A Strong Dose of Patience is Needed for the Short Sale Procedure

There are many Homeowners who can no longer afford to keep mortgage payments current and do not want to choose bankruptcy or foreclosure. There is another option called a “short sale”.

When a lender agrees to negotiate a short sale, it means the lender is willing to accept less than the total amount due. The “deficiency” is the difference between the amount owed and what the bank collects at the short sale. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose.

For your protection we suggest that you obtain advice from a real estate attorney and you call an accountant to discuss the short sale tax ramifications.

If you decide to work with The Buckley Jolley Real Estate Team to pursue a short sale arrangement with your mortgage company, you need to be aware that this is not a quick process. You need a huge dose of PATIENCE. Once your entire package (see attached information) has been sent to your mortgage company, it can take up to a month for the loss mitigation department to receive your information, log it into their system and to assign it to loss mitigator. This process may require you to provide us with additional information in a timely manner if the bank requests it.

Once a purchase agreement is received we will forward it to the loss mitigator assigned to your mortgage. The bank will order a Broker Price Opinion (BPO). This is not an appraisal; this is an estimate of the probable selling price based on selling prices of comparable properties in the area. This BPO could take one to three weeks for the bank to receive and accept the results. Once again, you need a huge dose of PATIENCE. Once the BPO has been accepted the bank will start negotiating the purchase agreement. This could take a week or more for the offer and counter offers to be negotiated. Once again, you need a huge dose of PATIENCE.

If the loss mitigator agrees with the offer and/or counter offer, they will present this verbally negotiated offer to a committee. The committee will determine if they will accept and sign the purchase agreement. Once again, you need more PATIENCE as this could take one to two more weeks.

The above scenario is based on one mortgage for the property. If there is a second mortgage or any type of line of credit this could prolong the procedure. We will have to follow the same procedure with the second lender and negotiate with their loss mitigation department. Once again, a huge dose of PATIENCE is needed.

As part of our negotiation with the bank we will ask the bank to waive the deficiency between the loan amount and the amount being paid to the bank. The lender has sole discretion to waive the discretion or to pursue a deficiency judgment. We will put additional conditions on the purchase agreement, prior to sending it to the bank, stating the offer is subject to the bank’s approval and the offer is subject to the bank waiving the sellers’ deficiency.

- Emily Trenkle, Closing Manager, The Buckley Jolley Real Estate Team