Foreclosure in 78230>Question Details

Ellen & Doc…, Real Estate Pro in San Antonio, TX

Does anyone actually know what financial incentives are in place that are rewarding the banks and servicing companies for slow-rolling Short Sales?

Asked by Ellen & Doc Stephens, San Antonio, TX Sat Mar 13, 2010

There must be some pay-off that exceeds the value of rapidly approving a Short Sale and avoiding a foreclosure. Don't tell me that it takes a bank that long to receive and understand an offer, calculate the real market value and make a rational decision.

Help the community by answering this question:


My understanding of the process is simply inefficiency. Its is not just on the part of the banks but everyone involved with real estate from the agents filling out the packets to the loan agents handling the case. It has been suggested that when something changes in the paperwork, it gets sent back to the bottom of the pile. The banks are largely understaffed to handle the growing problems but April 2010 there is suppose to be major overhauling. Allegedly, there is going to be a 2 week turn around time and it's intent is to expedite this process.

In DFW Texas, our association is really pushing short sale certifications and distressed property certification. The classes are a great update of whats really going on and how we can get around this learning curve. I dont like to buy into conspiracy theories... to me most of the time, its inefficiency or lack of knowledge.
1 vote Thank Flag Link Sun Mar 14, 2010
Honestly, I think the banks are just enjoying messing with us, and trying to drive us out of the business. Last time I checked, murder and arson are still illegal, so I am simply not doing the pre-foreclosures anymore. Personally -- I refer them to Josh Boggs... he has far more patience than I do.
Enjoy! Heaven is coming - this world is not our home!
Web Reference:
1 vote Thank Flag Link Sun Mar 14, 2010
The problem is how the process is managed. The banks are leaving the management up to each negotiator. The systems are not in place to manage the life of the loan which creates a mess. If negotiators change or go on vacation the file stops.

I can not prove this is for all lenders but do know for a fact that chase mortgage does handle the loans on a manual basis with the assistance of an access data base that can not keep up with the use. If the negotiator is organized and knowledgable the case will move quickly,if not organized, plan on a long wait.

Bank losses are not booked until the closing is booked or when updated bpo's if the assest is owned by the banks. Market to market , may of changed write downs but unless a market evaluation is completed , only assumptions can be used to estimate losses. With the growing numbers in the 60 day defaults the regulators should becoming more involved and raising issues for the banks and everyone else.

Keith Manson
First Weber Group
Certified Distressed Property Expert
Metro Milwaukee
1 vote Thank Flag Link Sun Mar 14, 2010
I've often thought the same thing...but consider this: The lenders that we are dealing with for short sales are often just the serviceing agents and do own the note. The notes are sold of to investors, which ultimately control the decision for the short sale.

So....we send the packet to the lender....and it takes a week or two to get it into their system. Figure another 2-4 weeks for them to analyze the financial situation and send that out to the investors. That's easily another 2-4 weeks....and then it goes back to the servicer to execute...there's three months right there. Add negotiatngwith the junior lien holders on top of that!

It's not easy....and they are not going away.
Web Reference:
1 vote Thank Flag Link Sat Mar 13, 2010
Cindi Hagley…, Real Estate Pro in San Ramon, CA
Yes, what a monster SS's can be!

I gave Cindi, Keith, Patricia and Danny a "thumbs up" because they are all on the right track in my opinion.

I've personally turned around a Wells Fargo SS from offer to acceptance letter within 3 weeks and a Chase SS from 65 days from offer to acceptance. There are soo many loose threads in such a chaotic system, that just by pulling one slight, will turn any possible success to certain doom!

For example, a certain negotiator in charge of almost 15 new SS files a day slapped on her desk alone decides that since the Realtor who wasn't very nice and polite over the phone turned in the SS packet in not the specified order; turns the file back to the bottom of her stack or on another pile that keeps it from getting reviewed. That can happen very easily and certainly does. I usually laugh when I hear some agents on the phone to the lenders demanding aggressively for that person to put their file on top priority. These people may get paid $18/ hour and could care less who I or any other Realtor is that only has one, maybe two files working with that lender... little alone that negotiator.

Look at Cyndi's time frame and she's right on the money as to what I "normally" see on a daily basis. Also, documentation for each and every single time you speak with ANYONE is crucial if you're going to have any shot at proving to ALL parties that things are being done timely and completely from your side.

Most Realtors will always believe they know more and don't have the time to be doing the 30 minute follow up on files you should do every day; and they may be right. That's why if anyone is going to take on a SS listing, they have better have a system in place and many support channels available to keep up with all the necessary communications and homework that these banks will need.

Additionally, I've turned down a handful of sellers upon our initial consultations. Not because I'm an speaking on behalf of the bank for an acceptance, but because I usually have seen what most banks are looking for and can decide whether i've got a seller that's truly in a hardship, or they simply are "claiming" a hardship. Big difference when you're dealing with a successful outcome.

Until there can be a large agreement upon policies, procedures and systems on how these SS should be handled, I believe that they're still going to be such a tough transaction to tackle if you're not ready to be patient, learning based and have a slight enjoyment for pain! ;)
0 votes Thank Flag Link Sun Mar 14, 2010
Short sales are not an easy task to undertake and should be considered thoroughly. It's not just the 1st lien holder that has to approve a short sale. It's such a process with so many in the back ground for decision making that it is time consuming and then on top of that banks are vamping up in numbers of employees to handle all the short sales. I would think twice before taking on a short sale that has a second lien. Even if the first lien holder approves the short sale, the junior lien holder may not.

It all goes back to "walk a mile in my shoes".

There are some great resources for short sales. I'm including one site.
Web Reference:
0 votes Thank Flag Link Sun Mar 14, 2010
Ralph, when mark to market was removed the banks all cooked the books. It may be legal but not right.
0 votes Thank Flag Link Sat Mar 13, 2010
Dan, banks regularly have their assets evaluated. True, they have to meet a certain requirement and non-performing assets are not assets but liabilities. And for national banks it is a felony to "cook" those loans.
0 votes Thank Flag Link Sat Mar 13, 2010
The real incentive is the banking commission itself. Banks have to have a certain percentage of assets. If they go below a federally mandated number the government does not like it.

A loss on a house sale be it foreclosure or short sale does not appear until the sale is made. What better way to cook the books than to delay or avoid sales that will provide losses and remove the cushion that makes the bank appear solvent when it really is insolvent?
0 votes Thank Flag Link Sat Mar 13, 2010
Check out the HUD website to see what incentives are out there for the banks. One problem I have run into is the rapid changing of staff that handle a property. And because of the large number of homes facing foreclosure there are not enough trained people to handle the paperwork involved. And it doesn't look as if it will get better.
0 votes Thank Flag Link Sat Mar 13, 2010
Sometimes I think it is just about controlling their books and P&L statements. They have very few negotiators and lots of short sales on their desk. Really... I think they just don't care to rush it. It is a crazy thing to try to analyze. Some things just do not make sense but I also know... you never know till you walk a mile in someone else's shoes.
0 votes Thank Flag Link Sat Mar 13, 2010
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer