Can Buyers Speed Up a Short Sale Review?
June 20, 2009 by Tim Burrell
Filed under Short Sales Stories
Short Sale Review Has Limited Roles for Buyers, Buyer’s Agents & Well Meaning Fathers
I received a message submitted from this website from Dave that said:
“Your web site has the best information I have seen. I am trying to help my son purchase a short sale home and am frustrated with the not only the slow response from bank of america but my nagging suspicion that neither the buyer nor the seller agents have a clue of how to this process works. As a former CFO I want to start calling the loan mitigation department and try to assist in getting this done.We are in California. Can a representation of the buyer legally call B. of A. and start pushing this along? Thanks for your help and you are providing a great service to not only your clients but the economy as a whole. Thanks again”
So, I responded by saying:
Your feelings that the agents are not fully trained are unfortunately very common. Send them to the website and it might help, even though some agents may not think they need it.
The bank is not supposed to talk to you without authorization from the borrower. The borrower’s financial information is confidential and they are supposed to keep that private. You might be able to call just to express the frustration of waiting so long, but that might be counter productive if you get a jerk on the phone. One thing the loss mitigation negotiator can do to get rid of you is to give you an approval on the short sale that you cannot live with e.g. approve the sale at a price you cannot afford.
One way you might help is to find the actual investor who owns the loan. It might be Bank of America, but it might not, as they could be servicing the loan for someone else. You can go to the Mortgage Electronic Registration System (MERS) and see who actually owns it. Then, try to get in touch with them. They will not talk to you about the borrower’s information, but you may be able to discusss how long it is taking to get a response and encouraging them to get in touch with the servicer to speed up the process. Again, you have to be concerned with an approval that does not work for you by the servicer.
The best way for all this to happen is for an experienced listing agent to be making these calls. Since you are not trained in this field, there is a chance you could make the lender upset and get an approval that does not work. Unfortunately, there are some agents who do not know how to make these calls, or who do not make these calls. So, you have a tough choice to make
If you have been waiting a couple of weeks, that is normal. For example. ASC has a normal review time of 25 business days, i.e. five weeks. Bank of America is normally less than that.
One thing you can do is to be sure that the short sale package is complete. Check with your agent to get a list of everything that needs to be in the package submitted to the lender. Then, be sure the listing agent has it all together and has submitted a complete package. Some delays are caused by the bank asking for more documents, then setting the file aside. Once you are at the bottom of the stack, you have to work your way back to the top of the stack to be considered after the requested documents have been received.
One thing you can do to help the process is to get in touch with the Mortgage Banker’s Association and encourage them to do the Foreclosure Alternative Plan that is part of the Making Home Affordable Initiative. Take a look at the post on this website that has a picture of Obama for more information. If banks did that, the process would be quicker when an offer comes in, because much of the work would already be done, and the only review would be to see if the offer is within an acceptable range of the Broker Price Opinion that they already have.
Good luck, and thanks for participating in the discussion on this website.
Tim Burrell
We recently received a rejection from BOA on a short sale offer that we have made. BOA only provided the rejection, no counter or idea of what price would be acceptable. According to our broker, the BPO came in too high. We are considering a counter offer, but really don’t have a feel for what to do at this time. Our broker believes that this property will go into foreclosure in August. There was another short sale on the same street completed last month for $30K less than our offer and the house across the street is up for sale at $35K less than our offer. Our belief is that our offer is very reasonable for the property. Any recommendation on what would be our best approach to get BOA to reconsider their BPO or negotiate with us?
The first thing is that your Realtor knows best, because your Realtor knows all the facts in the situation. You might discuss with your agent finding the investor that actually owns the loan. It might be Bank of America, or they might be servicing it for another company. If they are servicing it, get in touch with the investor to expalin that the BPO is too high, sending easy to understand documentation. You might also look to see if there is mortgage insurance on the loan that is going to be paid off. If so, get in touch wth the insurer, as they are the ones who are going to take the loss, and their motivation to get the short sale approved is different from Bank of America. If there is an insurer, send them the same easy to understand market analysis.
