By: Jerrold J

Jerrold J — Fri, 20 Mar 2009 18:22:53 +0000

You need to understand WHAT is happening to understand WHY it is taking so long. When somebody buys a house and goes to a bank and gets a loan, that bank uses it’s own funds to fund the loan and pay the seller. Once the loan closes and the buyer signs all the paperwork, the bank now “owns” the note. But most banks and lenders then sell that note to somebody else. These notes are sold to goverment programs such as Freddie Mac and Fannie Mae. Freddie and Fannie then bundle the notes into larger portfolios and resell them again to investment groups like the big stock brokerage companies. The brokerage companies then resell the notes again to Real Estate Investment Trusts, (REITS) and individual investors buy shares in teh Reits for long term returns.
So when the payments on the loan are not made the ORIGINAL lender must forclose. They send out the Notice of Default and start the process of getting TITLE to the house, at this point all they “own” is the note that they have sold. IF the foreclosure happens within a certain amout of time after the loan was created then due to the terms of their sales contract with Freddie, the bank must buy the loan back because it failed during the “seasoning period”. If it failed after the seasoning period is over then the bank doesn’t have to rebuy the loanfrom Freddie but they do have to handle the foreclosure paperwork.
So in your case, I think that the original lender was sent notice of your offer to Freddie, then they send the offer to the Stockbrokage company, then they send notice to the REIT, then the Reit has to decide what % of loss they are willing to accept on loans that go bad inside that portfolio. If your offer is less then what they have agreed to accept then the Riet must see how the rest of the loans in that portfoio are performing, what the default rate is, and how they are going to either change the loss % or if they can accept your offer or counteroffer something to you. Then all of this must pass back thru the chain of companies before you will get an answer on you offer.
And remember that each part of that chain has to decide how this affects that sale, that bundle, and how the rest of the bundle is doing.
Once the final holders of the note make a decision then the original lender will appoint a “officier” to the case and things will go quicker but do not hold your breath waiting for it to happen.
Also if the house has 2 loans against it ( a first and a second) it depends if both are held by the same comany or not. Seperate loan writers will increase the paperwork and timeline to get a short sale done.
Bank resell their notes so that they can make a small profit on each note written and then have funds ready to write more loans. This is why the “subprime” guys went out of business so fast. They could not write any new notes so no income coming in and a large part of their old notes failed and they were required to buy them back but without money coming in from new notes they went bankrupt on paper in a matter of days.

By: gregory_usa83

gregory_usa83 — Wed, 18 Mar 2009 20:32:01 +0000

No, if the house is in pre-foreclosure then the mortgage holder will wait until the last few weeks or even days to approve an offer, not getting a counter offer request is a positive sign unless you really lowballed the offer. The mortgage company will wait until the end just before the foreclosure sale to see if a better offer comes in.

Comments on: Short Sale House Question?

By: Jerrold J

By: gregory_usa83