After getting rejected for a mortgage modification, more home owners are turning to short sales as a way to get their lives back on track.
Our research shows that in order to get a short sale completed today, you must know the inside bank rules.
Banks are using different tactics and work-around to get the maximum money from home owners, and in some cases banks are requiring funds from the borrower at the closing of the short sale.
While each bank has their own set of guidelines for handling short sales, there are a number of rules that they all follow. Make sure you know these rules before making contact.
Top Key Rules for Closing Short Sales
1. Run the numbers. Will a short sale or foreclosure be better for the bank. Will this outcome be different in 3 months.
Banks are in the business of making money, and they want to show profits to their shareholders. Plus a number of times the investors will say no to a deal when they know that they can make more money from the foreclosure.
The key is to find out if there could any potential problems with the bank collecting from the private mortgage insurance (PMI) company. Today, a number of PMI companies are rejecting and fighting claims.
Also run the numbers to see if within three to six months, the bank will be in a worse off position.
2. Banks want to know four things up front.
a. what is the value
b. what is the offer
c. what is the purchase price
d. what are the liens
You must know these answers so that you can get negotiations moving quickly. Otherwise, banks will stall or drag out the process until these numbers are in alignment for them.
3. Asking to complain to a supervisor puts your client’s file at the bottom on the list
Folks in the call centers are paid $10 – $14 per hour and deal with lots of calls, people’s emotions and all types of situations all day. They are there to collect documents and to move things forward. They want the documents off their desks. Make sure your situation really require you to complain to their supervisor.
4. Know that the loss prevention person who is working on your file is in part paid on commission. Therefore, the more money they collect; the higher their compensation.
See steps 1 and 2. Just as the name implies, “loss prevention” is to minimize / prevent the bank’s losses, not your losses. In addition, they are not interested in low ball offers. However, if you have the documents to prove out your situation, they will listen.
When dealing with short sales, make sure you prove to the bank that granting a short sell to the seller is the best scenario for the bank. While you are there to help the seller to resolve their situation, it’s the bank that makes the rules.