Another choice would be to come up slightly with your offer. There is a chance it will be submitted to the same loss mitigation negotiator, or it could be assigned to another one. With your improved offer, send an analysis of the market that anyone could understand i.e. charts, graphs, tables or visual displays that are easy to interpret. The loss mitigation negotiator may look at your information, question the BPO, and maybe order another one that would come in better.
Unfortunately, you are not the Lone Ranger. This happens, and it is why the listing agent needs to provide market information with the short sale package so that the BPO will have a reasonable value. Another agent in my office had a short sale turned down when the appraiser did not use a house on the same street that sold for less than his offer because the house was so much bigger than the subject property. In the appraiser’s mind, he could not use the much bigger house as part of the analysis. In anyone else’s mind, if a much larger house sells for less than your are offering, the seller should take it and run.
Thanks for your message.
My husband and I have been trying to buy a house through a short sale with Bank of America. We put our initial offer in at the end of June. We increased our offer mid July. We have still not heard anything from BOA. A negotiator keeps telling the selling agent that everything looks great with the file and our offer and that it will go through, but no one at BOA is pushing it through. Any ideas on what we can do to speed up the process. We would like to move in before Christmas! This has been going on since the end of June. The selling agent told us she calls BOA loss mitigation dept. daily but never talks to the same person and can never get a straight answer.
Bank of America is one of the worst companies for servicing short sales, partially because they have all the inventory of poor quality former Countrywide loans to deal with. They have developed one of the most inefficient systems possible to deal with this, with three stages of review. Each reviewer has a certain amount of time to act, and if they do not meet the time limit, the short sale department “escalates” the file. Escalation . . . big deal, we will try harder, but it still will take way too long to do the review.
Calling regularly is good, because otherwise with will just let the file sit. However, you are dealing with a bunch of “gatekeepers” whose job is to get your agent off the phone. You need to get the contact information for the actual negotiator, and send the negotiator emails asking what they need to move it along.
More importantly, stop trying to get a defective system to work. Bank of America is probalby only servicing the loan, it is owned by investors. The investors are the ones with “skin in the game”. Find out who the investors are, and contact them. You can look up Fannie Mae loans on http://www.FannieMae.com/loanlookup and Freddie Mac loans on http://www.FreddieMac.com/mymortgage. If they are not the investors, you will need to ask Bank of America for the name of the investor. When I did that for the first time, they tried everything not to give that information to me e.g. asked me to fax in a request signed by the borrower, then said I sent it to the wrong location. After many other games, I mailed a request to their correspondence department, and they wrote a letter to the borrower refusing to tell her who owned her loan. After conversations with my attorney, they gave me the information. So, start out by sending a request by mail with a return receipt so you can prove they got it, and follow up with whatever force is necessary.
Once you get the investor information, tell them what Bank of America is doing and urge them to intervene so that you can get your sale approved. If you are first time buyers, emphasize that you need an approval so you can close before the benefits end.
Please also contact the Mortgage Bankers Association and tell them of your experience. If you have any contact with any regulatory authorities, that would be good also, e.g. the regulators in the Treasury. If you have any other relationship with Bank of America, e.g. a relative with a major account, contact the branch manager or anyone else in authority to tell them what they are doing.
One of their excuses is that they are swamped. If they implemented the Foreclosure Alternative Program specified by the Treasury, they would get $1,000 for every short sale they approve. They get 500 to 1000 short sale applications per day. If only half of the lower number were short sales that they could approve, they would have additional income of 1/4 million dollars per day. Do you think they could hire enough staff with that bonus? So when they give you the official excuse, give them the answer that there is an available solution if they will just take it.
Good luck.
Hi Tim,
We are in the same short sale situation as many of the people above. We are trying to buy one from bank of america. we do not at this point know who the investor is. has anything changed in terms of the tactics listed above in terms of our speeding up the process from 2009?
Thank you!
Elyse
Speeding up the sale is similar now to 2009. Bank of America has adopted the use of Equator to submit your shor sale, and the technology has sped up the review of the package. One way to speed up the process with Equator is to submit your materials perfectly and respond more quickly than the allowed time limits, then know the time limits for the response by the Bank of America negotiator. If the negotiator is beyond the allowe time, you can escalate the file and move it more quickly.
