regulation so bad that all of Wall Street was not a deep and wild enough investor pool so the housing bubble collapse brought down the entire economy.
Was the government punished for it's culpability ? No, they used the situation they legislated into existence as an excuse to (unconstitutionally) nationalize several of our banks so they'll have even more control over what loans a bank funds. Is this a recipe for reform ? Not in my opinion.
Lately, I sometimes want to move to a backwoods Montana and try to incompetently live off the land for a decade or two. Montana Realtors that know of a good spread for sale may contact me telepathically. *smirks*
I think you are necessarily cynical. The banks have their heads up their a** and have much bigger, secret deals going on that they care much more about. They sure as hell don't care about our listing we're trying to move for a couple hundred grand. I do disagree with your opinion on the housing bottom though. I understand the inventory, and the theory behind why it will keep the bottom from us for now, but there are some levels that occur in prices that can't be passed up on, and I believe we are there. Every region is different, but we are at 40, 50, and 60% down! You can't even build for what some properties are selling for! If you are right and the bottom is not here at these levels, then we may be in for a catastrophic, economy crushing ending.
I was very impressed with this article!
Having done some of the very first short sales in my office years ago, i was pretty on top of things with the lenders but got a major sting on one of my most recent short sales by a lender "rule" change!
We got hammered and no way could we get out of a bad situation. My Buyer walked and the Seller sulked but the bank "won!'
I needed to hear what you had to say so I would stop beating myself up over something that couldnt be helped...
Honesty by all parties is STILL the BEST poilcy! Go figure that!
Gina
Excellent points, Felix, especially #4. It's nice to hear some positive news about the industry this week, but I also read an article this morning on RISMedia saying we are on tract for 13 million foreclosures in the next 5 years.
I agree with the majority of points made. I especially agree that if someone says they have all the answers.... run. I am a virtual short sale assistant and deal with up 100 short sales at a time. You hit it on the head when you said it take persistence and patience. One variable that you didn't mention is the high turn over rate of the loss mitigation negotiators. They are in a high stress job - they individually are assigned between 150 -200 files. I have one recently closed deal where the negotiator was changed 7 times during the short sale. They really aren't the ogres that they are portrayed to be. Be kind, courteous and respectful and they will usually respond in kind.
It is so important to have a well organized and COMPLETE package. You need to respond to any requests in a timely manner. Always anticipate when your financials or estimated HUD become outdated. A package won't get into the system for something as simple as not having each page of the short salepackage labeled with the loan number. There are so many details and so much phone time involved in short sales that use of a short sale assistant/negotiator can be a good decision. However if they tell you they have the secret, close them all or any other outlandish claims say thanks but no thanks. Then interview the next company on your list . There are alot of companies and individuals out there that do what I do.
Always make sure that they have a system in place to keep you updated on your file. Nothing is more frustrating than to not be able to answer your clients questions as to how the short sale is going. Also make sure that you ask to talk to other Realtors they have worked with. There are new short sale assistants popping up everyday. Make sure you work with some one that has experience.
Dawn Uselding - A New Dawn Real Estate Services
A
One thing that is certain in a short sale, is that nothing is certain. The transaction can change even within the bank, depending on who you talk to. Some can be relatively painless, and others can drag on and on...
I've been involved in 5 short sales and only one has closed so far. I don't think its worth the hours I put in for the cut rate commission the lenders give us. The first thing they go after is our commissions, I know the mortgage broker got paid. The one I'm working on now is a cash deal, the offer only 8k under what he owes, the bank told me their "appraisal software" tells them the property is worth 30k to 50k more. I sent them comps that surely will tell them that their software is wrong, I'm not holding my breath. What really makes me laugh is the taxes and insurance are due soon and thats a sweet 22k!
Very interesting, Felix, and well written.
I am going to post this on my blog as well, http://www.karensperspective.com if that is ok with you.
I love your comment about banks having many options other than retailing a house, selling them for pennies on the dollar without it even being recorded.
Thank you for your information.
I agree, banks will make the decision that they are comfortable with. This is such an excellent post!
WIDGET! I love it and will use that in my next Buyer / Short Sale warning speech I have to give. Great reality post too!
Felix,
Sadly I think that you are right in everything you have stated. I am sure the banks are overwhelmed with all the loans that are delinquent and in the foreclosure process. They certainly did not have huge departments with staff trained to do this type of work a couple of years ago, and people have probably been retrained to try to tackle the job at hand.
Your statement about how they do not care about the feeling of the homeowers, I have to tell you as someone who many years ago was the manager of a bank collection department who had to write recommendations for loans to go into foreclosure, you cannot become attached to each and every borrower or you would probably end up losing your mind. You have to just look at it as the job that you were hired to do. You have to just look at the facts and do what has to be done. It's not cold, it's self preservation of your sanity.
