Short Sale Horror Story, anyone want to hear?

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Catherine Myers, Licensed Real Estate Agent, Walnut Creek, CA

Date: July 30, 2008, Number of Replies: 27

So, I'm working on a short sale... we're in progress. WaMu (if you've ever worked with them on a short sale) is fast approaching the worst company to deal with. They are slow to react, slow to process and basically nonsensical in some of their decision making.

So I'm in the middle of a short sale.. single mom, little kids... we have an approval on the second loan (citimortgage) and just working now on first. WaMu has ordered appraisal and guess what. ... I get a call from my client today (frantic I might add) that they have locked her out! I actually didn't believe her until I went there myself and sure enough, the locks were changed and the garage door opener disabled.

ILLEGAL! UNFAIR! and STUPID!!!

Called WaMu, threatened and at first we were told we'd get a call back in a couple days - no way... my client still owns the house and we will be hearing immediately. So within 20 minutes I got a call from a guy in Florida, WaMu's property preservation team. I was livid. He was apologetic. I told him I advised my client to file a police report and report to the District Attorney. This is not their house. THIS IS HER HOUSE until it goes to trustee sale. She has personal possessions in that house. They better hope all her items are there. They have opened themselves up to big liability now. What if her stuff is gone? What if she says its gone? Who's responsible? They trespassed.

So the servicing company (Fidelity) just called and will be getting us a key within the hour.

I think WaMu does this a lot , and in homes they think are vacant, they probably don't get caught doing this. But they did this time and its not right - at all.

Beware of WaMu in your short sales. This is a big deal in my opinion. This is not ok. They should be ashamed. When they first said we'll call within a couple days - where were they assuming my client (single mom) and her kids were supposed to sleep and without their possessions???

Ok, venting over, but have you even heard of this happening with other banks? Is this becoming more common now? Banks getting a jump start on the foreclosure?

Catherine Myers, REALTOR

GRI, CRS, ABR, SRES

Alain Pinel Realtors

1646 No. California Blvd., Suite 101

Walnut Creek, CA 94596

925-683-2125 cell

925-465-1593 fax

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Steele Propp Licensed Real Estate Agent, Minneapolis, MN

Date: July 30, 2008

Ok, venting over, but have you even heard of this happening with other banks? Is this becoming more common now? Banks getting a jump start on the foreclosure?

If a property is vacant and appears to be abandoned, the bank has every right to preserve it's asset. And it's right in the loan papers. Not a jump start on foreclosure.

Now, what happened to your client is inexcusable. I, myself, have been asked to do hundreds of drivebys during the foreclosure process to determine if the people are still there. Often as part of a driveby BPO. But even the slightest hint that someone lives there and we don't touch it. Someone really jumped the gun in your case. Sounds like an inexperienced agent probably gave the bank the wrong information.

But the field asset service company should have seen the furniture and reported it immediately. Sometimes they can be a little blind in their following of orders.

Steele

Steele V. Propp
Foreclosure Specialist/ Loss Mitigator
Bank Owned Property Division
Schatz Real Estate Group
1009 Mainstreet
Minneapolis, MN 55343
(612) 325-6764 Direct Line/Cell
(952) 938-2593 Office
(952) 938-3831 Fax mailto:SteeleP@aol.com

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Lindy Hall Licensed Real Estate Agent, Houston, TX

Date: July 30, 2008

Catherine, I feel awful for that woman.... and although not all scenarios will be the same, there is an underlying common denominator, which is that the owners facing foreclosure are often being lied to by their lenders. Not all, but enough to be concerned.

You may recall that I do a lot of BPOs, as do several other agents on here, and on the ones that are still occupied, the lender sets up an Interior BPO.... usually under the guise of restructuring their loan, and they just want to be sure that it has had adequate maintenance, or if it has serious problems, they act sympathetic, and tell the poor owners that they will "work with them". The owners THINK they are in the process of restructuring.... the bank(s) gets all their info and interior photos, and leads them down the primrose path, much chit-chat, and promises to call back.... all of a sudden, they are foreclosed upon. This is so cold-blooded. I turn down most of the Interior BPOs unless already vacant, because when occupied, odds are, those people don't know they might get shafted... and of course, we are never supposed to mention the word foreclosure, and never discuss it with them. Very few of the occupied Interior BPOs I do result in the owners getting to keep their house.... and sometimes they aren't even trying to do a short-sale.
(This also happened to a friend of mine, he didn't tell me until the notice was tacked on his door.)

