When Postponing Foreclosure Sales, Magic Wands Don’t Always Work
Throughout my stint in the short sale world, I have been known to report trends, as I seem them. Usually, a few weeks after I report a trend in the pre-foreclosure or foreclosure arena, I read an article in the Wall Street Journal or on dsnews about the very same trend, corroborating what I have noted. That’s pretty gratifying.
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What it means to me is that my third party negotiation crew is managing a volume of files that allows us to see industry trends as they occur. Here’s what I experienced this week, and let’s see if it becomes a trend.
On Wednesday, I received a call from a homeowner who had been working on a loan modification with Wells Fargo. The loan modification was declined, and the foreclosure date was set for December 3, 2010. Yikes! He was freaking out, and was working with another RealtorÂ® to put together a short sale.
On Wednesday night, I received an email from a woman in Texas who also has a loan with Wells Fargo and whose property is set for foreclosure on Monday, December 6, 2010.
On Friday, we received a short sale package via fax. The agent wanted us to process the package and negotiate the short sale on his behalf. And, oh by the way, the foreclosure sale is Monday, December 6, and the bank is Wells Fargo.
Do you see anything unique here? Sometime in September or October, I received several emails from Wells Fargo in which they stated that they would not be postponing foreclosures any longer. I could only surmise that this was due to Fannie Mae’s announcement that they would be penalizing servicers who languish to long.
While this flurry of Wells Fargo foreclosure calls comes at a time when many states are still battling out the robo-signing issue, I can only surmise that Wells Fargo is attempting to act on their word.
So, here's what you need to do if you are taking a listing on a short sale or are in the midst of a short sale with a Wells Fargo loan in first position: you need to be very wary of the foreclosure date. You can keep abreast of that information by ordering property profiles and preliminary title reports from your title insurance company. You can also contact the bank regularly and ask if a foreclosure date has been set.
If you take a listing on a property with a sale date in the very near future, do not automatically assume that the bank is going to postpone the sale. Postponing the sale is going to be tough. First, you will need to submit authorization to the bank to speak on behalf of the seller. If you send that via fax, it can take between two days to two weeks to process your authorization. So, if the sale is tomorrow, you are already out of luck (unless you are the borrower or have the borrower involved in the call). Second, you will need to have a complete short sale package with an offer—and not just any offer, but a good offer. Often times, the banks have already conducted their own assessment of value in preparation for the foreclosure sale. So, they will only be willing to consider a foreclosure postponement if the have an offer close to their value.
Because the ability to successfully close a short sale decreases tenfold if the foreclosure sale is around the corner, it’s important to spread the word that borrowers should not wait until the eleventh hour to list their properties for sale.
So, you are probably wondering about what happened with those three foreclosure sales, right? Two were from individuals who were just seeking my advice, so I have not heard back yet. And, because I have a magic wand and was able to waive it over Wells Fargo, the third sale was postponed for sixty days. Unfortunately, the magic wand doesn’t always work. Maybe it needs new batteries.