In a short sale (mortgage), why does it take 60 days or more for the bank to make a decision?
We have been waiting for over 30 days for an answer on a short sale property offer we made on a house that the current owner will abandon as part of filing Chapter 11bankrutpcy. The bank (Homecomings Financial) has been totally unresponsive whenever our Realtor makes contact with them–their consistent reply is: “we don’t know when it will be approved, it can take 30-60 days and sometimes 90″.
The basic question is: what are they doing? The only explanation is that our file is sitting somewhere on someone’s desk waiting to be worked. It baffles me that in light of the escalation of defaults and foreclosures in the market that lenders are caught unprepared to quickly evaluate short sale offers that, relative to entering foreclosure or repossession and resale (REO) of the home, could save them tens if not hundreds of thousands of dollars. We are about to give up as we won’t be able to sell our home quickly enough before the fall slow down if we don’t get a decision soon.
Real Estate Professionals
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February 10th, 2010 at 1:01 am
Yes it could be sitting somewhere, however, the lender has to double-check other factors, i.e., liens on the property, taxes owed locally or to the IRS…all of these things are dependent on people getting back to them.
February 10th, 2010 at 4:33 pm
Back up a minute, if, as you state, this is going through a bankruptcy court, that is the reason. The courts are back logged, and it seems to take a long time for all of the legalities to be clearly and cleanly resolved. You don’t want something that has a long ago lien or another person’s rights involved. Hang in there, the legal people have to get their cases done right as they come in, and there are a lot of them. Best wishes
February 13th, 2010 at 3:28 pm
The bank has laws to follow regarding the rights of the current owner. They must wait a specified amount of time to begin proceedings, and wait specified times for responses. Those responses, depending on what they are, allow for varying time frames to accomplish a myriad of tasks. The bank wants nothing more than to offload this property without a loss. Rest assured your offer is not just sitting around. With that in mind, don’t count on your offer being accepted right away if it is a low ball offer, IE less than what is due on the loan. They would rather put it on the market for a while first, but only a while, they will look at your offer it the property doesn’t go quickly.
You can place a contingency on the sale of your home stating you won’t be able to give up possession until you find another home. As long as you have one in your sights this shouldn’t put off too many buyers. There is one company, I cannot remember the name right now, that offers to purchase your home if not sold in a certain amount of time.
February 14th, 2010 at 12:09 am
You are wanting to buy this house. The bank will be required to settle for less that the full payoff amount. The employees of the bank that you and your agent are dealing with have to go though the steps required or they can be fired or held responsible for the failure to safeguard the investors money.
There are several steps. Among others are:
The bank needs to assure themselves and the underlying investors that the seller has no assets that could be used to offset the shortfall in the mortgage payoff.
The bank needs to assure themselves and the underlying investors that the house is being sold for the most they can reasonably expect.
The bank needs to assure themselves and the underlying investors that there was no fraud involved anywhere in this transaction and none in the transaction where the current seller bought the house.
There are several other steps. the employees have no financial stake in getting this done quickly. Their jobs depend on them getting this done correctly. You have no leverage to get them to speed up, and they could even decide that the best thing for the bank is to foreclose.
I know that it makes no sense to you or me but it does make sense to the bank employees.
February 14th, 2010 at 11:02 pm
Oh jeez….60 days? The longest I have ever seen one is a couple of weeks….5 to 7 business days is about the average.
Homecomings deals with primarily subprime mortgages.
What they are doing is waiting it out to see if a better offer comes along. I would go ahead and abandon that transaction and find another.
You are quickly learning why most people “pass” on short sales.
All the bank does is plug the numbers into a computer and it kicks out an approval of how much of a hit that they can take and it takes all of about 45 minutes. Then it goes to the desk of one of the managers with VP status for a signature. That’s it….I have a friend that works in the Loss Litagation for Bank of America and she also used to work for Countrywide doing the same thing….people think it’s a long drawn out process, but it’s not….Homecomings is just waiting for something better.
They are not concerned with other liens b/c they just call the title department to do a quick title search and that only takes a couple of days to get that report back. They are also not concerned with the IRS b/c if the property transfers prior to the IRS filing anything against the property, you cannot RETROACTIVELY file liens against property when it’s been transferred to a new owner. The bank gets title insurance for themselves to protect them against that sort of thing anyway.
I have no idea, of where people are getting that misinformation from.
The only decision that a bank is concerned with…is how much of a “hit” they can take….THAT’S IT!