Bank of America Short Sales and Loan Modifications
1st liens - 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.2nds - BofA continues to present the most difficult challenges in the servicing industry on Short Sale proposals on home equity
2nds. Our experience is that it takes a cash contribution from the homeowner of 80 cents on the dollar, or 10 cents+/- on the dollar cash and a note for the balance of the deficiency to get BofA to approve a Short Sale on a HELOC. BofA does not seem to respond favorably to documentation demonstrating the borrowers inability to meet the contribution demands.Update: Hooked on recourse. BofA is very frequently inserting "reservation of right" language in their approval letters. That means they are reserving the right to pursue the borrower for any deficiency balance after the short sale closes. We are seeing it on firsts as well as seconds, and we are seeing it on purchase money debt as well. Bo A is actually telling distressed purchase money borrowers that they will be punished for staying the course and working to get a short sale done -- because if the homeowner were to just walk away, BofA would not have the right to so much as wave at them on the freeway. Who is coming up with this stuff? At a time when we are hearing how we should pull together, the largest bank in the United States wants to be sure to kick borrowers while they are down.
CHASE / JP MORGAN CHASE Short Sales and Loan Modifications
1sts - Chase has been pretty good to work with, but sure do move at a slow pace much of the time. Let's hope that Chase decides to start moving faster, otherwise, with the acquisition of WaMu, we could see the slowest moving financial institution on the planet.
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. Chase, where would you propose these folks go to get the money?
CITI Mortage Short Sales and Loan Modifications
1sts - Citi is pretty reasonable on 1sts, once you figure out who to talk to. If you get a good contact at Citi, save the number. We have success at times when we direct a file to a negotiator we have had success with previously.
2nds - Citi has been moving files into the "Recovery" department pretty aggressively - no one has shared their policy with us, but it seems that at about 90 to 120 days late the 2nds go to a department that is darn tough to please. Once in the Recovery department, it will take a bigger contribution from the homeowner most times, even on non-recourse debt. Even with a 10 cents on the dollar contribution, it sometimes takes an agreement to a soft note to get an approval. Bottomline, move fast on Citi 2nds if you can.
Countrywide Short Sales and Loan Modifications
Note: Bank of America has acquired Countrywide, but their behavior on Short Sale files continues to be unique and dissimilar.
1sts - Too many files. From the beginning you could feel CW working to improve service levels, the problem was simply too large from the get go. Policy changes at improving processing efficiency have left us feeling like the target is constantly moving. The "triage" program, designed to cull out offers not worthy of consideration has ended up disqualifying many good offers. CW does deserve credit for their efforts, including their willingness to be fair with junior lien holders early in the Short Sale cycle.Update: The infamous paragraph number 10. Someone thought it would be a good idea (I'm betting someone who crossed the isle early from BofA) to include a clause in their approval letter that forces every heads up title/escrow person to say... STOP! There are to be no transfers of the property within 30 days of the closing of this transaction. Escrow instructions must contain a clause that if such a transaction takes place then the title/escrow company must notify (Countrywide). The clause makes the title/escrow provider responsible for tracking the property, and potentially liable for problems that could come about if there is a subsequent transfer. They will take it out if you fight - like anybody needed another reason to fight on a short sale transaction.
Downey Savings and Loan Short Sales and Loan Modifications
Note: On December 22nd Downey Savings was acquired by US Bancorp. US Bank is an super regional bank with very little exposure to the mortgage default problem. It remains top be seen how they will put their stamp on Downey asset management operations. Will keep you informed as the situation developsExcept on a very small portion of their servicing portfolio, Downey will no longer work on short sales. If it is Downney paper they appear to be willing to do a short sale and are actually very responsive. DO NOTassume that a Downey Savings mortgage is a no go - Call Downey, or have your client call Downey, and ask if they will work on a short sale on the loan before you surrender on a good short sale opportunity.Update: Watch them operate and it's no wonder they are where they are. I just would have expected U.S. Bank to bring their strong operational expertise to the table by now. Had a short sale ready to close last week in Southern California that would have generated $600,000 in net proceeds. Downey just said no. No particular reason, just no. This stuff is too crazy to make up. So, Downey really showed that seller. Downey sold it to a third party bidder at the steps three days later for $445,000. Do the math on that one.
Litton Loan Servicing Short Sales and Loan Modifications
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.
Washington Mutual Short Sales and Loan Modifications
Update - For the second time in the last few months it has been brought to us that WaMu has sold 2nd mortgage notes after a Short Sale has closed. In both cases (we fear there have been many others) the approval letters included provisions that said the seller was to contribute ZERO at closing, and no mention is made of WaMu reserving the right to pursue collection after close. We have reached out to WaMu management and suggested that what occurred was an "administrative error." They have been given a graceful way out - instead, WaMu has gone silent. In the meantime, collectors are going after the Short Sale sellers, non-stop. We will continue to appeal to WaMu management, and will keep you informed.From the very beginning of this cycle, going back to 2006, Washington Mutual has presented unique challenges for those trying to get Short Sales approved. We have encountered some very good people there along the way, but they seem to be handcuffed by challenges caused by understaffing and transaction-unfriendly policies. The acqusition by JPMorgan Chase may eventually improve WaMu's performance, but that assumes that a serious culture conflict is avoided. For now, it frequently takes WaMu five to six weeks just to assign a negotiator to a file. A bit of good news, you will start to make progress quickly once you have a negotiator. We are bumping into many WaMu files where we are being told the total commission will be capped at 3%. In almost every case, it was not truely a policy, but an overly aggressive negotiator. What a waste of everyone's time - and every day wasted means a bigger loss for the beneficiary.
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