I’m going to share a valuable lesson that I learned several years ago through the “School of Hard Knocks.” This is when I was just getting started doing short sales. Hope that you will chuckle, but more importantly, hope that this will prevent you from making the same mistake!
This involves doing a short sale on a property that has the 1st and 2nd mortgages with the same lender (referred to below as ABC Bank).
We prepared the short sale pkg meticulously, as we always do. We got the authorizations signed by the borrowers for the 1st and the 2nd lenders (same bank) and faxed both of the authorizations to the same fax number (given to us by Customer Service). We faxed the entire short sale package to the Loss Mitigation fax number that Customer Service of ABC Bank gave us. About 2 days later, I was planning to call to follow up, to ensure that the package had been received. To my surprise, Edward of ABC Bank called me first, to say that, “I am your Loss Mitigator on this file.” Great!! We now had Edward’s email address, phone #, all contact info, and he had assured us that he had received the package.
About a week went by, and I called to get status to find out when the lender was going to do a BPO on the property. I was told to wait another week, and I called again. After leaving multiple phone and email messages for Edward and getting no response for about 2 ½ weeks, I then just talked to the Loss Mitigation customer service phone rep who answered the phone lines. After reviewing the file, he gave me astonishing news: “We can’t order the BPO. The 1st has to do that. They haven’t even assigned a mitigator to this file yet.” I pointed out that the 1st and the 2nd were ABC Bank, both the same lender. I pointed out that Edward had called us first, stating, “I am your Loss Mitigator on this file.” Nonetheless, to my amazement, he told me that the 1st was not in an office just down the hall. The 1st was not in an office on another floor of this building. The 1st was not in a different building in a different part of this city. No, the 1st was in a different CITY and STATE altogether!! Not only that, the 1st had not even seen the short sale package, had not received the authorization, etc. The 2nd Loss Mitigator (Edward) did not even communicate with the 1st.
Wow! Was my face red!!! Well, to make a long story short, the deal closed just fine. I dropped what I was doing, faxed the authorization immediately to the 1st lender, faxed the entire short sale pkg immediately to the 1st lender, got the name & contact info for the Loss Mitigator for the 1st, and closed the deal. It did take longer because the 1st was 2 ½ week behind the 2nd as far as evaluating the deal, approval, etc. Now, I deserve most of the fault for this, but being a “newbie” at that time, I took Edward’s word for it when he said, “I am your Loss Mitigator for this file.” He absolutely did not state, “I am your Loss Mitigator for the 2nd lien for this file.”
So, lessons learned: Never, ever, ever assume that the 1st and 2nd liens for the same bank are covered/handled by the same group of loss mitigators. In fact, always assume the opposite. Always assume that you will be talking to 2 different loss mitigators in different cities, states, etc. Treat the lenders like they are from 2 different banks, companies, etc. Then you will be pleasantly surprised if and when you find out that you only have to deal with one person for both the 1st and 2nd liens!
This could have ended very badly. We could have lost much more time finding out that the 1st was entirely different; we could have lost a buyer who got frustrated with the delays, etc. But there are so many ways that a short sale can go wrong. Put success on your side, and make sure to do the little things well, to dramatically increase your chances of closing!
