What’s Up with the Banks and Short Sales?
It’s getting mighty crazy in the world of short sales! The rules that were established by the Home Affordable Foreclosure Alternatives (HAFA) program are sometimes followed, and sometimes not followed.
The biggest advantage that HAFA provided to a distressed seller is that it gave us a beginning point – an outline if you will – so that real estate experts and title attorneys could have a solid foundation to begin the process once a contract has been received on a short sale property. In the last 3 months, I have heard several banks inform me that they do not have to follow these guidelines.
The single biggest obstacle remains that it takes way too long for many banks simply to compile the short sale packet and confirm that they have everything they need to forward the file to a negotiator. When I send in a 70 page packet, complete with financials, a hardship letter, the listing agreement, the sales contract, and the HUD-1 form, it is still taking up to 30 days for the banks to either confirm the packet is complete or request additional information. The two banks I dealt with today are sending the request for additional information via regular mail, and they are sending the request to the homeowner – despite my repeated requests to either email me or call me with those requests.
Many of the larger banks are now using online technology to process the immense amount of paperwork required in the short sale packet. Bank of America and Wells Fargo, along with a handful of other smaller banks, are using Equator. The real advantage of this technology is that when a processor at the bank tells me they don’t have my client’s tax return, I can pull it up online and show them where the document is. Thank goodness that these same banks that know when you’re 30 seconds late on a payment are now using that technology to help homeowners (their clients) in need!
So what is a distressed homeowner to do? First and foremost, make sure that you are working with professionals that have some recent closings under their belt. The single most important attribute my staff and I have right now is stick-toittiveness, simple old fashioned elbow grease and a refusal to accept “I don’t know” as an answer. The biggest use of my time right now is to get aggressive with a bank who has had my file for 30 days and has no answer or update for my client. My internal policy is that the bank gets called at least every other day. Otherwise, the file will fall through the cracks. The banks will not pay attention unless my office induces them to do so.
Another important factor for my clients is not to get lost in the macro economics of what is happening to the banks and our economy. We are trying to short sell one property – your property – and the overarching picture is essentially meaningless to this one sale. Let’s concentrate on what we need to do to get this property sold, and not get wrapped up in the bigger picture.
These are tough times. Distressed sellers need somebody in their corner who will be tenacious, who follows up, and who can draw a line in the sand with the banks when the situation calls for it!