I have similar frustrations as Tiffany has. My husband and I had put an offer on a short sale home at the end of May. We knew what we were getting into with regards to the short sale process. We had the luxury of time on our side for awhile. We were in the process of selling our home in Colorado due to a job transfer and eventually sold our home in July. We have since moved to Michigan and have been lucky enough to have been put into corprate housing for a few months until this sale went through. Well, our time has run out and it is now October. I thought for sure we would have been approved/rejected by now.
I believe the short sale team for the seller was adequately prepared with submitting all paperwork, as was their attorney. We are the only bid they are looking at and have received mostly encouraging updates thus far. I know they have submitted a HUD-1 form and recently a letter was sent to the seller from the bank negotiator.
What does this all mean for us. Why is it taking so long? We have money in the bank and great credit. We have received minimal information from anyone in the past 2 weeks. We are getting very anxious. We don’t even know what the BPO has come in at. Is there anything we can do to to make sure that this sale goes through. Just knowing we have to start paying rent/storage and for how long is an agonizing thing. How long do you ride this out and when do you know when to throw in the towel? We really love this house and are willing to go the distance.
Lisa
Ask the listing agent to contact the investor who owns the loan to let them know how the servicer’s delay is jeopardizing this sale. That may expedite the review. As far as the BPO is concerned, it is unusual for the lender to tell you what it is, but you should have some idea of the market value. As long as your offer is within 90% of the market value, you should have a good chance of getting the short sale approved. I feel your frustration. Just imagine mine, as I have an abundance of short sales waiting for approval, all needing constant attention, and no income until they close. Good luck.
Thank you Tim for giving us some insight to our short sale situation. As of right now we are still waiting for the banks approval (Astoria). At the end of October we found out that our file was deemed “too old” and the process had to be started all over again. We are going on month 8. I am going to take your advice and try to contact the investor who owns the loan. I will keep you posted on the outcome of our short sale saga.
Thanks again for all your advice.
Lisa
Greetings Tim,
We had an offer accepted on August 1 on a BofA short sale, and according to CMA’s, felt we were in the 95% range. I cant make heads or tails of where we are.
Setup person had the file first, BPO (with inside apparaisal) completed quickly, and negotiator assigned September 18. Fannie Mae is the investor, so 2nd BPO was necessary. Seller’s agent cannot determine if this has been completed.
30 business days went by with no action, so re assigned on Oct 30. Neither the old nor the new negotiator have ever returned an e-mail to seller’s agent, who calls customer service once per week.
So, any idea where we are? What is this negotiator supposed to do, and what will happen if he/she does it?
The investor is Fannie Mae. Have you ever contacted them directly with any positive results?
Or am I just being to impatient?
Thanks. Scott
Welcome to the world of Bank of America. The normal processing time is at least 90 days, most of the time it is longer. I have one closing shortly where we started on it in June.
Bank of America has a three step process, so you will be assigned to three negotiators. If you were trying to design an administrative system to be slow, having three lines you have to wait in would be a great design to slow down the process
. It is rare for anyone at Bank of America to respond in any way, but if they call the listing agent, they have to answer the phone immediately, because if they don’t you get a voice mail with no call back number. I have had several messagges from Bank of America negotiators using a secure email system that occasionally will not let me in to see the message that was sent. However, the best way to try to contact the negotiator is to send an email and at the same time call Loss Mitigation and have the person you talk to send them an email, with a copy to the negotiator’s supervisor. If you can find the name of the supervisor, you may be able to send an email to the supervisor, as the Bank of Amereica emails are firstname.lastname@bankofamerica.com, but be careful as some of them have middle initials or numbers in the middle of the email.
Contacting Fannie Mae has helped me in the past, but they will not talk to you as a buyer. You need a letter of authorization to discuss the file. However, you can call them and ask them to contact Bank of America for an update, and that occasionally moves things along.
I understand your frustration and these are a few ways to deal with the situation. Basically, Bank of America and Ocwen are some of the most difficult to deal with. Good Luck.
Thanks Tim,
Are you saying that once the current negotiator does his job, I have 2 more negotiators to get through before the file goes to Fannie?
