Short Sale Strategies

<p> I&#39;ve got one of the short sales from hell on my hands. We have an approval from the first (Wells) and Countrywide is the second. Countrywide was approving the deal per the rep - and then up came the note on her system that it had to go to Mortgage Insurer approval. Now keep in mind this is a deal that&#39;s been in the bank&#39;s hands since MAY! Granted we&#39;ve had a couple buyer&#39;s back out due to the wait, and that has delayed things, but now I&#39;m being told the MI company will take another 30 days. </p> <p> 30 days? This buyer will not wait for 30 days - I&#39;ve been told that by their agent. First (Wells) is threatening to foreclose next week if we don&#39;t have anything definitive from Countrywide. </p> <p> I hear the MI company is Old Republic? Has anyone ever been able to skirt the bank and get to the MI person and beg them to hurry a decision? I&#39;m not above begging at this point. These sellers have been saints thru-out this process and they really wanted to avoid foreclosure. Closing this by the end of 2008 also offers them tax benefits/forgiveness which they&#39;d like to take advantage of. </p> <p> Thought I&#39;d see if anyone here had any ideas. </p>

<p> Well, as some of you know, I used to be a fan of the Countrywide short sale process. Things have changed. Does anyone have the names of escalation team members at CW, or even the proper federal regulator names/numbers? Here is a blog I wrote about my recent issues, and things got even worse today when they closed the file on an already approved short sale: </p> <p> So, of many of the big lenders, I hear a lot about Countrywide. They&#39;re here to help people. They want to work with people. They want to help people avoid foreclosure. Awww, its warm and fuzzy isn&#39;t it? </p> <p> <strong>Actually from the Countrywide website their Code of Ethics features :</strong> </p> <p> <strong>Doing the Right Thing<br /> <em>We have the responsibility to do the right thing for our customers, shareholders, communities and one another.</em></strong> </p> <p> Its an untruth (lie) from what I can tell. A PR dream come true, but its going wrong. I, for one, can&#39;t stop fighting for my clients. They are NOT doing the right thing for their customers, or the communities. </p> <p> I do a lot of short sales. Hey Countrywide, those are YOUR borrowers, trying to avoid foreclosure. These are YOUR borrowers who have lost their jobs, their health and their dignity in many cases. These are YOUR borrowers who have jumped thru every one of YOUR hoops to get to a successful short sale. And hey , you know what Countrywide? You are getting market value. You have an asset, that to this point, is well maintained and being marketed properly. Oh, and Countrywide, you have an offer - and this offer is from a buyer who really wants YOUR asset. Did you know you have YOUR borrower, the realtorS, and the buyers ALL JUMPING THRU *YOUR* hoops to get the short sale successfully completed? </p> <p> Yes, we are. We have, and we continue to do what YOU SAY. </p> <p> So, why is it that you&#39;ve cancelled SEVERAL of our short sales in last 2-3 weeks? Yah, would that be the same time frame you are on the news and in the press and telling the government that you&#39;re HELPING PEOPLE?! Yes, it would. </p> <p> Was it too much for you after working with YOUR borrower and their realtor for MONTHS to give a courtesy call before cancelling? To give a reason before you closed the file? Or to at least confirm your closure of the file MADE ANY DAMN SENSE AT ALL? </p> <p> Here&#39;s an example: </p> <p> You were waiting for the first lender to approve the sale (you are in second position). That&#39;s ALL you were waiting for. Nevermind the months you put us thru of needing extra docs, needing docs sent, resent and resent again. Nevermind the explanations and updated statements you needed and always got as soon as you asked. So we sent you the approval to be told you cancelled /closed the file. Why? Because after the MONTHS you put us thru, the buyer walked. But guess what, without ANY glitch at all, we had a back up buyer and submitted you a contract and new updated estimated HUD. NOTHING CHANGED FOR YOU. YOUR NET $$ TO YOU DIDN&#39;T CHANGE. THE TERMS DIDN&#39;T CHANGE. NOTHING CHANGED except the buyer name and you closed the file. Hey geniuses , the other bank is going to foreclose because after you delayed this for months, they&#39;re done. </p> <p> I believe now that for some warped reason, this is your goal. </p> <p> Is the government bailing you out if you foreclose but not short sale? What is your incentive here? </p> <p> That is just ONE of a half dozen examples I could give you of what you&#39;ve done to my clients in just the last 2 weeks. These are YOUR borrowers Countrywide. Do you care? (wait, I know the answer to that, its ok, it was a rhetorical question anyway, no need to answer). </p> <p> (If you read some of my past blogs, I used to be a big Countrywide supporter, I &#39;ve had good luck, things have changed since the bail out plans and new guidelines.) </p>

<p> Have you called Countrywide for an update lately? Oy vay! They now have it all automated! Now, instead of a &quot;real&quot; person you talk to their computer system that will tell you an &quot;update&quot; which on all the ones I called on today were non updates . They said they&#39;re working on the file, and that collection activities have been temporarily stopped. They said they will have another update on x date, and DO NOT CALL BACK until then. On one they told me 10/14 and another 10/21. </p> <p> Just when I thought we were on a roll... though on the bright side maybe this will make them work faster when they can devote less resources to phone answering. </p>

<p> Will Mortgage companies work with people who need to sell their rental property because they can no longer afford to feed it? Because they are an investor, will they automatically get a deficency judgement or can that be negotiated? Anyone have any experience with this? </p>

