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I'm really curious what causes short sales to take so long. In some cases it seems partly to be incompetence (closing without reason, later to be reopened), in others perhaps apathy.
Someone in another thread suggested that the bank would rather have the 200k loan on the books as an asset than take the loss from a short sale, however that was rebutted by someone stating that the banks in this case are just servicing and don't have the loan on the books anyway.
As I understand it, the process is fairly simple. Certainly gathering together all of the documentation for the short sale package takes time however at least in our case everything was in place in under 30 days. So after the short sale package is in the hands of the bank the following happens:
Assign a Negotiator (the standard title for a lender employee who coordinates short sales)
Order a BPO (Broker Price Opinion - a report documenting the value of the property)
Submit the short sale package and BPO results to "REVIEW" (inside, outside investor)
Somehow the above three steps seem to take many months. The first two shouldn't take more than a several days, I could see the last taking more time depending on how many parties are involved however unless they are calculating using an abacus there's no reason I can think of that investor review should take much time at all. Either the numbers work or they don't.
I thought it might be nice to have a thread for discussing theories, and maybe some people in the know can shed light on the mysterious process of the infamous short sale.
Different loan programs, different investors, different guidelines, different skill levels of staff, changes made to personnel, programs, systems, procedures, changes to phone number, fax lines....
Because there are be mountains of fraud involved in both the short sale package and the bpo.
Someone buying wants to point to lowest comps for their bpo. Banks want the highest bpo.
People aren't always honest how much money they have tp the banks. At least in my neighborhood. It's funny how people who have short sold their properties cannot afford a 400-500k mortgage but some how afford to pay $3k/month plus in rent.
Because there are be mountains of fraud involved in both the short sale package and the bpo.
Someone buying wants to point to lowest comps for their bpo. Banks want the highest bpo.
People aren't always honest how much money they have tp the banks. At least in my neighborhood. It's funny how people who have short sold their properties cannot afford a 400-500k mortgage but some how afford to pay $3k/month plus in rent.
There's something I didn't consider.. which is odd as I'm normally very cynical... I could see that taking some time.. but it still seems excessive.
I always figured the banks already have people doing favorable BPO's for them, do they order several and then take the highest?
Banks sell the loans and make you start from scratch. Banks lose the file and make you start from scratch. Banks reassign to a new negotiator and make you start from scratch. The process goes on so long, they make the seller provide all new paperwork, essentially starting from scratch. Are you sensing a trend?
Also, the negotiators sometimes have upwards of 1000 files on their plate, so they get to you when they get to you. Some are much better than others. We had one negotiator who, in order to get the file closed, we finally had to go to the negotiator's supervisor's supervisor's supervisor. Pretty much the head of the BofA short sale department. Once we reached them, the file closed in just a few days.
Also, besides the excellent list that 2bindenver posted, add changes in government policy and requirements, and in some cases, delays caused by a seller who doesn't really want to sell, or one who filed bankruptcy.
Many banks order an appraisal in lieu of a BPO. They might even order a couple of appraisals. If there's too much variance in the appraisals then they might get those reviewed. They're also likely using an appraisal management company that is in the middle of that process.
Remember too that some lenders have hundreds of thousands of foreclosures.
What I don't see is a motive, what is the banks motivation to delay these? Is it simply that they get paid to service the loan regardless? More TARP funds? It surely could simply be incompetence and no incentive to ease the load on the negotiators.
A realtor told me banks don't act logically in the case of short sales. I'm sure they have their own logic, but it may not be apparent to others, and I think the bottom line was don't expect logic as in "They'll want to make a decision soon and get the property off the books so it shouldn't take a long time."
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