Seattle Real Estate Blog by David Monroe: July 2010

At this time last year, Bank of America was on my black list for short sales.  I would still work with short sale clients that had Bank of America loans, but I had to make an extra effort to mentally and emotionally prepare sellers for a process that could take six months to a year from signing the listing to signing closing papers.

Several months ago, Bank of America started using the Equator system (formerly REOTrans).  Equator is the technology platform used by many of the top lenders nationwide for handling bank-owned property transactions.  Equator built a short sale portal to be used by Bank of America (and eventually other lenders) to help streamline the short sale process.

While the transition to the Equator system had its challenges, Bank of America’s implementation of this online system for processing short sales has been one of the biggest steps in the right direction that I’ve seen from a large bank in the short sale industry.  That doesn’t mean there aren’t still a lot of problems with Bank of America short sales, but it is a massive improvement from where they were a year ago. 

Short sales that would have previously taken 6-8 months to negotiate with Bank of America can usually be completed within 60-90 days now when processed through the Equator system.  It can still be a painful experience at times, but it’s kind of like pulling a bandage off your arm:  It’s going to hurt whether you pull it off slowly or quickly, but isn’t it better to get the pain over with quicker?


*******************************************
Authored by David Monroe, Real Estate Agent and Short Sale Specialist
Access Seattle area short sale help and foreclosure resources including selling in foreclosure, and 8 Ways to Avoid or Stop Foreclosure.
Considering a short sale?  Check out this Short Sale FAQ first.

Copyright (c) 2010 by David Monroe (Keller Williams Seattle Metro West)

Have you stopped making your mortgage payments?  Are you considering it?  If you’re just considering it and haven’t already stopped, read the post, Should You Stop Making Your Mortgage Payments?

If you have stopped making your mortgage payments, either because you can no longer afford to pay or for some other reason, here’s what you can expect:

First Mortgage
First mortgage lenders are typically much easier to deal with if you fall behind on your payments.  They typically won’t harass you by phone, but they’re likely to fill up your mailbox with letters reminding you that have haven’t made your payment. 

If you speak to your first mortgage lender on the phone, they usually won’t use high-pressure collection tactics.  That doesn’t mean they won’t ask for a payment, but the collection effort over the phone is not likely to go past that level.  They will make a lot of effort to determine if there’s a way to bring the loan out of default status by offering a loan modification, payment moratorium, or some other workout solution.  However, these workout solutions are rarely successful, since most borrowers just get lost in the system.

This low-pressure collection strategy may not apply if your loan was sold off to someone that specializes in purchasing loans that are in default for pennies on the dollar.

Second Mortgage
If you stop making payments on your second mortgage, this can create a bit more of a challenge.  Not only will the second mortgage lender fill up your mailbox with threatening letters, your phone is likely to ring off the hook as well. 

I put second mortgage lenders in the same collection category as credit card collectors.  Second mortgage lenders have a lot more to lose, especially if the first mortgage lender forecloses.  Therefore, they tend to use high-pressure, threatening, and sometimes unethical collection practices.  They may try to contact you at work or they may try to contact your relatives, although you can request in writing that they not do this. 

They may lie to you.  They may tell you that they won’t approve a short sale or loan modification if you’re behind on your payments.  This is not true.  If you challenge something that they tell you and they offer to have you talk to their supervisor to confirm, don’t take the bait.  Their “supervisor” is most likely just the collector in the cubicle next to them.

Letters In The Mail
During the first 90 days or so, your mailbox is going to fill up with letters from your lender.  They may start out friendly, offering lots of options and telling you how much they want to help you, then they will start getting more threatening.  Usually around the 60 day mark, they’ll send letters by certified mail as well.  They’ll use terms like “Acceleration Warning”, “Notice of Intent to Foreclose”, “accelerate the maturity of the loan”, “declare all sums immediately due and payable”, “commence foreclosure proceedings”, “take legal action”, etc.  They're trying to get your attention.  Just remember that no matter what they say, there are specific procedures and timelines that they must follow (see Foreclosure Process and Timelines in Washington State).

Two Notices To Take Seriously
If you’re receiving so much correspondence from your lender that you’ve given up even opening your mail, there are two letters (or notices) that you should pay particular attention to.  The first one is the “Notice of Default”.  This will usually be sent by regular mail, certified mail, as well as a hand-delivered copy (usually taped to your front door if you’re not home).  This notice warns you that the bank may start the foreclosure process if you don’t cure the default within 30 days.

The second notice is the “Notice of Trustee's Sale”, which is sent 30 days or more after the Notice of Default.  Like the Notice of Default, this notice is also sent by regular mail, certified mail, and hand-delivered.  This notice means the bank has scheduled the foreclosure auction for your property.  The foreclosure auction will be at least 90 days from the date of the notice.  The bank has the ability to postpone the auction at their discretion if you’re in the process of a short sale, loan modification, or some other workout option.

As always, if you’re concerned about your legal rights or legal implications, you should consult with an attorney. 

This is just a brief overview of what to expect, and it may differ slightly from lender to lender.  Feel free to share your experiences.


*******************************************
Authored by David Monroe, Real Estate Agent and Short Sale Specialist
Access Seattle area short sale help and foreclosure resources including selling in foreclosure, and 8 Ways to Avoid or Stop Foreclosure.
Considering a short sale?  Check out this Short Sale FAQ first.

Copyright (c) 2010 by David Monroe (Keller Williams Seattle Metro West)