You may already be past the first one, and possibly even past the second one. The worst part of Bank of America is waiting to be assigned to a negotiator, then when you get to the first one things start to happen. They have time limits for how much time each one has to review your file, so you want to keep in touch with the loss mitigation department to keep your file on schedule. If it goes over the time limit, they will escalate it and give it priority. So, I do not know if you are at the first, second or third negotiator, but it sounds like you are making progress.
Thanks again, Tim. I truly appreciate you sharing your knowledge and experience. Best wishes.
Do you have contact information for Fannie Mae?
http://www.fanniemae.com has good contact information. If you are looking to see if your loan is with them go to http://www.FannieMae.com/loanlookup and enter your loan number. If you are an agent, you need permission from the borrower to use that look up system. Good luck. Tim
Hello! I stumbled across your site and several of the comments have been helpful.
Have you dealt with Flagstar? I made an offer on a property near the end of July. Since the tax credit hadn’t been extended yet, I was ready to walk by the end of October and find something that could close on-time.
Then, things started moving. The sellers got “approval to participate” the last week of October. The title is clean except for a small amount from Household Finance which I’m covering in the purchase price (which meets/exceeds the amount needed for the short sale). The selling agent has been in contact with the Flagstar negotiator since the first week of November. They’re supposed to be working on the “closing instructions” at this time. The selling agent has been calling/emailing the negotiator daily and keeps hearing that we’re in “the final stages”, that we “should hear something next week” and that everything has been approved (though it’s just verbal right now since I have no paperwork to prove it). As of last week, however, the negotiator told us that she had submitted the file to her manager for review. We were supposed to close last week, but now we’re in limbo.
The more I read, the more I worry about just how far along we actually are and how many more managaers will need to approve this paperwork before it can be sent to my bank. My lender has been ready for weeks and just needs the final closing instructions so they can prepare their HUD1 (I’m not great at the real estate lingo — I think these are the correct details and terms…).
Do you have any insights? I really do feel like we’re close, but every day things keep getting pushed further back. I have no idea how long the file will sit on this nameless manager’s desk and where it’ll end up when he/she’s done with it!
Thanks for your time.
-Clay
I am sorry for the late reply. I was on a cruise for my 40th Anniversary when your comment came in. If Flagstar is the investor i.e. it is their loan that they did not sell, then they can approve it in house. If they are a servicer, then Flagstar puts the proposal together and submits it to the investor who owns the loan. You might put your loan number in http://www.FannieMae.com/loanlookup or http://www.FreddieMac/mymortgage and see if they actually own your loan. If they do, you will get a better idea of the procedure. It sounds like you are close to an approval if they are telling you the truth. By the way, your use of the terminology is fine.
Great insights from you and questions from potential short sale buyers here! My husband and I are still waiting on a short sale property in a desirable neighborhood in CA on which we first made an offer at the end of July. The bank (Chase), which holds both the 1st and 2nd loans (though in different departments), finally completed its BPO in October, but wanted more than we had originally offered. After mulling it over, we decided to meet their counter since it was still a good deal for us (though obviously not as great as our original offer). We were told by the listing agent that it had been assigned to their “closer” in late November, but now two weeks later is saying that without warning the second loan has been charged off.
She says she doesn’t know where the 2nd loan went, whether it was fully charged off and the bank is simply taking it as a loss and will only issue a 1099, or if it already sent it to a collection agancy. She was under the impression that the deal was ready for approval on the first loan and that the lending dept on the first had transferred funds to the dept on the second loan to mollify it. But this was never communicated to us or to our agent, so I’m not sure the only communication gap has been internal to the bank. We’re under no illusion that the listing agent represents the seller and not us, so I’m not sure how to best verify the information we are getting from her at this point (Our own agent is telling us that we are all on the same team here, but I am not as trusting, especially knowing that he (our agent) is not very experienced with short sales).
Obviously the seller would be better off only having to pay taxes on a fully charged off second, rather than having to pay back a collection agency. He may opt to let it go to foreclosure rather than deal with the collection agency, I suppose, if the amount on the second is large and potentially impacts his credit rating. But how large would it have to be in order to affect his rating any worse than would a foreclosure?
