DO YOU REALLY UNDERSTAND THE SHORT SALE PROCESS

First, everyone needs to take a deep breath and quit slamming the banks. Here is the short sale process. The short sale package once received by fax or email is given to a Set Up person, this person then reviews to make sure all documents required are there, this can take 2 to 7 days (depending on the volume), if they have to obtain missing data, this delays the S/Sale getting to the hands of the negotiator. If the property has a scheduled foreclosure sale date within 30 days, it is normally given a Priority Status. Once the negotiator receives the file, he/she determines what type of loan, FHA/VA, Conv, etc. They then review the hardship, financials, etc. If it has MI, information must be sent to the MI company for approval, this can take up to 6 weeks. And the MI Company will order their own interior BPO or driveby. The negotiator has a "worksheet" to determine the cost to foreclosure vs the cost of a short sale. Then, is a short sale warranted? The negotiator will order an interior BPO, another 7 to 10 days. If the loan is being serviced for another entity (i.e. Bank A is the servicer for Bank B), the investor guidelines are reviewed to determine if the short sale is within Bank A's authority to approve based on their servicing contract with Bank B. If it is not, then the short sale must be sent to the investors (Bank B) for approval (3 to 6 weeks). Now, if it has a 2nd lien, you are going through the same process again. Find out from the 1st lienholder how much they are willing to pay the 2nd, then call the 2nd lienholder and ask how much they want & what the 1st is willing to pay. The 2nd lienholder normally will not send out an approval letter until they receive a copy of the 1st lienholder's approval letter. Once approval is given from the investors and the MI company, the final "worksheet" along with the file is sent to the Loss Mit Manager for review and approval. If the loss is greater than the manager can approve then it goes up the chain of command. Remember, the greater the loss, the more signatures are needed to approve. (ie. Unpaid principal balance $250k, sale price is $125k- guess what, this short sale is going up the chain of command for approval because it is a 50% loss!) Now, back to the negotiator, who then sends the approval letter and the realtor advises him that the buyer got tired of waiting and the deal is dead (happens 70% of the time)
Here are some tips that I hope will help - Before you ever take a short sale listing get the HO to sign the Third Party Authorization form (most banks have their forms online, if not use a generic or call to see if they have the forms). Call the Lender and get detailed info on the loan, what is the UPB, does it have MI, is the loss greater than 80% of UPB, is it being serviced by Bank A or does Bank A own the paper? Is the HO even qualified for a short sale.
Now back to the negotiator, if the short sale is only in pre-foreclosure, the negotiator will treat it as a next in line. For those of who you are not aware, today's negotiators probably have at least 250 short sale packages on their desk at all times and will close approx 70 or more deals a month per negotiator. And if the bank is not contracted with Fannie/Freddie under the HAFA program, they do not have to follow the HAFA rules. Another thing to find out up front, is the Lender part of the HAFA program.
I recommend that every realtor, contact a Lender and ask to visit their Loss Mitigation Dept for an overview - most Lenders will allow a short visit. Once you understand the "other" side, then you will understand the Short Sale process. Patience and Good Luck!

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Comments

Barbara Pedersen August 13, 2010 at 5:26pm

Absolutely.I was ignoring him but when he addressed me directly I was just about to tell him politely but firmly to move the discussion to a more appropriate place. You did the right thing.
Cindy Billman, SRES ®, SFR®, CDPE August 13, 2010 at 4:35pm

Barbara - I deleted it because Dennis was trying to make it political - I appreciate you backing me up though - he was going way overboard!
Barbara Pedersen July 26, 2010 at 12:25pm

Hi Cindy,
what happened to this discussion on LinkedIn. I was just responding to Dennis & it was gone! LOL!
Kimmie Hauver July 19, 2010 at 12:04pm

Fabulous! I can only hope the agents that need this info the most will read it. Thank You
Jose Rivas (DGRA) CDPE, SFR July 18, 2010 at 5:56pm

Great post, you really spell it out. Thanks

This reply was deleted.