Many years ago, during discussion of a completely different subject, an ex-bank employee that was then a new Realtor in my old office, explained to me why some people get to be a YEAR in default, yet not foreclosed, and others can just be 6weeks behind and in foreclosure..... I was told that it had to do with FNMA and FreddyMac, and the mortgage insurance people.... somewhere in the paperwork for that loan, at least one of them will have a Rule, that if buyer is more than 21 (or maybe 30 days) late with their payment, that default must be filed within 30days (or something like that), otherwise the loan guarantee (and/or mortgage insurance) can be voided/canceled/nullified.
(Don't barbecue me for not knowing exact details and time-frames, I only got the gist of it. I do know I took a listing once where the owner was 18months behind on his payment(!!)..... very weird..... If someone has more recent and accurate info, please share.)

Catherine, your lady needs the best attorney she can find.... wouldn't it be cool if she won more $$ than the house is worth. The fact that she is already in default will work against her, but it's the standard fact, juries are almost always empathetic with the person filing a lawsuit.

She has already learned by this, that they are trying to take her house.... so she needs a a fast
rescue loan, or start packing and planning where she is going to go...

Lindy in Houston

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Andi Durbin

Date: July 30, 2008

I get a call from my client today (frantic I might add) that they have locked her out! I actually didn't believe her until I went there myself and sure enough, the locks were changed and the garage door opener disabled.

Unfortunately, the mortgage instrument gives the lender the right to secure the property to protect their interests. What probably happened is that someone hired by the lender did a drive by and indicated that the house was vacant. Once that happens, it is pretty automatic that the lender will move to secure the property. Because so many people DO move out leaving most of their personal belongings behind, stuff in the house is no indicator of whether or not it is vacant. Our last few foreclosures had bills in excess of $2K each to remove belongings left behind by the homeowners.

It happened to us on a short sale through Countrywide. The house WAS vacant but it was under contract and supposed to close the next day. The loss mitigation department knew this, but apparently the department that takes care of securing properties wasn't made aware. We were able to get a new key pretty quickly and proceed to closing.

In the other case we know about, the homeowner was out doing laundry and came home to find the locks changed. I'm sure this is not an isolated case.

Until the pendulum swings a little more back to normal, I expect stories like this will continue.

Andi

Mack and Andi Durbin, Brokers
Rooftop Realty
Serving Metro Denver since 1976
303-881-8844
www.rooftoprealty.com
Visit our blog at www.rooftopviews.com
30 years of doing whatever it takes

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Nadim Aziz

Date: July 30, 2008

Catherine writes, "I get a call from my client today (frantic I might add) that they have locked her out! …….Ok, venting over, but have you even heard of this happening with other banks? Is this becoming more common now? Banks getting a jump start on the foreclosure?"

Well, my opinion is that Wamu IS the worst company and I held that opinion before reading your post. I have heard of Ameriquest/Argent doing this under the guise of home preservation but as you mentioned, this was an occupied home.

Nadim Aziz

Broker Associate

Coldwell Banker

Ph: 408.921.9206

Fx: 408.448.8750

naaziz@paradigmrealtors.com

Nadim.Aziz@Cbnorcal.com

www.NadimAziz.com

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fred@palmbeachreo.com Licensed Real Estate Broker

Date: July 31, 2008

Catherine -

Since I list a lot of REO properties and am pretty familiar with the process, I believe your anger at WAMU may be misplaced.

Generally, they have a property preservation company check the property for occupancy. The national company (Fidelity in your case) assigns a local contractor to complete the job. The local contractor is given instructions that if it "appears" to be vacant, they are to rekey the property and to post a notice if there is personal property left inside.

It sounds like the local contractor just went ahead and broke in, rekeyed the house but never checked the contents to determine occupancy. Our rule of thumb is that if there is even an appearance that it is occupied we do not rekey the property, Instead, we place a notice on the front door to call our office.

Anyone with more than a few days experience in this business can figure out occupancy. Look for trash cans, vehicles in the driveway, old mail, newspapers in the yard, signs like that.

The people I use for this kind of work are very experienced and have never, ever done this to an occupied dwelling, even after the foreclosure sale and deed transfer back to the bank. The new owner (the lender) still has to complete an eviction process.