<p> Well, let&#39;s start our group rolling with some discussion: </p> <p> I <strong>was surprised, out of the blue, to get a short sale &quot;approval&quot; letter for a property who&#39;s package only got into processing with them 2 weeks ago.</strong> </p> <p> This is a second loan on this property. A little over 300k is owed on it (as a P.S. over 3 million is owed on the first) </p> <p> I was surprised that the letter said: </p> <p> <strong>&quot;Bank of America agrees to accept $320,000 in certified funds as settlement in full of this loan. Upon the bank&#39;s receipt of the payment of $320,000 the bank will release the the lien on the above property.&quot;</strong> </p> <p> Yes, don&#39;t be blinded by the approval part of this letter, take note that this is NO settlement at all. </p> <p> So I called and the rep said, we have a new guideline. <strong>&quot;In non-deficiency states we are no longer accepting short sales for anything less than 85% of the full loan value.&quot; Period</strong>. This is important.. not only as it may signify the death of many short sales around the country (in non deficiency states), but that their expectation is (per the rep) that the first loans, upon foreclosure, will have to buy them out to release the lien. </p> <p> So helping people with short sales just got that much harder in California... for anyone with a Bank of America loan (presumably a second loan or heloc product). Bank of America is going to force the hand of many, many borrowers. If this is true, and is becoming the new, true guideline, many will be now going to foreclosure instead of settling the debt thru a short sale as for most, there is just no room to pay the second 85% of the loan value. The other option is to force folks into promissory notes in order to accept the short sale ... for some that will work, for others, with true financial devastation and hardship, the idea will be overwhelming... </p> <p> Thoughts?? Experiences with B of A and their handling of seconds? I just had another one approved and didn&#39;t have any of these issues. </p>

<p> It seems that there is a trend for lenders to put a moratorium on Foreclosures while they try to pro-actively do work-outs for people with ARMs that are re-setting. Not sure about sub-prime sufferers. Any thoughts on whether this will result in increasing difficulty getting lenders to accept short sales? </p> <p> Bernard Gibbons </p> <p> +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++<br /> Bernard Gibbons, Realtor, e-PRO Certified Internet Specialist<br /> J. Rockcliff Realtors, 15 Railroad Avenue, Danville, CA 94526<br /> Phone (925) 997-1585<br /> <a href="mailto:bernard@bernardgibbons.com">bernard@bernardgibbons.com</a> </p>

<p> My northern california based client took a new job in southern california and now it is obvious that the only way his home will sell is as a short sale (he is about $100,000 upside-down plus closing costs. </p> <p> He has not missed any payments on his mortgage and he is now renting an apartment in southern california with his wife still living in the present home. </p> <p> I have been advised that he should contact his bank to determine if they will accept a short sale but I have previously understood that this is a pointless waste of time until we have an offer to present with supporting documents to justify a short sale. </p> <p> Any thoughts on this one? </p> <p> Bernard Gibbons </p> <p> +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++<br /> Bernard Gibbons, Realtor, e-PRO Certified Internet Specialist<br /> J. Rockcliff Realtors, 15 Railroad Avenue, Danville, CA 94526<br /> Phone (925) 997-1585<br /> <a href="mailto:bernard@bernardgibbons.com">bernard@bernardgibbons.com</a> </p>

<p> I have seen many pricing strategies and I would like to share mine. I also want to see what others are doing throughout the country and what the results have been. </p> <p> If a home is in the foreclosure process already, I list it at loan value. If it is not yet in foreclosure I list at 8% above loan value. I write into all my listing agreements a clause that allows me to systematically lower the price on the 1st and 15th of each month until an offer is recieved. Usually I lower it by 3% each time but if the sale date is near I somtimes get more agressive. All my listings expire on the 30th of each month this way I don&#39;t have to figure out when to reduce prices or contact clients about expiring listings. I also write them for one year out to be on the safe side. </p> <p> I also advised the seller not to expect much at the begining because we have to show the bank a concerted effort to get full loan amount for them. </p> <p> I haven&#39;t had a problem yet, however you must really pay attention to dates because the values have dropped so much, you always don&#39;t have the time necassary. </p>

<p> Do you generally open a pre-escrow when working a short sale or wait until the buyer&#39;s agent opens escrow once an acceptable offer is received? </p> <p> Bernard Gibbons </p> <p> +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++<br /> Bernard Gibbons, Realtor, e-PRO Certified Internet Specialist<br /> J. Rockcliff Realtors, 15 Railroad Avenue, Danville, CA 94526<br /> Phone (925) 997-1585<br /> <a href="mailto:bernard@bernardgibbons.com">bernard@bernardgibbons.com</a> </p>

<p> I&#39;m trying to get my head around the newly signed bailout plan and how it will effect my business and short sales in general. Since the government will buy the foreclosed property, does that mean that banks will be more willing to now foreclose rather than sell short or modify a loan? If the government is buying the properties cheap, are the banks still better off selling short? How will the government manage all these vacant properties- will they just sit until they can sell them at a profit whenever that may be? Will the government fix them up and have their own Realtors through a Resolution Trust Company type of company and do they work with Realtors? I wasn&#39;t selling when this happened in the 80&#39;s so I&#39;m not familiar with how that worked and hope someone on this blog has some insight into how all of this will affect us realtors. Thanks in advance for your thoughts. </p>

<p> Does anyone have a direct contact into Wells Fargo&#39;s Property Preservation dept? (These are the people who secure the properties, change locks, etc....) </p> <p> </p> <p> THANKS! </p>

<p> I have a buyer who has made a cash offer on a short sale property. I understand from the listing agent there is another offer as well. We priced our offer 10% below market , however the listing agent wants the seller to counter all offers. Aren&#39;t all offers as presented supposed to be sent to the bank to either accept or counter? The listing agent has never done a short sale and is negotiating with Washington Mutual who holds the 1st and 2nd. How should I proceed? Thanks for any advice. </p> <p> Jacque Baker </p>