Repossession/short sale question

16 Replies

I've been representing a client the last few months on a property that we've been trying to negotiate a short sale on with a mortgage servicing company. It's been about 3-4 months. The property has been off the market. At first they had no information for me to try to negotiate with them and then no one returned my calls. I finally get some answers, contact the owner of the property and had him give me authorization to negotiate with the bank. I sent over a purchase and sales on June 5th and called a few days later and come to find out there is an auction the 11th. Me and the buyer went and it was sold back to the bank. So I called the servicing company again today and they said the home is repossessed and a short sale can not be negotiated now.

My question is why didn't they ever try communicate with me? I called so many times.

And second, is it still possible to help my client get this property? What happens next with the property?

I have been doing short sales as a Realtor since 2008 and have seen this happen even when the bank has approved a short sale. Often the short sale negotiator at the bank is not in contact with the attorney handling the foreclosure. I have seen a foreclosure sale reversed in Florida when there already was an approval of sale in place but it is very rare.

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Most banks will not even consider a short sale that close to the sale date. I have closed more than 130 short sales and this is usually the case. There are always exceptions, but usually not too likely. Their position is that the seller had plenty of time to do this, and now they are just stalling. If the lender is just servicing the loan, then they must abide by the investor guidelines and do not have the authority to make decisions on their own. The bank that foreclosed might or might not be the owner of the property now. Most of the loans are insured and will be re conveyed back to the insurer (Fannie Mae, Freddie Mac, FHA etc.). Many banks also service for other banks. Their job unfortunately is not to communicate with you. It is your job to stay on top of them. Your client will be able to make an offer on the property if and when it goes on the market. They usually will not sell their foreclosed properties, not even to cash buyers. The bank might list it right away or it may be months or years. It depends upon many things such as the occupancy status of the property is vacant, clear title, loan origination issues, who the underlying investor is etc.....If the property is occupied, the first step will be eviction. I hope this helps.

You might want to see if you can find out who the property will be conveyed to. That will help you, because for example : If it is HUD, then you know it will show up on the HUD website, and that is where all offers are made. You will need to obtain your HUD NAID if you are a broker/agent and do not already have one. I believe that most list on the MLS, but offers must be made online, not through the listing agent.

Good Luck !

The banks I work with rather sell at auction then do a short sale and the banks always get the home because the reserve is very high. Just in Dallas there are 800 foreclosures that are on the books of two banks here, and they decide not to list them for sale on the MLS but will sell to investors.

My experience,

Joe Gore

Laura Marshall
The loan is through Bank of America but I've been contacting green tree servicing since the beginning because that's what the bank told me to do. Should I contact Bank of America and see what's going on next with the property?

Thanks for all that info

@Cory E.,

I doubt the Bank of American will talk to you, but you can keep checking and wait until they list it and then make an offer if they list it because they have their friends who is investor, and they might not list it.

Joe Gore

In my personal experience, most of the "former" B of A Loans serviced by Green Tree were Fannie Mae loans. If your 3rd party authorization is on file, the best thing to do is call and speak with the department that handles properties after foreclosure sale. It isn't always the REO department. Some servicers have a separate department that takes care of foreclosed properties until they are either re-conveyed or sent to the REO department...however...the REO department might handle everything. Being that it is Green Tree, it is highly unlikely that they own the loan, so the property will be sent somewhere else and not sold by them. Since it is most likely not "any lenders" portfolio loan, my "guess" is 99.9% positive that it will have to be listed before it can be sold...but again, there are always exceptions. If you have the last 4 digits of the former owners SS#, you can always check both the Fannie & Freddie sites to see if they were/are the investor. If so, at least you know where it will eventually end up, and you wont have to go to the servicer for the info. Try for Fannie Mae loans & for Freddie Mac loans.

Oh...I also forgot ...If it is an FHA loan, you will be able to see that on the original loan document. They usually have the case number on the first page of the recorded Deed of Trust.

Sounds like you got the process a little backwards. If you originally had no Authorization To Release from the owner, they couldn't negotiate with you. Also, on most short sales, there is no "negotiation" or meaningful short sale process initiated until After the purchase agreement and short sale package, with associated documents, is submitted to the bank. Now, you'll simply have to wait for it to be listed. As said, if you find out who owned the loan, you can get an idea where it will pop up. You can also have an agent put a standing search in the MLS system, so they get notification as soon as it's listed.

@Wayne Brooks
I didn't know I needed authorization from the owner at first because no one told me that for the first month of calling green tree.
I am a realtor so I will definitely be waiting to see it pop up on mls. I might call and try to get the listing myself, if that is at all possible. I've noticed there a select couple of people who seem to get all the Reo listings. This property sat on the market for a while and no one was interested, so I'm not worried about someone else trying to buy it, I'm just trying to do the best for my client

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Cory E. - I think this to be a great thread and learning experience for you. Hopefully, you'll leverage this experience into profitable transactions in the future.

I agree with Wayne that you've got this reversed. I would start with a listing (the property owner in default) and try and control the sale of the asset. Then get applicable releases and authorization from your client and consider using a short sale transaction service to mitigate and coordinate, cost to be paid by seller (hopefully).

I think the only time I'd consider representing a buyer is if the property were listed on MLS or auction service that cooperates (pays commission to brokers).

Rule #1 of brokering: I must have a way to get paid.

A Mortgagee has a greater interest in a foreclosure sale as it preserves their rights to deficiency.  Most short sales release the borrower from any potential deficiency.  

The administrative burdens already mentioned, i.e. - sale timeline in Loss Mitigation and inbound inquires likely in the REO department do not always flow well. They are supposed to have a single point of contact now per Dobb Frank, but I digress.

In order to become the REO agent, you would need to be an approved REO agent by the Mortgage Servicer.  No small task if you have no experience working with REO in the past.

Go put your card in the door and on it, put you have an offer.  The agent is already assigned, likely was assigned after it reverted from sale.  There may be barriers due to mandated marketing times to ensure fair market value but it may help to be first in line.

Good Luck.  

I just got off the phone with Green Tree and they already assigned it to an REO agent in the area, I will be contacting him and trying to help my buyer. Thanks for all the help everyone!