Short Sale Report

1sts - There is hope that BofA's adoption of the REOTrans (now Equator) platform for short sale processing will cut down the time it takes to get a short sale done. Equator is not going to give "full settlement" approval letters (at least not yet) but it does improve the short sale file submission process. The biggest advantage is that all documents will be date and time stamped which will eliminate the need to resubmit lost documents. The use of the Equator system is a step in the right direction. You will still need to open all files with the loss mitigation department and be referred to the Short Sale Support department. Not all loans will go through Equator. It appears that only the Fannie/Freddie and investor loans will be assigned an Equator file number. The Short Sale Support department will let you know if your file will go through Equator. (To check to see if your loan is a Fannie Mae or Freddie Mac go to www.fanniemae.com/loanlookup or
www.freddiemac.com/mymortgage) If the loan is a Fannie or Freddie loan be prepared to have 2 BPO requests. One order by BofA and one order by Fannie/Freddie.
It does not appear that their Short Sale Support department was adequately trained on Equator. Additionally if you had a file submitted in the last 3 months and it needs to be submitted through Equator it feels like you are starting the process over again. Short Sale file handling runs about the industry average of 60 days +/-.  Normally not flexible when homeowner hardship is unique.  Operates very much like the big bank they are - cumbersome policies that are slow to change.
If you get a good negotiator they are worth their wight in gold since there are numerous tasks in Equator that they need to complete to keep the process flowing.
Sellers and agents have different logins. Agents should get their sellers login information to make sure that the seller docs are uploaded properly.
2nds - Bank of America continues to present the most difficult challenges in the servicing industry on Short Sale proposals, on home equity 2nds.  It takes approximately 5 weeks for them to acknowledge receipt of the package. They typically demand 5% of the net proceeds which typically equates to 12-15% of the loan balance when other lenders are closer to 10%. (This is still dramatically higher than the $3,000 in the treasury proposal). If the file is charged off and sent to recovery/collections we have heard from some agents that they are surprisingly easier to work with than the loss mitigation department. This may not be true in all instances.
Update - Since the Countrywide integration, Bank of America has become absolutely inflexible on the continuing liability for deficiency issue when authoring short sale approval letters. California borrowers, who are legally entitled to anti-deficiency protection, are forced to accept liability for the deficiency on first and second mortgages as a condition of BofA short sale approval. While this is not a new issue, the fact that there is virtually not room for flexibility is new. Irrespective of the severity of the hardship, the troubled borrower is forced to either accept the liability or surrender to foreclosure.

1sts - Chase has been pretty good to work with, but sure do move at a slow pace much of the time. They are trying to integrate the WaMu portfolio but do a much better job on the Chase files than the WaMu files.

2nds - We are having some unpleasant experiences with Chase on 2nds. The sad truth is that many distressed homeowners have borrowed beyond their ability to repay in an effort to remain current on their home.  They have dug a horribly deep hole for themselves -- they have few, if any assets, and a pile of debt.  And Chase is demanding cash, and I mean lots of it. Many times as much as 50 to 60% of the outstanding balance.  AGENTS BEWARE: We have heard that they are shameful in their attempt to push realtors to assist in delivering funds to them off of the HUD. If this is true it is unethical and puts the realtors license at risk. We have heard this from numerous sources that also insist they have brought this to the attention of the senior management at Chase without any results.

In nearly all cases you will run into Franklin Credit as a junior lien holder. We find them to be very difficult to work with. Their focus is entirely on collection, in many cases without consideration for either the circumstances of the borrower, or the borrower's rights. We have had particular difficulty in working with Franklin Credit on transactions in which the borrower has had the debt discharged through bankruptcy. They seem to have a 'we make our own rules' attitude and are VERY proud of their "tough to negotiate with" reputation.

Although most credit unions are typically easy to work with Franklin Credit Union appears to be understaffed and the response is very slow.

They initially moved all of their files to Countrywide. With the integration into Bank of American they have now taken their files back. They are slow and difficult to work with in most cases.

If you want to get through to a Greenpoint negotiator, call before 7:00am pacific time - and call Monday through Wednesday. Otherwise, prepare yourself for frustration. Simply don't have the manpower to handle their file load. Hold times are very long, sometimes over an hour. And, don't expect a return call....ever.