You may want to have a heart to heart talk with the local contractor and explain the facts to them - then find an attorney to have your client sue his butt.

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Randy Carson Licensed Real Estate Broker, Greensboro, NC

Date: July 31, 2008

So, I'm working on a short sale... we're in progress. WaMu (if you've ever worked with them on a short sale) is fast approaching the worst company to deal with. ... I get a call from my client today (frantic I might add) that they have locked her out!

I have had this happen 3 times on homes here in North Carolina. All 3 homes were being foreclosed on by Countrywide. Fortunately only one was occupied at the time. I talked with the person who does a lot of the rekeying for Countrywide and he told me it has become a very common practice here. Maybe there is an interpretation of wording in the Deed of Trust that the banks feel allows them to do this. . However, I totally agree that it is not right.

Randy Carson

RE/MAX 1st Choice

3150 N. Elm St., Ste 101

Greensboro, NC 27408

Phone: (336) 686-1776

Fax: (336) 458-9471

MailTo:Randy@RandyWorksForYou.com

or Visit @ http://RandyWorksForYou.com

"Oh, by the way..... I'm never too busy for your referrals!"

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Katheryn "kat" Gardner Licensed Real Estate Agent, Hilton Head Island, SC

Date: July 31, 2008

So, I'm working on a short sale... we're in progress. WaMu (if you've ever worked with them on a short sale) is fast approaching the worst company to deal with. They are slow to react, slow to process and basically nonsensical in some of their decision making.

Hi, Catherine!

I am sorry to hear what you and your client are going through. Short sales are among some of the most frustrating, time-eating, soul-sucking transactions out there. Unfortunately, there are no signs they are going away. I know some agents now just avoid them all together. Lenders need to wake up and realize if they continue to make this process so difficult, they may as well do away with short sales and go straight to foreclosure because agents and buyers alike will begin to understand that the short sales are sometimes just not worth it. I just closed one that went very smoothly and it still took three months of no communication and last minute headaches. This was after the offer was accepted!

I expect to write an offer on another tomorrow and have done everything I can think of to prepare my client for the road ahead. This one is with Country Wide and they have already said they will not even begin to answer offers for ten to twelve weeks. This does not bode well for anyone! I don't care how busy a lender is, three months of sitting on offers is too long. Not to mention, keeping clients earnest money funds tied up for months.

Maybe we will eventually get some standards that will help the process run more smoothly and protect buyers and sellers from lenders who have departments that do not communicate with each other and result in problems like the one you mention.

Good luck and let us know how this turns out!

Kat

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Donna Yount Licensed Real Estate Agent, Flint, MI, MI

Date: July 31, 2008

I hear your frustration in the tone of your writing. I have been having trouble with a Bank here in Mich. I am working with the buyer and I sent the PA in and the bank set their version with the exact same conditions and everything (it was their form not ours) and made my buyer sign it before agreeing to terms. It drives us both nuts trying to work with this bank. But we are finally closing next week. (fingers crossed)

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Cadey Charfen Licensed Real Estate Broker, Boca Raton, FL

Date: August 1, 2008

I am sorry to hear what you and your client are going through. Short sales are among some of the most frustrating, time-eating, soul-sucking transactions out there. Unfortunately, there are no signs they are going away. I know some agents now just avoid them all together. Lenders need to wake up and realize if they continue to make this process so difficult, they may as well do away with short sales and go straight to foreclosure because agents and buyers alike will begin to understand that the short sales are sometimes just not worth it. I just closed one that went very smoothly and it still took three months of no communication and last minute headaches. This was after the offer was accepted!

Kat - we agree Short Sales are not going away in fact in some areas they are as much as 80%+ of the closed business. Realtors have to be informed and understand the process in order to be able to help their clients. The Certified Distressed property Expert Designation is helping agents help more homeowners in a more effective and efficient way. Take a look at the website, www.cdpenow.com and if you are interested in hearing more there is a free webinar today at 3:00 PM detailing the market, where we stand and where things are going. Any questions you have will also be answered. You can sign up for the webinar here: https://www2.gotomeeting.com/register/270084804.

Have a great day!

Cadey Charfen GRI, CDPE

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Short Sale Horror Story, anyone want to hear?

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