Other questions for us are, assuming the listing agent never found out who the investors are on these loans, would it be helpful at this point to find out that information and use it to nudge the bank? Also, what leverage might we have at this stage, and what specific steps should we be pondering as the bank gets closer to perhaps approving the sale or asking us for even more money? Can the listing agent be trying to help her client by lining up other offers or is that too risky or even illegal? Or is she simply signaling to us now that the seller is in dire straits and may need even more help from us even if the bank does accept the current deal?
Thanks for any help with these (or other) negotiating points we should be considering as buyers. -Brianna
Normally, charging off the debt merely moves it to a different department, typically collections. So, the listing agent needs to get in touch with that department and make your offer known to them. If it has been sold to a collection agency, great! They want to make a deal. I had one short sale with Wamu that was outsourced to company that did collections, and I applied for the short sale on Monday and had it approved on Friday. So, this is just a change of cast memebers for your play. Find out who the players are, present the offer and get it approved. Finding the investor might also help to get the servicers to pay more attention to your offer and get it approved. Good luck.
Thanks, Tim! The listing agent believes that investors getting involved slow the process down, and in response to my question about searching for the identity of the investor only said that the banks rarely divulge who the investor is. That probably is true, but am I missing something? Is the M.E.R.S. not able to give that info. easily? -Brianna
I have not found M.E.R.S. to be reliable, but you can try it. The investor does not usually slow things down, because having the investor contact the servicer usually gets the servicer to speed up. Just having the investor ask about the file usually gets it to the top of the stack to be reviewed. Sometimes the banks won’t tell you, but if you persist i.e. demand the information in writing signed by the borrower, they will tell you.
Good luck.
Tim
Hi Tim, thank you for the helpful column, although I do have some questions. I have submitted my offer for a short sale and our lawyers are working on some details. Wells Fargo holds the loan and has received our offer. My realtor has been great but told me that my attorney should be the one calling Wells Fargo to move things along. I was told by other people in the know, including my attorney that in a short sale it is the seller’s attorney who should be contacting the bank? Please help me out here, who should be the one trying to get Wells Fargo to move things along?
You will have a hard time communicating wiith the bank without a letter of authorizatiion from the seller letting them talk to you. After all, the seller’s financial information is confidential so they cannot discuss it with you or your attorney without the seller’s authorization. So, get the seller and their attorney to take care of the short sale. Or, in rare instances they will authorize you to take care of it. I had one situation with a seller who hired a discount broker who could not help, so they autorized me as the representative of the buyer to resolve the short sale. But, that is unusual to say the least. I hope this helps. Good luck.
Hello Tim,
I am a first time home buyer and put in my offer for a townhouse at 125k. The home was appraised at 135k (actually my first offer was 135k but they countered with 125k so long as I pay HOA fees). The bank sent a counter offer asking me to pay the delinquent home owner association fees. I agreed and sent in the paperwork the end of May. It is now mid July and still nothing from Bank of America. I am very patient (although I would love to start working on my home and move in) but I am worried because the tax credit is set to expire September 30th and I would really like to be able to get that. Is there a way for me to contact BOA if so how and should I be worried that they wont respond in time for the credit? I am feeling anxious and worried they might try something fishy. Thank you for this helpful service and I hope to hear from you.
You can contact Bank of America, particularly the branch that originated the loan, to express your frustration at the delay. The loss mitigation department won’t be able to talk to you, because you do not have a letter of authorization from the borrower and they have to keep the borrower’s information confidential. I hope you get the approval in time.
Hi Tim,
Great info. here. My wife and I are going on 7 months waiting for approval of a purchase of a short sale in Virginia. They have already done 4 BPOs and after hearing that we were close to approval or counter, they have just told us that they are going to do 2 more BPOs. They will not tell us why. The bank–according to the seller’s realtor, and she said she didn’t know if it was the servicer–is MGC Mortgage, apparently Beal Bank owns them. I have communicated all of your suggestions here to my realtor who has said she communicated them to the seller realtor, but the seller realtor said she is not allowed to contact the investor. Can that be true? Help!?!
CJ
The agent for the borrower can contact the investor if they have a letter of authorization to talk to the investor. The investor is the one with the “skin in the game” who ultimately makes the decision. So, they are the best one to negotiate with.