Experienced Short Sale Realtor


A couple of weeks ago I was invited to attend a seminar sponsored by Bank of America which was designed to help agents who negotiate short sales better understand the new systems they have instituted.  And in fairness, I do believe that the banking giant is trying to streamline the chaos we’ve been dealing with for the past several years….I’m just not sure it’s really working.

I have recently been involved with three B of A short sales, two as the listing agent and negotiator, and one as the buyer’s agent.  Short sale listing #1 was a Cooperative Short Sale, similar to the HAFA program.  It was managed through Equator but took nine months to close.  It was a total nightmare. Listing #2 is a VA first mortgage that is NOT handled through Equator and requires a separate secure email system, (this one has also taken way too long).  And finally, the short sale purchase has a B of A equity line that also does not use Equator or any system, and in fact was moved to three different offices.

So what I’ve learned is that there is no ONE system that is used by B of A, and it totally depends on the loan type.  Now I’m no systems analyst, but it would just seem to make sense to me that ALL short sales should be introduced into Equator as pretty much all the same documents and forms are required.  The file could then be assigned a negotiator in a particular department depending on the loan type, but at least ALL files would be in the same system.

The one good thing that came out of the seminar was that it qualified me to receive access to their new online escalation tool.  So now when I seem to be getting nowhere, and have exhausted the phone and email protocol, I can escalate the file and receive a response to my concern within 24 hours.

If you live in San Diego County and have questions about a short sale, and want to know if it’s right for you, please don’t hesitate to give me a call for a confidential consultation.

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Short sales are tricky at best, and negotiating a successful resolution can try the patience of even the most experienced agent.  With the foreclosure clock often ticking, it’s important that the listing agent keep the transaction on track. Here are a few things agents should avoid that can be real deal killers:

  1. Accepting the wrong  offer.  If you know that the property has termite issues, doesn’t have a working heater, or has other significant repair issues, look carefully at the type of financing  the buyer will use.  VA will not allow the buyer to pay for repairs and it is unlikely that the lender will  pay.  FHA also has fairly stringent rules about the condition of the property, unless it’s a rehab loan.  If there are issues with the condition,  selecting a buyer that is using conventional financing, or cash and agrees  to buy the home “As Is” will improve your odds of success.
  2. Failing to  communicate.  As we all know, short sales are anything but short in terms of the time it takes to close.  Having a buyer that stays the course and doesn’t wander off to buy a different property is critical.  The listing agent should be in touch with the buyer’s agent at least twice a week and provide  updates as soon as they are available.    I also have the buyers deposit their earnest money into escrow within 3 days of acceptance of their offer by the sellers – we don’t wait for short sale approval.  Buyers that have put their money into escrow and receive regular progress reports tend to be much more committed to completing the purchase.
  3. Assuming….anything!  Just because you faxed in your seller’s tax returns, doesn’t mean that they were received and made it  into their file.  For most banks, allow 48 hours for items faxed to the loss mitigation department to be  posted into your seller’s file, then call and confirm.  Failure to provide documents when requested can kill the deal.  Also, don’t assume that the 2nd lien holder will accept whatever  pay-off, the 1st lien holder offers.  Don’t wait for the 1st to be  approved to start negotiating the 2nd .  Better to know what they want early in the game.

The list could go on and on, as each sale has its own peculiarities that could spell trouble.  The key to short sale success is a combination of patience, education, organization, tenacity and a crazy instinct to anticipate obstacles and leap over them before the deal dies.  Good luck out there!

For a no-obligation consultation regarding a short sale inSan Diego County please give me a call at 619-846-9249.

I attended a webinar on Tuesday that was presented by the Charfen Institute, all about the changes that are occurring in short sale processing at Bank of America, effective tomorrow.  As I currently represent the sellers in two B of A short sales, and the buyers in two other B of A short sale transactions, I logged-in wanting to see if there was anything I had missed in reading the information at their short sale resource center.

The information in the webinar was well presented, including a slick commercial for the Charfen Institute CDPE (Certified Distressed Property Expert) Designation Course.  However, I didn’t really learn anything new….

But the thing that really got me steamed was the marketing “call to action”.  If I signed-up to take the CDPE course before 5:00 p.m. Thursday, I would receive $900 in FREE Resources – a CDPE short sale success bundle.  Here is one of the items included:

“Bank of America Add-On Kit ($200 value) – Get the five newly-required documents that MUST be submitted with all short sale offers, effective April 13.”

My problem with this is that the list and actual documents available for download are offered for FREE at the Bank of America short sale site….so how is this a $200 value??? 

And the other two items valued at an additional $700 and included in the “success bundle” are all things that are available online from the various lenders, or with a phone call – all at no charge.

