Lender411.com Articles Foreclosure

Link to this page Print RSS  

In one of my weekly newsletters I wrote about how you can streamline the short sale process.

I included information how to contact Counytywide's short sale department if you don't get an answer on a short sale within 45-60 days. If you need this information again, please contact me.

Someone posted this article online. Since then I have been getting emails from frustrated short sale buyers, all over the country, asking for my help. In each instance, the seller agreed to their short sale offer but the seller's bank has not responded to the offer.

In some of these emails, the offer is six months old or more.

Real estate agents that specialize in listing short sales estimate the chances of your short sale offer being accepted by the bank is between 10-35%. So, at best, you're likely to have slightly better than a one in three chance of that offer being accepted by the bank.

If you are serious about owning a home, and you want to be in that home in the next 90 days, you will want to consider avoiding short sale offers.

If you fall in love with a particular home and you understand that the odds are stacked against you and you don't need to move quickly, say in the next six months, then proceed. However, do so with caution.

Lenders have been slow to accept short sale offers. Accepting a short sale seems to make financial sense for them. Research shows that short sales losses for the bank typically result in a 20% loss. If the home goes into foreclosure, this results in a 40% loss.

For example, the bank has a note for $200,000 on a home. If they accept a short sale, on average, they will lose $40,000. If they let it go into foreclosure, which includes legal fees, maintenance, and more, they will lose $80,000.

The banks know this data. Although it makes financial sense, short sale acceptance is still about one in three, at best.

Here is how it works:

A short sale requires the approval of the buyer and the seller. The seller then has to go to his mortgage-servicing company for approval to go forward with a short sale.

One challenge is that the seller's loan has been packaged and sold into a security. A mortgage-backed security.

The mortgage servicing company then has to go to the actual investor of the security. This is where your seller's loan now resides. They need this investor's approval to allow this short sale. This is where the long delay occurs.

Link to this page Print RSS  

Page: 1 of 5

1

2

3

4