Sometimes It Can’t Be Avoided: Specialized Loan Servicing
No matter what you do, no matter how hard you work on selling a house, there is still a possibility that it will go back to the bank. When the causes of that are outside of your control, there’s really nothing you can do. No matter of thinking outside of the box can force someone to cease being an idiot.
A property that I recently held as a listing went back to the bank on the 30th of September. It wasn’t because I didn’t know what I was doing. It wasn’t because the lender didn’t have the right information. It wasn’t because the offer was too low.
It was because the offer that we received came in one day before the auction, and here’s the real reason:
The loan servicing company refused to extend the auction date without a payment of $2500.00 outside of escrow. They simply refused. There was no time to negotiate, no time to reach the right person, and no time to get the job done.
The owner’s lender had an offer that was above what it was sold for at auction, yet they wanted to hold the home hostage for $2500.00.
“Where’s the money going to come from?” I asked. The answer? “It doesn’t matter to us.”
That’s bank-speak for “send us more money” with no promise to fulfill their obligation. The problem with this type of transaction is that nobody in their right mind is going to simply wake up one day and decide to send $2500.00 to a bank with whom they have no relationship. Sellers are selling short because they don’t have any money. Buyers aren’t going to take the risk, and neither broker is going to enter into a transaction like that. Escrow companies will hold funds in escrow pending the sale, but they won’t release it until it’s final, so that doesn’t work, but it’s the only proper way to do it.
Ludicrous proposition, I say.
So what are some of the important things that you can do to minimize the chances that they’ll foreclose?
- The very SECOND you know you are going to stop making payments on your mortgage is the same moment at which you need to get your home on the market. You don’t want to be making these decisions AFTER you receive a Notice of Trustee Sale.
- When your agent asks for paperwork, make like a gazelle and get that paperwork done. Wasting time is not something that we can afford to do.
- Let your agent do the work and don’t get involved with the bank unless advised to do so.
- If your lender communicates with you directly, let your agent know immediately.
- Your attitude may be that you just don’t care anymore. Continue to care until the process is complete.
- Keep the home available to show AT ALL TIMES. Tenants who are living month to month need to be notified that it’s time to move out.
- A vacant house is easier to sell short than one that is occupied.
- If you live in the house, keep it clean.
In my experience the number one reason a home goes back to the lender is related to time, not the details of the transaction. Unfortunately this one didn’t pan out, but the rest of them typically do.