Dealing With Loss Mitigation: Landing The Short Sale You Want
By JD Esajian on November 3, 2014
Even though there has been a reduction in the amount of short sale deals, there are still plenty of opportunities available. Anyone that has ever worked on closing a short sale knows that it takes due diligence and persistence to get your deal approved. The key is working with the seller’s lender to keep the deal moving forward. This requires constant communication with the loss mitigation department. Getting through to them is not the easiest thing to do, but if you can make contact, you will be well on your way to getting your short sale deal approved.
The loss mitigation department of each lender is the ultimate decision maker when it comes to short sales. Just because the homeowner wants to sell and there is a ready, willing and able buyer, it doesn’t mean there will be a transaction. If there is no equity, the lender has the right not to accept the offer or not approve the homeowner to sell. The loss mitigation department will make that decision. Even though short sales have been prevalent for the better part of the last five to ten years, there is still much uncertainty with how the process should be handled with each lender. Fortunately there are some things you can do to get your offer noticed and placed on the top of the pile.
Getting through to a loss mitigation starts with getting the right contact information for them. Assuming that your seller is approved and you have the proper authorizations, you can begin to reach out to the lender. Even if you have past fax or phone numbers, they may have changed from the last time you submitted an offer. Furthermore, you want to have the contact information for the specific loss mitigator assigned to your offer. This is typically done after you submit your offer and homeowner package. This package typically consists of numerous documents and pages and if you are faxing it over it is easy for a document or two to get lost in the shuffle. If the package is not complete most lenders will not even look at it. Try to find an alternative way to scan the file and upload directly to the lender or a third party portal. Once your package is submitted and with the lender the real work begins.
If the file is in the system it will eventually be assigned to a specific person in loss mitigation. Finding out a direct extension or an email for this person is critical. If you can’t get in touch with them your deal will bog down and end up going nowhere. You should be prepared to be on the phone or the lender website for a significant period of time. It is not uncommon to wait on hold for 20 minutes waiting to get someone at customer service only to wait for another 20 after you are transferred to loss mitigation. If you do not have a direct number you will do this every time you call with a question or seeking an update on your file. Even if you don’t directly reach out to the loss mitigator for a week or so after the file has been assigned you should work on getting their contact information. You should keep a file of every previous lender and loss mitigator you have worked with in the past and reach out to them to find out who has the loan. If you get this information it will make the rest of the process that much easier.
Your loss mitigator deals with several files every day. It is important to remember that your deal is not the only one they have. It sounds simple enough but if you treat them with courtesy and respect even if the offer has been with the bank for several months you will get more accomplished. You need to do everything you can to make their decision as easy as possible. This means submitting all items request as quickly and as organized as possible. Nothing should be left to chance and everything requested should be sent at one time. You can offer supporting documentation in regards to the value but you need to know when to push and when to back off. Items like listing history and comparable sales data are expected to be included but you don’t want to go too over the top.
If you sound like a professional investor, they may think you know something more about the property than you are letting on. They know you are trying to get the best deal possible but you can’t overdo it. You can certainly follow up with them every few days or so but there is a way to do it that doesn’t seem that annoying. Ask how the weather is where they are or if they are extremely busy. If you are calling on a Monday ask how their weekend was and if you are calling on a Friday tell them to have a great weekend. The decision is based on numbers but it is made by a human being with emotions. Little things like this can make all the difference in getting your deal approved.
There are many horror stories about short sales, but those are from people that don’t know how to work with loss mitigation. Organization, following up and common courtesy will help you in dealing with loss mitigation.