Step 1: Find out the type of loan it is.
Examples are Fannie Mae, Freddie Mac, FHA, VA, Portfolio, and "Sliced and Diced." Why does this step matter? First, around 70-80 percent of all loan held by the large, national lenders are not owned by that lender. They are simply collecting the money for the actual owner of the loan.
The owner of the loan is the actual gentility that makes the decision to approve or deny the short sale. Find out who the actual owner is and you can hold that lender accountable for their actions. They better do a good job on the short sale. If not, then you report on them to the actual loan owner. In addition, most of these loan owners have specific guidelines on short sales. Not all lenders follow those guidelines. If they don't then you can hold them accountable for their actions. Okay, so here is how you find out who owns the loan.
Go thru the steps below.
Search Fannie Mae's Website.
Search Freddie Mac's Website.
Look at the actual mortgage to see if the loan is an FHA or VA Insured Mortgage. If the loan is FHA insured, then on the first page of the mortgage, there should be a small square. Inside the square, it will say, "FHA Case Number 091-4242640-703." The case number will be different, but it will still be an FHA loan.
If the loan is VA insured, then on the mortgage, 1-4 pages past the signature page will be a VA Rider. At the top it will say "NOTICE: THIS LOAN IS NOT ASSUMABLE WITHOUT THE APPROVAL OF THE DEPARTMENT OF VETERANS AFFAIRS." That is a VA loan.
If the loan is not any of those, then it is probably then it is most likely a portfolio loan. This means the loan is owned and serviced by the original company that bought it. This is especially true if the current servicer is the same company as the original lender.
There is one final option: "Sliced and Diced." If a foreclosure has been filed, then look at the Plaintiff's Name on the Lis Pendens. If it contains something like "CWALT 2005-06CB", "BOAALT Series 2005-10", "Certificates", or "Trust"; then it is probably "Sliced and Diced."
Step 2: Influence the BPO.
A BPO is a bank's version of an appraisal. They use that property valuation to make a decision to approve or deny a short sale offer. Many BPOs are inaccurate. As a result, many short sales are unnecessarily rejected. The banks lose even more money when they property sells later on. The problem is that the people doing the BPOs are rushing thru them. They are visiting 100 or more homes per month and preparing an in depth property evaluation on each one.
That isn't always enough time to properly evaluate each property. As a result, many BPOs are inaccurate. An inaccurate BPO often leads to a failed short sale. Let me explain why. If a BPO says that a home is worth $250,000, but the actual value is only $220,000, then the short sale will probably be turned down. You the homeowner risks losing your home to foreclosure. In one example, the people doing BPOs on a short sale consistently stated that the property was worth $325,000 to $375,000. Over the course of a year of being on the market, the most a buyer offered to pay was $275,000. But, the bank wouldn't accept their offer because they thought the house was being sold for less than it was worth.
The market continued to decline. The realtor continued to market the property. However, now buyers were only offering $230,000. The short sale bank finally accepted that offer. Inaccurate BPOs cost that lender $45,000. In addition, they put a seller at risk of losing their home to foreclosure. This is why your agent must influence the BPO. Here is how they do that. Your agent does not allow the person doing the BPO into the house without their permission. They meet the person at the house and tell them why the home is selling for the price it is selling for.
They explain the market conditions and explain what they feel the home is worth. The give that person their own opinion of the value of the home. Many times that person will use the information they have gathered for them and turn it into the bank. That gives you a much better chance of a successful short sale.
Step 3:Find out the BPO value.
This seems fairly simple. But, most agents never find out this number. as a result, they don't know why their short sales are not being approved. We talked to another agent a little while ago. "I've got 5-6 short sale files under contract. But, none of them are being approved. The short sale negotiation company is working on them, but they can't get any of them approved. What do I need to do?" he asked us. We started asking him for more info on the files. "What are the BPO values?" What percentage of that are the homes selling for?" What type of loan is it?"
Now, why do we ask these questions? Because that is how you determine what the problem is. We've negotiated over a hundred short sales with all the different lenders. We know why the banks accept short sales and why they turn them down. On our short sales, the majority of the reason an offer was turned down was because of a high BPO. The bank thinks the home is worth 200k, but the buyers won't offer any more than 170k. The offer is not going to be accepted. But, sometimes they will accept an offer on a 200k BPO if it is above 180k. It does happen, but not very often. 190k on a 200k BPO happens a lot more often. If you don't know the BPO value, then you don't know why they are turning down your short sale offer. You don't know what it will take for them to approve it. You are shooting in the dark.
This is the case whether you are negotiating the short sale yourself, or having someone else do it for you. Either way, your chances at success are much lower. Here is how to find out the BPO value. First, ask the person at the lender that is negotiating the short sale. Most of the time they will give you that information. If the short sale loan is a VA or FHA insured loan, then you can get a copy of the FHA or VA appraisal. (The banks use those to determine the property's value instead of a BPO.) If the lender will not give them the value, then the home owner can request a copy of the BPO. Most banks will give them that information because a homeowner is legally entitled to it. They may not give it to the homeowner's agent, but they will give it to you. Once you have that information you can determine if the short sale offer is reasonable or not.