Tips from an Industry Insider
For those out there (like me) going through a short sale, I found this interesting interview on the Mortgage Servicing News website.
The interview is with Kevin Beck who is the Foreclosure & OREO Manager for Fremont Bank in Northern California. He manages all default related areas, from collections and loss mitigation to bankruptcy, foreclosure, and REO. He oversees the implementation of all policies and procedures for the Default department. Fremont Bank is a privately owned community bank that services approximately 45,000 mortgage loans across its private and GSE portfolio.
Kevin is responsible for Fremont Bank’s development of Loss Mitigation strategies and best practices. During the current housing crisis, Kevin’s team has created a practical, customized loan workout approach, including modifications and short sales, to fit the needs on the individual borrower’s unique situation. The result has been mutually successful short sales and a modification re-default rate well below the national average.
Kevin has been in the mortgage industry since 2002. Prior to joining Fremont Bank in 2008, Kevin worked in retail and wholesale loan origination. Kevin earned his Bachelor’s Degree from the University of Arizona.
When asked if 2010 will be the year of the short sale, he said that many servicers had focused on loan modifications in 2009 because all the government and press focus was there. But in 2010 he thinks there will be a shift to a more balanced approach that considers short sales as well.
Using a “Short Sale Expert” Doesn’t Help
He noted that in his experience, having a third party doesn’t usually help homeowners get short sale approved faster.
There has been little success thus far in dealing with 3rd party short sale companies. Our most successful short sales have come by working closely with our clients and their agents. There may be some 3rd party models that add value, but our initial experience has been that they add an extra layer of confusion to the transaction.
In our case, the “expert” we contracted to help did nothing but take our money. About a week or two after we paid and signed the contract, we got an e-mail that said the company was ceasing operations because of the increased government scrutiny and legal landscape.
Didn’t even answer my e-mails when I asked for a refund. Not surprising, but unfortunately they had come highly recommended from people I trust.
Why Short Sales So Often Fail
Short sale transactions often fail because of unrealistic expectations. To address this, buyers need to be better educated on short sales and prepared for the non-traditional buying process. Sellers need to realize that the best way to complete the transaction is to partner with their lender or servicer. Too many times the seller’s agent is trying to hold the deal together on his or her own, while the actual seller removes himself from the process. This will likely cause the sale to fall apart.
So if you’re in the middle of a short sale or considering one, stay engaged through the whole process. What has worked in my situation was to have my real estate agent handle dealing with the other agents, showing the house, countering offers, and everything else with the actual real estate deal. Then I dealt with the lender and making sure I turned in all the paperwork and called for follow ups and raised cane when I needed to.
The only time my agent dealt with the lender was to fax in the HUD-1s or other transaction-related paperwork and ask specific, transaction-related questions. I took care of the rest of it and it seemed to work best for us and the lender.
Dealing With Second Mortgages
What seems to confuse agents and borrowers is when a lender or servicer holds more than one lien against the subject property, yet cannot approve the short sale simultaneously. In many cases, an institution may quickly approve the short sale for the senior lien, but move much more slowly on the approval for the junior lien. There are opportunities for improvement on the servicer side to communicate better internally to get these deals decided on more quickly.
My short sale involved a second mortgage from the same lender as the first mortgage. And it took forever and I had no idea what was going on for most of the process. They never explained to me that the two loans had to be handled separately. But now that I think about how things happened, it’s easy to see that they dealt with the first mortgage first and then, once the decision was made on that, dealt with the second mortgage.
If you’re going through a short sale, I wish you luck. Ours seems to have worked out…it’s not quite finalized yet, though.
Tags: Home Affordable Foreclosure Alternatives, loss mitigation, My Short Sale, second mortgage
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