They are using Titanium Solutions to contact homeowners. (Titanium Solutions is the leading provider of homeowner contacting and counseling services.www.titaniuminc.com) Litton is one of the most active servicers in the area of proactive loss mitigation. Unfortunately, it has not translated to better, or significantly faster work on short sale files. Given the attitude of Litton management towards foreclosure avoidance programs, Litton is a servicer to watch going forward. The bet here is that before this cycle is over Litton will be one of the easier servicers to work with.

Litton update. An example of Litton's attitude. Litton has said they were willing, as a senior lien holder, to allow as much as 10 cents on the dollar to junior lien holders. That was until they discovered most of the major servicers were more than willing to accept the 10 cents, but were not the least bit interested in reciprocating. The process seems to punish progressive thought at every turn.  Nonetheless, hat's off to Litton for trying.

1sts - Still Erratic. Ocwen will not postpone trustee sale dates to accomodate a Short Sale - even if it just about ready to close. The bright spot is that they seem to change their policies on a regular basis so this could change at any time.

2nds - Ocwen has been one of the easiest to work with on junior liens from the beginning. They can, however, be demanding in terms of making agents work hard to get closing date extensions.

One West was formerly Indymac Bank. One West has been great to work with and very responsive to the short sale requests.

The five largest MI companies have recently been downgraded. They could become increasingly difficult to work with since their is no incentive to solve the problem early. If they approve a short sale now as opposed to cover the loss at a later date with a trustee sale they may choose to wait to take the loss. Although not really a "lender" mortgage insurance (MI) companies like Radian may have a stake in the Short Sale at least on covered loans. We are talking, in most cases, about MI coverage that was purchased, or paid for, by the beneficiary (lender) - we are not talking about traditional borrower paid mortgage insurance. Old Republic generally demands 20% of the outstanding lien (usually it's the junior lien) from the borrower. is the only way to describe most demands made by mortgage insurance companies when their cooperation is being requested to get a Short Sale closed. We continue to have more than occasional success when we attack the challenge head-on. It is time consuming. Particularly in those cases where the debt in non-recourse, you can be successful when battling with MI companies, including Radian. Just make sure you start early and have a big cup of coffee.

Specialized has been one of our favorites, making common sense decisions that maximize capital recovery. They are great to work with but it is hard to tell which loans they are servicing. 2nds where they face a total loss if the 1st forecloses, even with reasonable offers from senior lien holders. They claim that their recovery department can squeeze money out of somewhere after they are wiped out. Dare I ask where? The tooth fairy? Unnecessary foreclosures hurt everyone. Come on Specialized, you are better than that.

If you request a loss mitigation package they send it out right away. Some files are being transferred to First American Loan Servicing. They continue to be slow an unresponsive.

They move quickly in most cases. I believe part of reason for Wachovia's speed is their recognition of challenges in the real estate market. The view from here is that Wachovia really gets it. You typically have a single point of contact. Wachovia has used the localized approach for much of their REO portfolio, and we believe that has helped them better understand how tough things are at the street level. Speaking of tough, that is the best way to describe Wachovia on value issues. Don't send Wachovia a deal based on a wholesale price and expect a favorable outcome - and that is as it should be. Most times, when Wachovia responds to a file, the focus is on the 'net proceeds' number. So, look your deal over closely before you conclude that you have, or don't have, a deal. They are particularly aggressive with the World Savings Portfolio that was integrated into the Wachovia portfolio. Look at the original Deed Trust to see if you have a World Savings loan.

1sts - They are really trying to better their service. They are also great about full satisfaction releases.   Tip — recount your conversation and reconfirm they have a complete file before concluding your conversation with loss mitigation. 

2nds - They take 60 days to review and then the first thing they want is updated docs (pay stubs, bank statements, retirement accounts etc)Watch your commission and take nothing for granted when working on a Short Sale with Wells Fargo Home Equity. They are VERY picky about their packages and will look at all documents to make sure there are no gaps (bank statements, pay stubs etc). They are very slow to approve and then their is a huge rush to close at the end. They do expect EVERYONE to contribute. We have had experiences of late where Wells Home Equity has gone directly to agents demanding a portion of the their commission as a condition of approval. There is wide speculation that the loss mitigation department is bonused on contributions. Occasionally our sources have seen the approval letter come in with an amount less that what is on the HUD. There is much speculation on whether or not they are bonused on the amount collected above the approval letter. That said, they are very good about full satisfaction language on the short pay demand!!