I can not imagine what it is like working in these areas in the current environment! Think about that when you are dealing with some of the bank reps on these deals.
Oops, forgot to put my name and e mail on the comment above!
Thank you Dawn for adding your comments. I fully agree about the change of negotiators and mitigators. It happens all day, every day. Also, as a helpful tip, whenever you're sending any trailing documents to them, be sure to put the loan number on each and every one of those pages. Paperwork gets shuffled and can be lost within their piles of files.
Also, one mitigator rep I spoke with told me that because they have piles of files, each are assigned a specific file number that's used internally. If possible, get that file number if you can. Anything that will help your deal move along faster will help to benefit you in the long run.
So, when you call them you can use that file number to reference your questions or concerns to. And, do whatever you can to build a nice relationship with whomever is handling your file. As Dawn mentioned, they change out mitigagors and negotiators quite often so getting frustrated with one over past experiences will only cause your file to be put at the bottom of the pile and your deal will take far longer than you are prepared for. They don't want to work with an agent who's complaining all the time. It'll only make matters worse. I know that some of these people can seem rather imcompetent or unpleasant themselves. However, they're dealing with rude and obnoxious agents every day from all across the country AND they're the line leaders in the transaction so anything that will provoke them to not want to help you and your client will be to your detriment and not to you or your clients benefit.
Felix, what a great blog. So many true points here. I am working 2 with BOA right now. One file is smooth the other almost 6 mo and they tell me another 35 days for investor approval as of July 27th 2009. Wait a minute... The file was in 2nd phase negotiations as of June 30th 2009 was kicked out of the short sale process without one word to me. If I did not call every 3 days and avoid the automated update "Your next update will be on BLAH BLAH BLAH date and IF YOU CALL BEFORE THEN YOU WILL DELAY THE PROCESS" gee I would have never known. This is when I was told give it 24 to 48 hours and it will be restored to where it was originally. (Apparently there was a bill past and files are automatically being kicked out for loan modifications without any questions first. When I rtold them my client was unemployed as it SHOWED in his file, they knew the loan Mod would not work). Now over a month later...Today I had to be very firm with Leslie and show a bit of temper. Hey it got me to the supervisor Miscael. He tried to blow me off and tell me it is with the investor and there is nothing he can do I insisted in talking with the supervisor. He was quick to say his supervisor was not available. I said i have pages of names, dates, times, and notes of the discussion with everyone I have talked to since Feb., "What is your supervisors name so when I decide I will no longer attempt to help clients that have BOA I will write a huge blog and explain why and everything that transpired from beginning to end." Miscal asked me to hold to see what they can do to rectify the situation Mrs. Clark. WOW what a turn around. I was the put into a VM but I kept hitting zero so i could speak to a live person. I did this 3 times and his supervisor answered Carolina (SP). Let's just say there are things that can be done, no one can rush the investor but she is snap shot-ting the file, writing a note to get this to the investor. the A/C has already been stolen and this file really needs priority not ball dropping.
I hope this is a turn around and things will get done and and answer given soon. I don't recommend losing ones temper as you get further with sugar but sometimes you have to add spice. Today was that day for me. I feel like persistence did pay off today. It really is rare to speak to a supervisor of a supervisor because they will do everything they can to not let that happen. This file has been escalated by me over 10 times and this was the push that I used. I told them that I have done my part and we need to work as a team here. I could understand if it was because of a different buyer but this is the same one from February. It was an hour long ordeal but I had a chance to read every ones comments on my 5 hour trip home from vacation. The comments here helped me get as far as I did today. Thank you all. I love Active Rain and the camaraderie here.
Paul,
Finally, someone mentioned the 90 day "flipping" FHA rule. I was about to come unglued because no one had mentioned it and I think that is where everyone was getting their drawers in a wad. I understand what you were calling transactional lending but as long as there is full disclosure and the appropriate doc's were signed (as is Colo law here) you are fine and as in the FHA "flip" you cannot sell to a buyer within the first 90 days of the last purchase date you should be fine.
I have been working short sales for a number of years and I have found that generally the magic number is 3. Three what? Three buyers you typically have to go through to get the sale done. You have a good strong offer on the first buyer. You have disclosed on the MLS that you are in process with all the seller information submitted to the bank but they are so back logged that they don't really care how long it takes. It takes as long as it takes is their mantra. The second buyer comes and it is less than the first offer and the buyers are a bit more patient but the bank process continues because your deal hasn't been in process as long as seller a, seller b and seller c so you call often and find yourself frustrated. Then you find yourself stigmatized and buyer 3 comes and it is much less than the first two offers but you didn't tell the bank you lost buyer 2 and they have been plugging along and now you are on top of the pile and you have a new buyer with a lower offer but now the bank is ready to deal. Thank goodness because you are totally ready to be done with it all.
