Patty's "All Things Real Estate" Blog.

November was a very interesting month, and one that really shed some light on the incompetency of the short-sale ‘department’. 

First call to verify docs had been received.  The rep says it appears they have received the short sale package and purchase agreement and the docs have been uploaded to the system. However the file is still in ‘modification’ status.  She will see if she can ‘push it through’ to pending status the the negotiator will be assigned.  This takes another 7-10 business days to push through. 

7  days later called again for the update.  Short sale documents are there but the file is not opened.  The file is supposed to automatically open, but for some reason did not. Rep is opening the file manually (whatever that means).  It should be activated in 48 hours.  Call the bank next week to see if activation is complete.  Then it will take another 7-10 business days to be assigned to a negotiator.

7 days later called again for the update, fully prepared to receive the name of our short sale negotiator and get this purchase approved!  Was advised that short sales are now all being tracked through an online system.  Was given the web address and login instructions.  Once I log on and enter the required information, the negotiator will be assigned through the online system.  Great, getting closer!   …….NOT

After logging on the system with the instructions they provided, I was unable to get into the correct area.  Called the bank back to get some assistance. Was told (this same day) that they are not using this system yet.  I was also told the short sale is still in ‘modification’ status.  It cannot be changed to Pending status until the homeowner calls to cancel the modification and request the short sale.  {What? I think they have in house incentives for the reps who can confuse the most customer and cause the longest delays! } I called the seller and advised they needed to communicate with the lender about the short sale status.

The seller called back and said they talked to the bank.  Said the modification was cancelled and the short sale option was requested back in August (according to the bank record).  So why did the bank tell me it was still in modification status?  Called the bank again to make user the status was updated.  Was told the file has been assigned to a negotiator!!  I was even given the persons name!!!  I am so excited, we are finally getting somewhere!!!  Transferred to short sale department to get phone number for negotiator.

Well, that excitement was short-lived.  The name the previous rep gave me was not the name of the negotiator, it was the name of the person who input the record.  This rep does advise the short sale was ‘pushed through’ today (coincedence?), the file has been ‘opened’, and we just need to wait for the negotiator to be assigned.  This can take an additional 15 business days.  Advised to call back next week.

One more phone call…..Was advised the negotiator was requested on 11/22/09.  Negotiator should be assigned by 12/14/09. 

So more waiting………………..

Called the bank to report we have an accepted offer on the property.  I was transferred to the short-sale department – immediately – just like they said.  Well, aside from the zillion questions they ask when they answer the phone; loan number, seller social security number, property address, borrowers names, my name, my company name, contact phone numbers, name of first born child, blood type, grandma’s favorite brownie recipe……you get the idea.  Almost immediately……

The short-sale department advised again to place loan number at top of each page of offer & supporting documentation and fax to their ‘secret’ number.  Allow 10 business days for ‘imaging’ into their system, then call back to verify the status.  List of documents to submit are: Purchase agreement & counter offer, estimated HUD-1 (settlement statement), 2 months pay-stubs, 2 months bank statements, pre-approval letter from buyers lender, past 2 years tax returns, and financial hardship letter. 

It would have been nice to have this list of required documents prior to talking with the short sale department.  That could have saved us another 10 days of document collection.   Anyway, the 30 page fax was sent off to the secret fax number and the waiting period began.

So far, so good.  Everything going according to plan….

Not much happened between the time the bank was contacted and the day the offer is submitted.  Mostly just a period of collecting inforamtion for thefile and collecting financial information from the seller.

September consisted of calling the bank weekly to inquire about status of NOD and the loan balances. Was advised that the lender would need a new financial hardship letter from the seller and recent bank statements.  When offer is obtained on the home all documents need to be faxed and loan numbers need to be written at the top of each page.  If we receive multiple offers, we must negotiate the offers and only send one to the bank for approval.  Again I as advised that I need to call Home Retention with the offer and would be referred to short-sale department instantly.  Was also advised that review and approval process could take up to 4 MONTHS! 

Yikes…..

August 3rd, 2009.  This is my first call to the lender to inquire about their short-sale procedure.  They advised that I need to send a  3rd party authorization form signed by the seller to authorize our brokerage to receive information about the property & mortgage.  Faxed the authorization form to the fax number provided.

August 10th, 2009. I spoke with Customer Service.  They advised that in order to speak to me as the sellers representative the bank has to send a letter to the seller to verify they authorize me as a third party.  They do not have the 3rd party authorization form that I faxed to them on August 3rd.  This person then transferred me to the Loan Modification Department.  Spoke to another rep.   This bank bought out another bank and inherited this loan, but they don’t have the loans transferred over yet .  I was advised that I have to call the previous banks Home Retention department.

Same day:  called the Home Retention department and was advised that they DO have my 3rd party authorization on file!  Was also advised of  the following:

• Need to list the home for sale as soon as possible
• Get updated financial worksheet from the seller
• Notice of default has been issued, but has not gone to foreclosure process yet.
• Loan modification file has been opened but has not been referred to a negotiator yet.
• When offer is received on home, offer needs to be negotiated, then called in to this department.  Information will be given at that time on where to send all documentation.

Same day/same call:  Transferred back to customer service for clarification on notice of default (NOD).  I was advised that I may need to talk to loss mitigation.  Notice of intent to accelerate the loan was sent on June 30th, however no NOD has been issued.  (Didn’t the previous rep tell me the NOD had been issued?  I am confused!). 

Off to install a sign post in the front yard!

It was never my intention to go after short-sale business.  On the contrary, when short-sales started becomingprevalent in our Pleasanton Real Estate market, I made a decision to stay far, far away from these transaction. I thought it would be better to refer this out to an expert than to become one.   My reasons for not wanting a piece of this market were the following: 

• clients have to wait too long,
• banks take too long,
• short-sale departments at the bank are a nightmare to deal with,
• you could possibly work on a deal for 6-months and not get an approval,
• the bank may foreclose before the deal is approved,
• the buyer walk away if it takes too long,
• houses are in sub-standard condition or disrepair

Did I really want to spend my valuable time working on something so futile?  Fast forward to 1-year later and here I am with 3 short-sale listings.  And yes, many of those reasons I just stated are absolutely true!  What has changed for me that I now am involved in the short-sale market? Simple, education and experience.  There is really no other way to do this than to jump into a short sale transaction and endure the process.  In doing so I have found that it is actually something I enjoy.  It is a challenge and everyday there are obstacles and road-blocks, but there are also small successes and an opportunity to learn something new, which in my opinion, just makes me better at what I do.  It is a very different way of doing business, but one that is just as rewarding.

I  have decided to post the saga of one of my short-sale transactions.  This transaction started last year and  isn’t closed yet so I will catch you up on the past history, move into the future, and you can follow along through  the approval and (hopefully) the closing of this transaction.  I will not divulge the specifics of the actual property,  property prices, or any personal information about the parties involved.  This is more about the daily dealings with the financial institutions and what all parties must endure to get a transaction approved and closed.

The saga will begin tomorrow…….