Now I’m all for free enterprise, understand incentives, and the take-away tactic in sales.  And I am not knocking the CDPE course, of which I’ve heard good things.  But come on!  I just don’t think it’s right to assign a dollar value to something that is not under your copyright, that is free, readily accessible, and a necessary component to our job representing clients in a short sale.  Why not just share the links?  I would have been more impressed. Is the $200 value assigned because of convenience to the agent?  In my book, if an agent is too stupid or lazy to figure out how to get lender forms, they shouldn’t be doing short sales, with or without any certification!

 

 

A couple of days ago one of my favorite loan officers shared some information about a problem facing many would-be buyers who are trying to get approved for an FHA mortgage after a short sale.  Here’s a couple of surprising things I learned that could squelch some dreams.

Most of us probably know that FHA requires a 3 year wait from the date of the short sale, (conventional 4 years), but here is the kicker:  Did you know that for DU underwriting it is actually 3 years from the reported date?  That means that if the 1st or 2nd lien holder didn’t report the account as closed until 10 months after the close of escrow, a buyer would not qualify until 3 years and 10 months after closing!

And it’s not just short sales.   FHA looks at a short sale, deed-in-lieu, foreclosure, and loan modification, (YES, even a loan mod) as the same derogatory event, and as noted above they require a 3 year wait from the reported date.  Approval for an FHA loan is normally based on running the application through the Desktop Underwriter (DU) automated underwriting program.  The DU program reads the dates entered on the credit report so if that is incorrectly reported, the loan will be denied.  In the case of a short sale, it might be helpful to find a lender who agrees to manually underwrite the loan so that the correct dates are used.

Besides the date, the other item that could trip up a buyer is how the old mortgage debt is reported.  If the account is reported as closed, but still shows the amount not paid off in the short sale as a balance on the account, the reported balance will probably disqualify them in DU by calculating a payment and inaccurately increasing their debt-to-income ratio.

Advice from my loan officer:  Following a short sale, borrowers should check their credit report from all 3 reporting agencies about 6-8 weeks after closing.  If the sale is not reported, and/or it does not show a zero balance they should contact their previous lender to get it corrected. Then, get a DU or manual underwriting approval well before shopping for a home.  It may mean the difference between buying again in 3 years versus facing an unanticipated and disappointing wait!

 

 

If you owe more than your home is worth, and are having difficulty making your payments, you may be a good candidate for a loan modification or a short sale.  The important thing to realize is that this problem won’t go away on its own and the sooner you attempt to deal with it, the better your opportunity for a positive outcome.

However, before you pick-up the phone to call your lender, be prepared!  The person on the other end of the call is going to do a phone interview during which they will ask very detailed questions about your income and expenses.   In order to be ready you will need the following items:

  • A completed financial worksheet which outlines ALL of your income and monthly expenses. Make sure that the income you state matches the deposits to your bank accounts!
  • Last 2 months pay stubs or year-to-date profit and loss statement if self-employed.
  • 2 most recent bank statements for all accounts
  • Hardship letter
  • Last 2 years federal tax returns

This initial interview is a sort of triage, where they try to determine, what program, (if any), might work for your situation.  The more information you have available, the quicker you will be able to move to the next step.  Even if the interview doesn’t include questions related to your tax returns, these are the items they will want you to send to them so it’s best to gather everything before you get started.  When you do send or fax, make sure that your name, phone number, email and loan number are on a cover sheet with a list of the items included.  For the initial packet of information it may be best to send with a delivery confirmation so that you have proof of mailing and delivery.

Your hardship letter should clearly explain why you can no longer afford your mortgage payments.  You obviously could afford them at the time the loan was originated, what happened to change that?  Job loss?  Death of a spouse? Divorce?  This should be a heart-felt letter addressed To Whom It May Concern and be no longer than a couple of paragraphs.  Just state the facts.  It is helpful to write the letter before you call so that you have an answer ready when the interviewer asks.

On this initial interview, and all subsequent phone conversations keep a log, noting the date, time, who you spoke with and the key points of your conversation.  Always ask about the time frame for the next steps and be prepared to follow-up!  Never assume that something is happening….chances are good that your paperwork may become lost, so be ready to re-send it.  And if you don’t feel like you’re getting anywhere, ask to speak to a supervisor.  But remember that the folks working in the loan workout department are probably over-worked, and a nice comment and a polite “thank you” will make the process less stressful for everyone involved. 

Best of luck! Don’t hesitate to call or email with any questions. I also have a great Excel Financial Worksheet that I’m happy to share.  Just send me a request to marti@kilby.com.

 

In the second of a 2-part series, San Diego real estate broker Marti Kilby explains the short sale process.


 

San Diego real estate broker Marti Kilby explains the short sale process and what you can expect.  This is part I of a 2 part series.


 

 

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