You have jumped through all the hoops so your legs are sore, your phone bill is high for all the phone calls you have made and you have cauliflower ear for being on hold, your sellers is tired, you are a bunch less that what you could have gotten the bank 5 months ago, you have gotten the foreclosure put off, and your superhero cape is now tattered and torn but you are almost to close. Thank Goodness.
Do we do it for the money? Not entirely. Like the old joke goes. Why do runners run? Because it feels good when they stop. Same concept! :)
Wow, very interesting and as someone else said, frightening!
Could you explain in more detail what 'performing and non-performing notes' are and how they 'account for the majority of their swaps'.
Sounds light there is a lot going on behind the scenes...if you could shed some light it would be appreciated!
Dane Caldwell
Over a year ago I started working on a solution to the current real estate "situation" Please feel free to visit and comment.
If you can see a problem with this solution, then you will be the first.
Either my webpage here www.dnusbaum.com/fix.html or here in the form of a blog
http://factotum666.livejournal.com/563.html
Expect to spend at least 30 minutes at either place.
Over a year ago I started working on a solution to the current real estate "situation" Please feel free to visit and comment.
If you can see a problem with this solution, then you will be the first.
Either my webpage here www.dnusbaum.com/fix.html or here in the form of a blog
http://factotum666.livejournal.com/563.html
Expect to spend at least 30 minutes at either place.
Great information. If I might expand just a tad, however, there are banks, B of A being one of them, who are actually leveling brand new homes in brand new developments because squatting has become so pervasive and the liability that goes along with it can end up costing a lender a lot more than just clearing the lot. Once you get these squatters in it's almost as tough getting them out as a standard renters eviction.
You're definitely right about the banks wanting someone residing on the property but even at that they will eventually have to face the music and when they do finely issue a final eviction notice the residents tend to retaliate, as we all know, by trashing the home and stealing everything and anything bolted down or not including the kitchen sink.
Wachocia is the only bank I know that has a streamlined short sale process. From an agent in my office it works very well. Of course they'll participate in a short sale if it makes sense to them, but at least they have a process, a manager who will meet with the agent, the homeowner, at the property.
In California it's illegal to charge a transaction fee.
Hi Deborh,
Just to clarify, Transacational Funding has nothing to do with transaction fees charged on a closing, which may be prohibitive in some states. Transactional Funding is short-term gap lending for commercial and residential transactions.
heck ya I totally agree about #4, i have people call me to list thier home for short sale and I pull up that there home already went to foreclosure sale 6 months ago. The question I have for you in this case is if there was an offer to purchse presented to the bank in this instance, with no REO company involved yet, would the bank consider accepting that offer, sort of like a short sale but I gues after the foreclosure sale??????
Great Post! About a month ago I tuned in to NPR and there was a man speaking about how the banks are not motivated to approve short sales because this results in an immediate write down on their balance sheet. Whereas dragging it out and eventually going into foreclosure entitles them to more favorable ac procedures, tax credits and the ability to deny the asett lost value. Bad debt vs. bad investment (my words not his) It sure sounded good. Alas, I was not able to find out who it was speaking or what his credentials where. Did anyone else hear this?
Michael Layton, GRI, e-PRO
Keller Williams Realty Palm Springs CA
Now Available: "What Lenders Won't Tell You About Your Short Sale! - Part 2"
Just click the link below:
http://activerain.com/blogsview/1183207/what-the-lenders-won-t-tell-you-about-your-short-sale-part-2
Great information. You are correct in that banks are constantly changing with respect to short sales. Thats why realtors really should be working with a short sale management company. What I find amazing is that realtors are actually shining away short sales. They dont take them on because they think they are too difficult and time consuming. Maybe they are right. I am a short sale specialist and at Real Property Solutions we manage the short sale for all real estate agents and brokers. The agent would actually make more commission by submitting the short sale to us than doing it on their own. Our investors purchase the short sale, the realtor gets their commission from the seller/homeowner to the investor, then the investor relists the property with that same realtor. Hence, double commission.
Real Property Solutions will take the hassle out of your short sale. Get the short sale and pass it to us for full service management of your short sale. We take care of all the headaches associated with your short sale. All you have to do is get the short sale, pass it to us, and you still get paid double commission. Call us to find out the details.
Real Property Solutions
13636 Ventura Blvd Suite 324
Sherman Oaks CA 91423
Crystal Gomez, M.A
Short Sale Specialist
818-5671-4655 cell
888-571-7854
www.go.managemyshortsale.com
It's amazing how few real estate agents are bringing up exactly what you are pointing out concerning the banks holding out...
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