When HAFA was rolled out as the government’s answer to short sales, the servicers said they’d be pre-approving candidates, but I still haven’t seen, nor heard, of any around here.
So it’s been more of the same drawn-out approval process.
Bank of America is still a disaster zone, with no consistency whatsoever, and lengthy delays. Chase has been better, and from what we can tell, one of the reasons is because when a buyer bails out, Chase keeps the file with the same negotiator. Bank of America seems to start over every time.
But I think it has a lot to do with the competency of the individual negotiators – some can handle a bigger workload than others. Same with the listing agents, and I have yet to see a short-sale negotiator that made any difference in getting them approved faster.
1. We have documented the purchases by LGS of 1-br condos to use as rental properties in a particular La Mesa complex. Last year he paid $75, 000 for an REO, and $60,000 for a short sale, which took 11 months to get approved. In the end, he had to bring in an extra $1,800 to pay the short-sale negotiator vig, and $2,200 to pay off the second mortgage holder.
In August, 2010 we offered $60,000 cash on a third condo for which that the seller paid $155,000 on 2/1/07. There were two purchase loans; the first was $124,000, and the second was $15,500, and both were funded by National City. The first lender approved our price in December, and alloted $1,500 to the second lender. But the second had already been sent to collections, and they refused – they wanted $6,800. LGS offered to add $2,000, similar to what he paid last time, but the second denied that too. The deal died last Friday.
The first lender is foreclosing today, and the opening bid is $142,000.
2. In May, we made an offer of $820,000 on an approved short sale, but we backed out a week or two later due to discomfort about the process – but sometimes price will fix that. We came back a month later and offered $790,000, but the mortgage had transferred from GMAC to Saxon. Whatever the deal made there must have been motivating, because Saxon delivered official written approval of our lower offer within 30 days.
3. A year ago we made an $1,000,000+ offer on a BofA short sale that seemed to be in line with the comps. Four months later it was denied, and BofA said they were going to foreclose instead. But then they postponed the trustee sale three months in a row, so I called the listing agent about giving it another try.
He said, “What the heck”, so I sent an offer that was $100,000 lower. BofA approved it last week.
4. I heard this story from another agent. Their short sale was approved, but the sellers weren’t very cooperative, which is typical. They turned in their escrow papers the week of closing, which included their “statement of information”, the form used by the title companies to help determine if any outstanding liens belonged to the sellers, especially when they have common names. Title found that the sellers had a $19,000 tax lien! Because the sellers cried poor-mouth, the buyers and both agents had to split it three ways.
Generally the short-sale process is about the same as it’s been – long and unpredictable.