What Takes Us 2 Days, Takes the Banks 6 Months for Short Sales and Loan Modifications
Do you ever wonder why it takes so long to get a short sale or a loan modfication completed? It can take months or even years to to get a short sale or a loan modification done. Why?
There are any number of reasons:
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Hard to collect all necessary documents from borrower/owner.
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This may be because the banks never seem to receive the documents until they've been faxed in 5 or 6 times.
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It may be because it takes the borrower/owner or agent some time to respond to requests for documents.
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Several different departments must touch the file in most short sales and loan modifications.
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Often, borrower/owner or agent can't speak to person in charge of file.
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Investors make the decision though the borrower/owner and agent may never speak to investors.
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Short sale and modification departments are overwhelmed by huge numbers of files.
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Many short and modification departments constantly have new employees due to turnover and or hiring because of large number of files.
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Listing agent may not understand what needs to be done.
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Nobody is following up consistently with anybody else.
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The system is inherently broken and needs to be revised.
How long does it take for an agent or mortgage broker to gather the necessary information to put together an offer or a mortgage broker to put together an entire file? It seems to me these can generally be completed in about two days, with the cooperation of all parties. Sure it takes longer to get the deal completely closed, but not months.
My questions is, if it only takes us 2 days, why does it take the banks 6 months?
What say you? What can we do to effectuate a change?
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About the author: Christine Donovan is a California Residential Real Estate Broker with experience in assisting clients buy and sell residential real estate.
Are you upside down in your home? Is it worth less than you owe? Are you concerned about making your mortgage payment? For more information see Options to Foreclosures, understanding short sales or contact me at christine@donovanblatt.com to discuss your options.
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My favorite is when the file is "in review" for 30-45 days (or more) and then you are told your authorization is more than 90 days old and they need updated pay stubs and bank statements from the now out of state seller in 24 hours or they will close the file.
I hear the Government is "coming down" on Lenders who've received Federal emergency funds and will soon limit the turnaround time to weeks instead of months. Something has to be done to streamline the process.
Jeffrey - Can you hear my ironic laughter?
Tom - I would love to believe that's actually going to work, but I've seen too many government programs lately.
I think bank hierarchies are kind of like Congress. If you don't know what to do or how to do it, talk about it for a year and hope that something happens.
One of my files have been in review for over 3 months. Thanks to BOA, I don't know what part of the file they still need to review. All docs are in and still in review. Still can't talk to a negotiator. Makes no sense to me.
I think we have to keep in mind that the bank is their representing the banks interest and not the homeowner. That fact alone should tell all. I also think that the banks are just not prepared for handling ss or loan mods. I have found that even walking into a bank for a home loan is not that much different. The facts are that loan mods for the most part are being placed into HAMP, which requires a minimum of 3 months of a trial modification before the possibility of a permanent modification. So, the time-line can easily reach 4 to 6 months from start to finish. I know alot of people blame the banks, but on the other hand I have also seen very few loan mod prospects get a full package in or return calls promptly when contacted, which is also a significant inhibitor to completing these mods.
Well put, Christina. This one made me wnat to both laugh and cry. It's true, and so frustrating. Sometimes I think the main reason we cannot effectuatte any change is becasue the lenders don't realy want change. Somehow, this bogged down process must work for them, or they would have fixed it by now. Some few lenders actually have, so we know that it CAN be done.
Russel - That sounds about right to me.
Stella - I'm not sure if there's any way to make sense of any of this.
Christine - These are all valid points, but the fact is there are all of these people who need/want loan mods and/or short sales and the banks need to find an effective way to deal with them. And, often having no way to communicate with those making the decisions just isn't helping.
Elva - Wachovia is obviously the shining star of short sales. They've decided to make a business decision to make it as easy and painless as possible. However, they have the advantage of not having to deal with an outside investor.