Short Sale Horror Stories
Ever heard of Murphy's law? Well I had a Murphy's law closing involving a short sale, and what do you know but the seller's name was even Murphy! First of all, the closing was scheduled 1 day before the scheduled foreclosure sale and the mortgage company would not agree to stop the foreclosure sale until they received the funds. They would not even postpone the sale one day without the money. Then the promised short sale approval letter from the 2 nd mortgage company didn't come as expected the morning of the closing and I spent about 3-4 hours on the phone trying to get through to someone who could send it to us. We finally received the approval 3 hours after the closing was supposed to start. 3 hours before the closing was supposed to start, the title company discovered that this supposed single, never married man had an estranged ex-wife who would have homestead rights and so would not allow the closing to go through. We tracked her down and I sent a colleague to drive 4 hours to pick her up to bring her to the closing. They finally got to the city and couldn't get to the title company where the closing was because the whole block was barricaded off due to a severe accident and no one could get through. They were finally let through to the closing 4 hours after the closing was to start, now 5PM, causing everyone to have to stay late at the title company to get the transaction closed. Since it was so late, and so funds could not be wired to the bank, and the foreclosing attorney's office was closed, I had to drive the check to the foreclosing attorney's office first thing in the morning so that they would have the check in time to cancel the foreclosure sale which was scheduled for 9AM that morning.
Still Not Authorized
I was working on a short sale with one of the most inefficient mortgage companies in the nation. Immediately at the start I faxed written authorization to the mortgage company so that I could speak to them about the borrowers loan. I called the following day and was given a different number to send it to. A few days later I was told that they still didn't have anything and gave me a different number to fax it to. In whole I was provided with a total of 8 different fax numbers (each of which I was told was the only one that it should be sent to as there is only one fax machine these should ever be sent to). And it took 17 business days for the mortgage company to finally admit that they received the written authorization and allow me to talk to them about the loan.
I went through this same hokey pokey dance when an offer was received on the property and so had to send in the short sale package. This time I was given 5 different fax numbers over a period of 14 business days until they finally admitted that they received it and would begin to start the review process!
Needless to say, I am not going to waste my time with this mortgage company any longer, the deal was lost since the buyer was unwilling to wait around any longer.
You would think that mortgage companies would understand local state and county laws in regards to real estate so that they could properly handle real estate transaction. Well, this is not always true. I had a problem with a mortgage company on a property in Illinois where property taxes are always billed a year late. For example, 2006 taxes are paid in two installments, one in Spring of 2007 and 2 nd in Fall of 2007. When closing on a real estate transaction, the buyer is credited with a tax pro-ration usually calculated at an estimate of 100% to 110% of the previous tax year. (For example, if a property were closing in January 2007, 2006 tax amount wouldn't be owed yet so there would need to be a credit to the buyer for an estimate of an entire year of taxes prorated at 100% to 110%, whatever is agreed between buyer and seller.)
The mortgage company just did not understand this concept. They kept stating that they have paid all the property tax bills and there is nothing outstanding. The last property tax bill was due in fall of 2006 and they paid it in full and on time and so they don't have to credit anything for taxes since they are paid. I took me talking to 8 different people, including supervisors and management before I finally found someone who understood the concept and would agree to the credit to be paid out at closing.
She did What?!!!
I was working on a short sale that was going quite well. I thought that I would definitely have an approval. The property had been extensively marketed at $250,000 with no offers being made on it except for one at $225,000 from a real estate investor. The mortgage company was taking a while to make up their mind on whether to accept the offer or not. The seller got irritated at the length of time it was taking so called the mortgage company herself, without discussing first with me. Well she got a hold of the negotiator I was working with and gave her an earful about how long this was taking and how upset she was. Never once considering the fact that the bank considers a short sale as helping out and being nice to the borrower. She flew off telling the negotiator that this offer was from an investor and was no where near what the property is actually worth and that they need to make up their mind so that she can find another buyer if they aren't taking the offer. Well, as if I had a chance to get the deal approved after that. The negotiator called me the next day and let me know the offer was declined and that they wanted at least $250,000 and was upset with me for making her think this was a fair offer. I tried to explain and defend myself since really this was a fair offer given that the property was marketed at $250,000 for over 150 days with no offers. She just wouldn't listen to me any more.
I Guess Banks Enjoy Losing Money
I had this one short sale that I just couldn't get the bank to approve. The offer seemed fair to me at $160,000. The bank insisted that the property was worth at least $200,000 and wouldn't settle for less. They wouldn't even order a bpo to confirm the values, they told me the offer would have to be at least $175,000 for them to even do that. Well, I convinced the buyer to raise the offer to $175,000 to try to make this work. The bank ordered the interior bpo and it came in at $168,000. The bank decided that they didn't want to believe that interior bpo value and they still felt it was worth $200,000. There was no hope of me getting an offer anywhere close to that value.
The property ended up going to foreclosure sale and of course no one bid on it and so it went REO to the mortgage company.
4 months later, the property showed up listed on the MLS as a foreclosure property by an REO realtor at $169,900! Why would the bank allow it to be listed so low if they actually thought it was worth $200,000? Or did they just decide to believe this realtor instead of the bpo realtor?
Anyway, the property sat there for months and months. Finally, after being on the market for 9 months it sold for $152,000! The bank lost $23,000 over the highest offer I sent in, nevermind that I only charged 4% commission, not 6% like the REO agent and nevermind all the fees and costs associated with the foreclosure and carrying costs over the long period of marketing the property. I guess banks like to lose money and ignore reality!
No More Guesswork for me!
I was working on this one short sale and sent in an offer to the bank for $150,000 in order to get the ball rolling, figuring that if that offer was approved I would find a buyer easily since the property was probably worth more like $170,000. I sent in the offer in order to save time once a real offer came along. Well, I got the $150,000 deal approved, but then no buyers came. I had to back out of the deal with the mortgage company. After the property spent another 4 months on the market an offer finally came in for $135,000 and the mortgage company would not go for it since they now had it in their head that the property would be worth $150,000 or more.
I should have just waited for a real offer in the first place and it would have probably been much easier.