I’m learning the basics of doing SSs. I’ve read a book, and am enrolled in a course (which will cover SSs, but not for a while). A lot of the investors in my REI club have done SSs, and always mention that the process is long and tedious (they mention this during the Success Stories portion of our meeting). Can someone tell me if their experience has been long and tedious - and if so, what part is the worst? How is this dealt with when the Foreclosure auction is right around the corner - does the lender put off the auction if a ss is pending and going through negotiation? Thanks for your help.
Usually long and tedious is correct but sometimes shorter. Never expect less than 60 days and it is usually very hard to get a FC sale delayed. Does happen though.
My shortest time to approval letter has been about 32 days and my longest 9+ months. Alot depends on whether the servicer is the lender…usually not. If they are the same it can go pretty quickly but if not, it can take a long time. This is an issue that most people don’t know. They call Wells Fargo or Countrywide but they are often not the lender, just the servicer. The investor who actually owns the loan is someone else like a European or Asian bank or pension fund. WHy do they care about dealing with your short sale? They often don’t and can take weeks to respond to offers and their responses are not always logical. The servicers have very little control or leeway in these situations. They have orders from the investor and often can’t deviate at all even if they like you and like your offer.
You can expect hours on the phone with Loss Mit person or trying to find the loss mit person. You have to be a pest to keep your file moving with loss mit. Calling day after day. They are swamped.
Otherwise it is alot of waiting. Just gotta have your paperwork in order. Work several at once since most are rejected. If you can, work other areas of REI since paydays can be infrequent or irregular in SS.
Very helpful. Thanks!
Still thinking on this. You mentioned that the bank servicing the loan, is often not the lender. I knew that, but didn’t realize that the original lender still had an interest in the loan - I always assumed that the loan was actually sold to a new lender - who owned the note, and serviced the loan. Very interesting. So, the original lender still has it on their books as $ owed, and the new servicing co. sends out statements, answers the phone when the homeowner calls, and pays off the lender as the payments come in. Is this right? So in order to complete the SS, you would deal with the servicing co. and they would require the original lender to sign off on the ss for the transaction to be complete. It is also the servicing co. that initiates the foreclosure, and monitors it until the end. If the property makes it to being a REO, who buys it - the lender, or the servicing co?
Is there anyway to know at first glance if the lender and servicing co. are one in the same - or is this info that I need to get from the servicing co? How often is it that they actually are one in the same?
I am assuming that I will never interact with the original lender, but that all communication flows through the servicing company.
Once again, thank you - this is very valuable info.
Yes, you have the right idea except don’t get too confused with the “original lender”, all you care about is who owns the loan right now not who made it originally.
It really depends on the company. Some are mainly servicers and some are mainly originators. But just as an example, C-Wide “originated” 114 Billion in loan in Q1 but they serviced 1.3 TRILLION in loans. So most of time when you call Countrywide, they are not the investor. Smaller companies like credit unions, etc are more often servicing their own loans (and incidentally they are the ones doing ok in this environment). Most loans that are originated are packaged and sold to 3rd parties.
Usually loss mit will tell you if there is a 3rd party investor involved otherwise there is no way to know.
The servicer does handle to FC proceedings ACCORDING TO THE GUIDELINE OF THE INVESTOR. This means everything from when to file, how to negotiate on SS offers, whether to offer to modify the loan, etc. Everything done by the servicer is according to the wishes of the investor and different investor have different wishes.
To address one more thing in the original question. Obviously the number of mortgages to be shorted greatly contributes to length of process.
The shortest turnaround I’ve had was under 21 days. This was from when I first submitted my ATR info letter to getting a payoff demand letter. Fremont Investment originated the loan and still had it when I bought it. Since I already had all of the homeowners info I sent all of that with the ATR. Within days a LM officer contacted me to arrange a BPO contact. The LM officer called a couple of days after the BPO was preformed and said my offer was to low. I verbally upped my offer and she said that would work. I submitted a new contract and hud-1 for the new price. Two days later the home was broken into and the furnace was stolen. Called and faxed Fremont resending my previous offer and then offered 5k less. They accepted that offer on the same day. At this point the auction was just a few days away so I asked that they postpone it. They did for 30 days. In those 30 days I managed to get another 4k off the price by having my listing realtor take no commission. We ran into some snags with my title company agent who had never done a SS closing so I asked again for a postponement of the sale, they were VERY adamant that no futher delays would happen. Luckily we got everything together and closed 48 hours before the auction.
Getting the lender/sevicer to delay the auction is not difficult if you two have come to an agreement. To get that auction postponed you need to have all of your paperwork in and have a solid contact in their LM/Collateral Dept that you can plead your case to. From my experience you can get one postponement easily but you had better be ready by the next date. I lost a deal by not being ready by their date. It cost me a $400 appraisal/app fee.
Longest time was 11 months and it did not workout. In fact the homeowner is still there over a year and a half later.
As eric3 says the servicer does everything the investor tells it to do. They will not tell you who the investor is and this would not matter since that investor has already hired the servicer to take care of all aspects of that loan. Or at least all the specific aspects outlined in their contract.
If this is going to be your chief means of REI you need to work several at the same time. Most will not work out for you.