Deb Espinoza's Real Estate BLOG

National Association of Realtors (NAR)  has just confirmed that short sales are still anything but 'short', stating an average time frame for a short sale taking 16.6 weeks!  This fact on top of the startling statistic that less than 3 of 5 short sale transactions are ever coming to completion makes it crystal clear why most buyers and buyer agents steer clear of short sales.

Another thing that buyers need to take into account when making an offer on a short sale is that a large percentage of sellers do not cooperate and have an attitude in which they think they've lost everything anyway and why should they care?? Many times the seller won't provide documentation that the lender wants in a 'timely manner' thus stalling the short sale process, and then there is also the possibility that the seller decides to work on a last ditch effort to get a few more free months in their house by filing bankruptcy. When the seller files a BK, the entire short sale is void and all the work and wait is for nothing.

I currently have a short sale that was approved by the lender and upon walking my buyer back through after receiving the approval letter we discovered a few disturbing things. The seller had starting removing items that he apparently felt were his to take. The entire designer custom fireplace mantle and surround were ripped from the wall, the vanities were removed from the bathrooms and the water lines capped, and the surround speakers were removed from each room and plastic wrap taped over the gapping holes in the ceilings. The pool that was so beautifully maintained a month ago now looks like a green swamp- Never mind the fact that before we viewed the property in the first place the seller had already removed the entire kitchen!

So, now what do you do? The listing agent was informed and she called the seller to tell them to stop trashing the house and removing items that are not theirs to take, but they told her that they will not return the missing items. Never mind the fact that my buyer LOVED the fireplace, that now isn't so pretty, and the pool will take time and money to clean up, the holes in the ceilings will have to be repaired and new vanities will need to be purchased and installed.

So now as a buyer representive I realize that I must include another item in with an offer on a short sale. An addendum that explains that the buyer expects the house to be in the same condition as when the offer was made and that photos have been taken and that 'built-in' items will NOT be removed by the seller because they are considered part of the property. All this because you can't expect that the listing agent informed the seller of what their duties are as a cooperating seller in a short sale.

So my advice to buyers will still be to steer away from short sales unless you have the patience of Job, and are prepared to have the deal fall apart after 4 or more months of waiting, or prepared to find a shell of the house you thought you had made an offer on.  The possibility of getting a 'good deal' on a distress sale, short sale, just may not be worth it to many buyers.

Sad to say- but after years of short sales being the 'norm' in real estate sales there has been absolutely NO improvement on behalf of the lenders, servicers, MI companies, and negotiating companies process of processing and approving these deals in any kind of timely or quality manner of service. As if BofA wasn't enough of a mess with their in-house negotiators using Equator for short sales, they go and hire outside companies to 'help' them handle HAFA short sales. I have two going now that are assigned to two different companies and the process is totally different for both.. WTH?? One negotiator "OVER responded"- really! She gave LESS than 24 hours to complete her tasks- counter from the lender- buyer respond by 10AM tomorrow; buyer okays with the ammendment uploaded, you have 3 hours to get the lenders updated approval letter for higher loan amount. REALLY!! She was flexible to a point- but REALLY??!! The nice thing was the last piece of info was uploaded by us at 3:30 and we had an approval letter by 4:30; the 'not so nice thing' now is that they want ORIGINAL signed documents that have been provided twice already- by the homeowner to BofA and by us through both Equator and fax. The HAFA negotiating company says THEY need the originals in THEIR file and to send them to BofA PO Box... go figure..  Now the other company... offer in for 3 weeks, no response, notes put into Equator asking what's up, what do you need... Finally copied ALL listed as "contacts" for the file.. STILL, no response. And one lender or servicer may be good today and tomorrow... Not so Much..

And who's bright idea is it to OVER value the properties so much that they don't get sold?? Obviously it must be true that the servicers and lenders make more if they foreclose... They can take cuts off attorney fees, asset management etc. I guess it still is about the almighty buck for these big companies to squeeze every last cent of a deal and drag this mess out for years instead of just getting the deals done so we can clean the mess out and move on... And all the while they pretend they are our partners.. At least until they can lock in their monopoly on the loan market by squeezing out reputable mortgage brokers- but that's another Blog.

Just in case you have a short sale file with GMAC that was being handled by the Philadelphia office and you hadn't heard... That office was closed, probably over the weekend because that is when I lost track of my loss mitigator. All files have been transfered to the Dallas office and you have to wait for them to be assigned to a new negotiator there.  My sale was supposed to close yesterday; emails to get HUD approved came back undeliverable; mailbox full, and phone calls to mitigator's direct line were forwarded to the main customer service number. No one there can handle the file to close it until we are assigned a new person...  Great.

Just in case you haven't heard.. Chase is selling pretty much ALL their second mortgages to a credit collection agency. Well, actually that is what they WANT you to think. What I have reason to believe is that Chase created a new (strong) arm of their company called Regency Collections and handed over all the second mortgages to professional canibals to kill any short sale deal that doesn't involve Chase also as the first mortgage holder. You see, I am told that if Chase also holds the first mortgage then "of course" Regency will accept the $3000 settlement on the HUD to release the lien; however, if Chase isn't the first then watch out! They are standing pretty firm on a MINIMUM of 20% and that's just to release the lien; if you want deficiency to go away then they want 60%!  Yeah, I think that every poor struggling homeowner has that laying around and if not, then they'll surely want to come clean and pay it back when they 'get back on their feet'. Oh, and also to complete the corrupt (in my opinion) package.... Regency DOES suggest that the homeowner make a 'special payment to bring down the principal balance" before escrow closes and this will entice them to release the lien with the additional amount that they get 'legally' off the HUD from short sale so they get at least their 20%. Hummm... Does this fall under the ILLEGAL practices that CAR warns agents about or did Chase/Regency get legal advice to make it so they don't have to follow everyone else's rules? Maybe it doesn't apply if the offer is made by a collection company and maybe this is 'special' verbiage that their slimy attorneys can wiggle around and get them off the hook if someone challenges it... Smells fishy to me for sure!!

This is plain and simple- Chase wants their short deals done; but screw the other banks and investors, homeowners that have Chase 2nds. They look to get away with this by hiding under the guise of Regency Collections, but guess what? My bet is this is ALL Chase-.   Regency says they didn't "buy" these loans; they are just acting as the credit collector for Chase and that all deals have to be approved by Chase (Chase confirms this) before they can release a lien on a short sale second. It's automatic that Chase will release a 2nd for $3K if Chase is the first mortgage holder; but no how, no way, if someone else holds the first. And in either situation Regency plans to go after the homeowner for deficiency. What a typical Chase tactic, this is a really great way to treat your customers; remember those whose tax money you have so easily taken to save your "Too big to fail company" from crappy business practices. You deserve the break and bail out but to hell with the little guy?? Don't forget that it's all the 'little guys' that made your company and could just as easily help its demise.