First a couple from Pinnacle Capital Mortgage : "Short sales, which require the lender of record to agree to accept an amount less than they are owed, are notorious. Most of the buyers in today’s market are aware that the waiting period can be extensive; the longest in my experience is 8 months. Bank owned properties, which are properties that have been foreclosed upon, generally require less of a waiting period, but that is not always the case. Click here to prequalify for a mortgage from Pinnacle Capital Mortage.
Amd then a couple of horror stories that I have run into.
The first was and this is very common. A borrower wanted to purchase the father's home on a short sale. They wrote an offer for approximately $115,000. The bank refused to accept the offer because they were related to the seller. Subsequently, the best offer we could get was around $105,000 from an unrelated party. Again, the bank refused and proceeded to foreclose on the home. After the foreclosure, they sold the home to the exact same buyer, fully disclosing that they were related to the former owner, for approximately $95,000. Good for them! The banks now usually preclude the purchaser from being related to the former owner even on a home that has been foreclosed upon.
Secondly, of the two short sales I have lost to foreclosure thus far this year, this is the worst one and I won't mention which banks were involved but neither is an exceptionally large banks so this is pretty uncommon. The property had a first and a second on it and the seller was willing to settle with the second out of pocket or in other words pay to sell their home. The borrower was trying to do the right thing but needed to move. The 1st and 2nd loan companies were in such a big fight, with EACH OTHER that we could not get them to agree on a settlemnt. I even escalated this one very high in the Fannie Mae chain of command to no avail. The first was willing to settle but the second would not put a settlement agreement in writing because "their system was down". They ended up settling after the foreclosure for thousands less than they would have been able to before the foreclosure. I even asked them if they needed me "to come up and type approval letters." For $2-3,000 per letter I would have gotten on a plane. In essence, because no employee was able to step outside their cubicle, so to speak, the bank lost a few thousand dollars. If you need assistance with this kind of bureaucracy, we have become quite the expert at dealing with almost all of the major banks and even some of the small ones whose "systems" are consistently down.
