If you have experienced it first-hand, let me tell you that the short sale climate changes weekly. Sitting over my morning coffee, I thought I’d share a bit of info that I’ve learned and already seen reinforced this week – as it’s a pivotal change. In the past, lenders typically pushed back foreclosure dates if we have a short sale offer or other work-out option on the table. Well, that’s changing. The Investors/Trustors behind many of these delinquent notes are starting to ‘tighten’ their standards, and are deciding to not accommodate our efforts of loss mitigation in certain circumstances.

According to my executive-level inside source at BofA, many of their investors will no longer delay a foreclosure if they see:

– the borrower has a sale date in less than 30 days
– the borrower has made no attempt for a loan mod or short sale in the past
– the borrower has not made a payment in many months
– the incoming buyer is using an FHA or VA loan to buy the home because they are harder to close

I was speaking with my inside-source in regards to a particular deal that we were trying to delay the sale on. It was a home going to auction for a price of $188,400, and we had an offer on the table – about to close – for $250,000! Puzzled at the lack of common sense (and logic) of our bank negotiator for not delaying the foreclosure date, I called my inside source for her help and clarity. That is when she shared this new, tragic news that they’ll no longer be helping sellers who fit the criteria listed above. They said they’ll be enforcing this moving forward, and that it’s a trend we will see become much more prevalent with other investors (note owners). Their intent is to week out fake buyers, those homeowners looking to only extend the time in their homes, and to get a non-performing asset off their books using any means necessary.

Interestingly, data released on Thursday shows that Chase is now delaying foreclosure sales more than ever (up 30% just last month). My opinion is that they’re so far behind the short sale processing curve (see previous blog posts), that this is the only way for them to slow the growth of their distressed asset portfolio. They’ll come around eventually, also.

As you’ve seen in my previous blog posts, these lenders vary tremendously in their loss mitigation efforts. As you’ll also see, it’s been my experience that BofA is leading the way though, and truly blazing the trail that many of these other lenders are and will-continue following.

As always, we’ll be there paying close attention, and passing on all of info and ‘inside-secrets’ that we can to run the best short sale business possible!

My coffee is cold. Until next time…

Jeff Grant, President, ShhortSale.com