Five Reasons Why Short Sales Are Declined
December 17, 2009 by Kristin LaVanway · 5 Comments
On December 15, 2009 , I attended a round table presented by the Women’s Council of Realtors. The featured speaker was a representative from Bank of America who shared an overview of the current short sale policies that BofA is following.
During the presentation, he shared the five most common reasons that short sales are declined. It’s fair to assume that these reasons are common among all lenders.
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I am a Realtor in Gilbert, AZ, working with clients throughout the Phoenix Metro area. I am lucky to love what I do and appreciate the difference I can make in people's lives.
In a previous life, I was a rocket scientist - really! - but decided to step away from corporate America to be a Mom to my four boys. Found it hard to do bake sales, so I ran a small independent programming business instead.
Flash forward...I am now a single mom and I face many, many challenges everyday. I am living through the hardships that many are facing in this economy. These experiences have motivated me to help other people in my shoes.
I have teamed up with Dean Ouellette to form the East Valley Team - the best darn team in the Valley. Check out our site at http://www.EastValleyTeam.com. I spend way too much time on YouTube - check ou tmy channel at http://www.youtube.com/klavanway
I think you are missing one big one, PMI and in the case of Indymac/OneWest where they worked out a sweetheart deal with the govt they make much more money doing a foreclosure than a short sale. I know this may be different with BoA, but may effect other banks.
#5 is a tough one too because if the buyer is required to sign a note which could often be several tens of thousands of dollars then they just say forget it and let it go to foreclosure. Again I understand bank wanting to get back as much as they can, but the need to realize foreclosure is not best for them too in most cases.
As always, great information!
Yup, I hear ya – all the parties have to come together on some type of payoff agreement or no deal – the PMI provider is definitely a member of that group since they are paying a claim towards the loss. #5 is VERY tough because it is so case-dependent. The last few times the bank has demanded a Seller contribution from my client, I was able to work out either no contribution, or a nominal amount that the Buyer was willing to contribute. But if that wasn’t the case, my Sellers would have declined the deal and let the house go to foreclosure.
This list of five came straight from BofA – we all know there are tons of whacked-out stories about short sales gone bad. I tend to believe that BofA wants to approve more short sales – I saw the same transformation at Chase (after making a few well-placed phone calls) – but it isn’t going to happen overnight. The growing number of short sales that are closing suggests that banks are finally seeing the light, but I also know that banks are digging in on items like HOA accounts and closing costs. Time will tell…in the meantime, keep the Excederin handy.
Was his name Roland?
Jason