This is part 5 in the series: 40 Questions You Need to Ask When Considering a Short Sale
Questions for the Banks: Will You Play Nice?
Its interesting to stand back from a short sale negotiation and watch the banks go back and forth with their offers and negotiations. Sometimes the banks play nice with each other and other times they would rather sit in the sandbox alone and throw sand. While you can’t do a lot about how the banks will behave, getting a general sense of what to expect can certainly help.
Side note: for simplicity, “banks” refers to the lien holders involved in the short sale and can include mortgage insurance companies, 1-4 different lien holders, etc.
7 Questions to Ask About the Banks
- Who are the banks?
- How many banks/lienholders are there?
- Are any of the loans portfolio loans? (in house)
- In the past 6 months how have the banks handled business?
- Do the banks have any business policies to be aware of?
- Has the listing agent recently worked with any of the banks involved?
- Has your agent recently worked with any of the banks involved?
Reality Check Points
- Most agents have done a deal or two with the big name banks, knowing who they are can be helpful
- The more banks the harder the deal will be to get approved. Avoid deals with more than 2 banks
- If a loan is a portfolio loan it means getting approval on that loan will be much easier
- Banks seem to behave differently throughout the year, having some updated information about how they do business helps. Ask any agent and they should be able to tell you about BofA’s roller coaster of business practices.
Each bank is unique, but you should be aware of any glaring policies. For example, with BofA’s equator system if they issue an approval letter (after 3 months) and the buyer cancels the contract the seller will have to start the entire process over. We are talking about literally spending another 3 months to go through the entire approval process just because the buyer’s name on the deal changes. Not all banks do have that policy, but it is somewhat common. Banks only think about what is in their best interest, so be aware of how they are going to handle the transaction and if it will have an impact on you.
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