Fast Short Sale Approval?? Ask if the Servicer is Delegated

Fast Short Sale Approval?? Ask if the Servicer is Delegated. When home owners pay their mortgage payments to Bank of America, Wells Fargo, or any of the other "lenders" these entities are actually servicers for the investor that owns the note. In most cases, even though they lent the money they have subsequently sold the loan to an Investor. At this point, all they do is collect the payment, take a fee for this and then transfer the remaining funds to the holder of the loan...the Investor. The investor could be Fannie Mae, Freddie Mac, Pension funds, Insurance companies etc... When you are requesting a Short Sale the request is almost always made to the Servicer. If the Servicer is delegated then they have the authority to accept the Short sale without asking the investor for approval. Usually this delegation is based on certain parameters. For example: The Investor may tell their Servicer that they can accept any short sale as long as the loss is less than 35%; the Borrower (Seller) is at least 30 days delinquent on their payments, live in the property and the current payment is more than 31% of their gross income. If the Short Sale fits within these parameters then the Servicer can issue the approval. The parameters vary from investor to investor. Here's why it is important to know whether the Servicer is delegated. If the Servicer is able to approve the Short Sale without going to the investor, it saves a lot of time. It can easily cut the Short Sale time for approval in half. An example of why this knowledge is relevant: Recently it was discovered that a Servicer was delegated. There was a purchase price that netted the investor about $1,000 less than what would fit within this particular Servicer's delegation authority. At this point, there are two options: 1. the file could be submitted to the investor for approval, or 2. the purchase price could be raised $1,000 to get the approval quickly. The Buyer was perfectly happy to pay an additional $1000 (presumably in exchange for a faster approval). The Short Sale approval was received the next day. Accordingly, always ask the Servicer if they are delegated for the file you are working. If they are try to see if the Short Sale you have submitted fits their parameters. They may not always tell you but it certainly is worth asking. Knowing the answer can save you a lot of time. Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Things a Listing Agent Should Never tell a Short Sale Lender...

I know that this sounds like a question from the $25,000 Pyramid show, but....There is a disturbing trend in short sales....an investor puts a property under contract and begins to market the property for future sale. Listing agent discovers that there may be a higher offer. They then tell the short sale lender!

This is a mistake for valid legal reasons. The listing agent's duty is to the home owner. In telling the short sale lender that there "may" be a higher offer, you are breaching that duty to your client! If the short sale that you submitted is rejected, you are now liable to yoru client because you had no duty to disclose the higher offer and in doing so, the bank rejected the offer because they believed that a higher offer is coming in. Of course the higher offer does not come in because the contract with the investor is now terminated!!

There is some misguided notion that you have a duty to the bank. The only time that you do is when the property is a REO. In that situation, of course, you must advise them of the higher offer, BECAUSE THEY ARE YOUR CLIENT!

There is no duty to advise the bank of the higher offer. There IS liability to YOUR client if you DO! So, please do not do this. You will lose investor buyers, and subject your self to liability...and by the way, in all likelihood, your E&O policy will not cover this loss because you were not acting within the scope of your duty and license and your action caused the liability!!

Investors are around 30% of the buyers right now so it makes no business sense to alienate them!!! This is also a good reason for the listing agent to NOT negotiate the short sale....you are putting yourself in harm's way when you negotiate the short sale

The highest Short Sale Offer may not be the Best Offer

While it has always been true that cash is king, in the distressed property market it is vital for listing agents (and selling agents and buyers and sellers) to consider the fact that the highest offer isn’t always the best one and cash may not be king.
The Highest Offer May Not Be the Best One

In simple terms, when evaluating offers on a short sale, the highest offer may seem great, but there may be terms and conditions that are not in the best interest of the seller. For example, will the buyer with the highest offer agree to all of the necessary terms and conditions that may come from the bank? Will this buyer agree to pay for pest control if the bank refuses to do so? Will this buyer agree to wait three months for a short sale approval letter?

Now, with regard to short sales, the offer that is the best is clearly from a buyer who is serious, who is willing to stick around, and who is willing to accept any changes to the terms and conditions that have been dictated by the bank.
Finding the Buyer to Stick through the Short Sale Process

A buyer that is willing to stick around for the long haul is probably the best buyer of a short sale. Bank employees do not care a lick that the cash buyer can close in two weeks; they still take their sweet time to process the short sale despite the fact that this inefficiency is causing them to bleed money right and left. Keep in mind that buyers that are willing to agree to terms and conditions that may change at the eleventh hour are better, stronger buyers than those who will march when the bank refuses to pay closing costs or termite repairs.

The cash buyer is great for the short sale because he or she does not need to worry about lender approval of the HOA or an appraisal that comes in sub par. But, will this buyer be willing to come up to the purchase price that the bank is looking for on their short sale? Aaah. That’s a good question. Lately it seems that the bank thinks all short sales are mansions made of