How To Close A Short Sale Even If The Foreclsoure Proceedings Have Started
I apologize for the long subject line (and the misspell) but I thought it was necessary. I just wanted to share a story with you. One of my clients received a letter recently from the lender's attorney stating they were going to begin foreclosure proceedings immediately. The sale date is scheduled for May 4. The total debt is $124,567.72 as of March 30. In the past I have ceased all short sale activity once a letter like this was received. I usually have too many other deals to work on and my time is spent better not chasing down attorneys. For some reason, this time I decided to make a call to the attorney's office because I really wanted to help the homeowner because she had just gone through a rough divorce and loss of her job . I got in touch with a lady by the name of Kim who worked in firm's collection department. I explained to her that prior to the homeowner receiving the foreclosure letter I was working with Washington Mutual on a short sale deal. At this time she asked me who I was and what my relation to the homeowner was. I informed her that I was the the homeowner's advisor and immediately started talking about resolving the loan again. The focus is not about me it is about paying the debt. I told her that a reasonable offer had been made to the bank and we are just anxious to close this deal so the homeowner does not have to file bankruptcy or face the foreclosure. My offer was $111,362. Only a $10,205.72 discount so I figured still had a little more room to negotiate. At first Kim told me that there was nothing she could do and I would need to speak directly with the lender if I wanted to work out a short sale. After I explained the situation to her and we went back and forth for about 2 mintues she asked me when would I be able to close, and I responded by saying " Within days after I receive an acceptance letter confirming my offer." She asked me for a copy of the sales agreement and I told her that it was expired but I would be more than happy to sign a new agreement with the homeowner. I sent over a signed contract for $105,495. I'm not sure exactly what transpired but I assume someone contacted the lender with my offer. This offer was $5,867 lower than my original offer and $19,072.72 less than the total payoff. I started this negotiation with the law firm on April 6 and received an acceptance letter on April 12 for $107,567.72. A nice $17,000 discount. I am going to keep the property as a rental and possibly sell it within a couple of years. There are 4 similar properties currently listed for $128,900, $131,500, $125,900, and $135,500. Not bad for a deal that I almost stopped working on. Hopefully, this can encourage another investor not to get discouraged if foreclosure proceedings begin in the middle of your short sale negotiation. Best wishes!
[ Edited by homebuyer13 on Date 04/14/2004 ][ Edited by homebuyer13 on Date 04/14/2004 ]
Though the foreclosure timeline differs from state to state, the overwhelming majority of short sales are first proposed and approved during the foreclosure process.
???? What are you saying?. All of the short sale's that I have closed have been before the foreclosure proceedings have started. My strategy is always to catch it early in the process. Most of clients are people who are 1-2 months behind. The only letters they received are from the lenders trying to collect the debt or to arrange a work out plan. It is much easier that way. As far as your demographics are concerned that is usually not a factor because typically you work with lenders who are not in the same state the home is in anyway. To them it is just 1 out of thousands of loans they are attempting to collect on.
[ Edited by homebuyer13 on Date 04/14/2004 ][ Edited by homebuyer13 on Date 04/14/2004 ]
We have to get out of this "cookie cutter" approach to all deals. Every situation is different and there are several ways to apporach every single deal. The most important thing is to have a system to follow but one must know when to think outside the box. This only happens with real life situations.[ Edited by homebuyer13 on Date 04/14/2004 ]
That's terrific. Apparently, you enjoy access to distressed property owners before the mortgage foreclosure process begins (in NY, as you know, the initial step in the foreclosure process consists of the filing of a Notice of Pendency of Action after which the Plaintiff has 120 days to complete service on all Defendants). My point was, and is, that across the USA, the overwhelming majority of short sale proposals are made to the mortgagee during the foreclosure process, not before. The foreclosure process in itself is not a deterrent to a mortgagee approved short sale.... in fact, it supports the premise that the homeowner cannot cure the default.
I appreciate your response. The main point of the initial post was to share a success story, not debate on who's approach to the short sale process is most relevant. The post was intended to share a real life experience in hope that it can encourage someone else who is or has been in a similar situation.[ Edited by homebuyer13 on Date 04/14/2004 ]
I think generally most short sells are performed after the Notice of Default, because that is how most investors find out about the pending foreclosure. Very hard to know who is before before the NOD, and not all home owners call an investor on the first notice from the bank. Also, the bank does become more motiviated to do a SS once they realize there will not be a work out.
Brenda
"???? What are you saying?. All of the short sale's that I have closed have been before the foreclosure proceedings have started."
That is remarkable! I'm impressed.
How are you able to contact the homeowner/mortgagor before the foreclosure process begins?
I'm not asking you to divulge a trade secret, or reveal a source for insider information... but I've been working in the foreclosure industry since 1979... and I have not been able to find a legal avenue to contact financially distressed homeowners before the forecoosure process begins.... What's your secret?
[ Edited by TheShortSalePro on Date 04/14/2004 ]
Again, that is strictly an opinion. Nevertheless, when you as an investor market your territory the proper way those types of deals will come to you. Absolutely, homeowners will call you when they first miss a payment, or if they have received a letter or call from the lender. It happens to me all of the time. I find all of my deals through this method.
Like I mentioned, all of my deals come from homeowners calling me directly. I don't look for deals. I am aware of the types of deals that are worthy for me to pursuit and then I start the short sale process. It is that simple. Obviously, I don't close every short sale I pursue but I close enough for it to be worth my time.
NIce to meet you Homebuyer13
Out of curiousity where do you do most of you short sales. The numbers in your post seem so low for the New York Market.
Bully
I appreciate your story and inspiration to follow through on these deals.
I have a question, though. I've always thought that it is (would be) easier to deal with the lender than the attorney for a short sale, because the attorney WANTS to foreclose on the property. Is this thinking incorrect?
I would appreciate SSP, homebuyer13, and anyone else's perpective on this.
Thanks.
I think it's in the lawyer's interest to shuffle as many papers and file as many motions as possible.. they have no vested interest in resolving foreclosures.
I'll usually cc the Plaintiff's lawyer on my SS proposals... but I direct my focus to the decision makers.... and ultimately, when they agree that a ss is in their best financial interest, the lawyers must take instruction from their Client.
[addsig]
I do my deals in NY, MD, GA,TX. To answer the next question, you must secure a short sale through the lender because the attorney is only interested in obtaining the actually payoff amount. Any discounted payoff would have to be through the lender. 99.9% of my short sales are done before an attorney gets involved.
Thanks for the replys...good info.
I would love to know what homebuyer 13 is doing to get his leads! That is awesome.
I advertise using signs and also flyers from time to time. I would have to say that most of my business comes from the signs I post.