If you work in short sales in Massachusetts, you know that the servicers (most times) call the shots. If you are lucky to negotiate a GSE (Government Sponsored Enterprise) short sale (FREDDIE FANNIE FHA VA, etc) – I call them the three F’s – you don’t necessarily have to worry about any sneakiness of the servicer. The servicer is following guidelines set forth by the investor. That’s how MOST loans should be, but many times with a private investor, the pooling and servicing agreement gives the SERVICER the rights to make decisions about the loan. I of course cannot understand why ANY investor would do this. Yes, small decisions, but when you are making loss mitigation decisions that affect a borrower, these should either have specific guidelines in place or truly be run by the servicer.
We have been working on a loan since the Fall. I’m upset because it was service transferred to SLS (Specialized Loan Servicing) – they aren’t the worst, but definitely not the best. I would say they are a more difficult servicer to work with and really just drag the process on, mainly to milk the investor of the monthly fees they charge (I’m assuming) they don’t seem to they don’t seem to have any urgency when they negotiate a short sale. I’ve worked with one of their negotiators (Jacob) on and off for 3 years. He’s hard, but workable if you have the right numbers. On the particular sale we are working on it was taking a while because it was service transferred in. In December the file was marked completed, BPO was ordered and we waited. Melissa, one of my lead negotiators, called in and spoke to Jacob who said “The investor needed to NET $306,000”, and Melissa immediately went back to the attorney to see what the counter price to the buyer needed to be to get to that number. Keep in mind their NET is what they get out of the sale. That doesn’t include, commissions, real estate tax transfers, utilities, attorney fees and other settlement costs, so we had to get that number for the buyer. We did, and went to the agent to see if the buyer wanted to agree to the new price. Vision Realty, at Re/Max Renaissance had the listing and said the buyer would increase. Next came an addendum and increased HUD all that were faxed in and emailed to SLS.
Melissa waited out two days to make sure the info got into Jacob (sometimes it takes 48-72 hours for services to scan paperwork into their systems) – She called in and spoke to him to find out if she would get approval. After all he said the amount the investor wanted and now, we met that amount. In 100% of the short sales I’ve done, UNLESS MI was on the loan, then the servicers issues approval. What Melissa found out after speaking to Jacob was shocking. He said the investor now wanted $313,500 NET, so a raise of $7500. Melissa reminded him of their conversation last week. She also said nothing has happened to the house to substantiate a $7500 price increase. He said he didn’t care and that that is what the investor wanted. She was floored. She came to me to ask what to do so we escalated.
A woman named Heather called Melissa. She said she listened to the transcripts of the conversation and even though Jacob said the investor wanted $306,000, that because Jacob didn’t say this is a guaranteed approved number that SLS did no wrong doing. NO WRONG DOING? It’s flat out WRONG. You don’t counter a buyer, have a seller, agents and attorneys jump through hoops to come up with a counter number and then submit all the documents to say, “Nope we are countering again,” without explanation.
Needless to say we lost the buyer, the seller is now at a place where he may be foreclosed and we are all here scratching our heads. The seller will suffer because of this deceptive business practice and it looks like there is nothing the seller can do. The seller contacted the Consumer Finance Protection Bureau, and NOTHING. Hasn’t heard a peep since. He filed with the AG’s office, which basically said this isn’t their area unless he is getting foreclosed on (which soon he will ) – and we as a company called Deutsche Bank and found the Asset Manager, Ronaldo Reyes.
Here is the moral of the story. Ronaldo flat out denied that Deutsche has any decision power in the transaction even thought they were the trustee for the investor of the loan. He said the servicers make all the decisions and if the servicers are saying the INVESTOR wants more money it’s flat out wrong. So where do you go from here? Ronaldo did call an attorney for SLS’s transaction management group. We then got a call from a Benjamin who said that the amount they KNOW they could get approved was $324,000. Funny how the approved number has changed 3 times.
There is no where to go on loss mitigation valuations. There are no rules for non-GSE investors on what they can, will or won’t take. They don’t have to provide a copy of the bpo (although Freddie and Fannie don’t either, but they all should) – If a borrower buys a loan, and an appraisal is needed to dictate how much of a loan they can afford, with guidelines in place, then IMO if a borrower sells a home and it’s short, then the same rules should apply. An appraisal should be done and the investor/servicer should be required to MITIGIGATE LOSS, and take an offer that is somewhere near and around the appraisal amount. Not just make up numbers and cause buyers to walk from properties. The CFPB cannot help. Their guidelines really don’t touch upon valuations pertaining to short sales and loss mitigation efforts.
The problem is all of the above takes TIME. It takes hours and time to do and then NOTHING. No sale, No buyer, No solid number, just fictitious figures thrown at random. It’s too bad because the short sale industry really needs an overhaul.
I’d be willing to do it.
If you are looking for assistance on loss mitigation, please give us a call to discuss your options. We are happy to help at NO COST to the seller!!