Many years ago a client came to me and told me about a house he was thinking of buying in Denver as a Short Sale. He wanted to know if I knew anything about Short Sales and if there was a way to speed up the lender in his case. I had to sheepishly say “no” I had never heard of this thing called a “Short Sale”. Six months later my first Short Sale client walked into my office in Leesburg asking for help. I could not believe the level of effort and time it took me to close that first Short Sale in Leesburg.
After my first Short Sale in Leesburg finally closed I begin calling every Title Company Attorney, Lender, Realtor and Broker I knew begging for insights they could offer me on how to navigate the lenders system more effectionally. What I discovered was simply amazing.
For the most part there were two school of thought; 1. Hire or outsource a person to do nothing but negotiated with a bank or lender and chase paperwork or 2. Refer out the client to another Realtor. In those early years successful outcomes on most Short Sales were 50-50 at best. On top of it all each lender had a totally different policies and procedures to follow when turning in a Short Sale offer. Sometimes these policies ran contrary to common sense. Some lenders required a borrower to be at least 60 days late on their mortgage before they would entertain a Short Sale. While others would refuse to work with the borrower if they started the foreclosure process (normally this starts within 60-90 days). Even if you successfully completed the gauntlet of procedures and paperwork you can still wait as long as six months for a reply from the lender. During this time borrowers could be served with eviction papers with very little notice. Understanding early on that Short Sales in the Fairfax and Loudoun county areas were going to be a part of life for the foreseeable future I begin to take every class and seminary on Short Sales available. Most were a complete waste of time and money but a few offered little nuggets of invaluable information.
Fast forward to today and the world of Short Sales 2.0. Thanks to some interventions from Congress and consumer advocates there are now clearer rules of the road to follow. For example, each lender is required to give a point of contact to process a Short Sale. In the old days I would spend hours bouncing from one lender rep to another having to re-explain where we were in the process. Most lenders have taken this a step further and given all their Short Sale reps a direct phone number and email account to communicate with Realtors and borrowers. Bank of America puts their entire Short Sale process online so you can follow the flow of work. Realtors can actually see what items are needed and where the client is in the process online and in real time 24/7. You also, no longer have to be in default of your mortgage before you can begin the Short Sale process. Most of my clients never fall behind on their mortgage and still get approved for a Short Sale. Most lenders also now have a goal of responding to Short Sales within 30 days and closing within 60 days. My last Short Sale was with Wells Fargo and we closed within 30 days of receiving an acceptable contract. The total time from listings to closing was 45 days!
What does this mean for anyone thinking of trying to Short Sale their home? Your success rate is much higher now then it has ever been. What do borrowers thinking of doing a Short Sale still need to look out for? The biggest piece of advice I can give someone thinking of doing a Short Sale is to interview the right Realtor! Make sure the person has a track record and has a Short Sale designation like CDPE (Certified Distress Property Expert). These Realtors have taken the time to learn about Short Sales. The second bit of advice I would give is to get your paperwork together. Lenders want to see bank statements, paycheck stubs, employer letters (if you lost your job), divorcée decree etc. Think of it as if you were applying for a new mortgage. Lenders are on the look out for fraud.
What little good new there is in this very traumatic time is that borrowers have a choice. They don’t have to go into foreclosure and damage their credit for years if you are behind or struggling with your mortgage. In some cases the lender will even pay you to successfully complete a Short Sale rather then take your home in a foreclosure.
Want a private confidential meeting to discuss your Short Sale options and to see whether you qualify for a Short Sale? Call or email me today!
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