What is a Short Sale and How Do They Work?

The key to working with the bank is to find the right department, then understand how to work with them.


There are a number of different departments within the bank. The Customer Service Department is designed to get you to the right place for your particular problem. As long as they take the time to understand what you want, they are a resource that will get you to the right people. To understand where you might be misdirected, here are the departments that you do not want. The Collections department is to get money out of the borrower, maybe get the account current or get it foreclosed and out of the system. The Bankruptcy department deals with loans that are in bankruptcy, typically seeking to get the properties removed from the protection of the bankruptcy stay. The Foreclosure department is to march directly to the foreclosure sale with minimal distractions, typically providing the borrower only with the amount necessary to fully reinstate the loan or the amount for a full payoff of the loan.

What you want is the Loss Mitigation department designed to lessen the loss to the bank primarily by facilitating short sales. To understand the difference, members of the collection department get bonuses for getting money paid on the loan or for getting money recovered through foreclosure. Members of the loss mitigation department get bonuses from completing a short sale and recovering money for the bank through the closing of the sale.

Do they publish the phone numbers for the loss mitigation department? No.

So, how do you get there? E-mail me for a list of most of the banks Loss Mitigation Department telephone numbers.

Most people would look on their mortgage statement from the bank. If you are behind on your payments, do not call the phone number on the mortgage statement, because it is the collections department. They will try to get some kind of payment, and they are under extreme time pressure in their call, as most of them are timed for how long they are on each call. If they transfer you to loss mitigation, some firms give the collector a black mark. Find an old loan statement from when the payments were on time because the number on that statement will get you to customer service department. Get them to transfer you to the loss mitigation department.

When you call loss mitigation, you will typically get a gate keeper who can give you some preliminary information. Some of the departments will tell you what you need in the short sale package. Others will send you a form with that information. Still others have that information online. Get that information as soon as you can, because you want to tailor your package to their requirements. They review hundreds of packages, so if you put your information in a format that is easy for them to review, you will get a better reception form the negotiator.

Most loss mitigation departments will not deal with you in any significant way unless you have an offer. Once you have an offer, submit it in the manner we describe in the Step by Step guide. Then, start calling loss mitigation about once a week to see that it moves along. When your package gets to a negotiator, see what you can do to make that negotiators decision easy. Provide everything they request in the format that they want as quickly as possible.

Communicating with some loss mitigation departments is extremely hard. When you call the Countrywide loss mitigation number, and go through the prompts, more than half the time you will be transferred to collections. They will try to tell you it is the same thing, while they are asking what you can do to get the seller to bring the account current and suggest you call HUD to learn about how to reinstate the loan. You learn to smile at their claim that they are the same.

Countrywide has a system coming out of their merger with Bank of America to send secure emails, where you need a password. That sounds simple enough. However, on many occasions the system will not let you get to the message even if you get the password emailed to you and you copy and paste the password into their system. In other words, you can enter it perfectly and not get the message. So, you send a regular email to the negotiator. Many negotiators will not respond to regular emails. So they get mad that you did not get their message. So, you call and leave a voice mail. Most negotiators will respond to a voice mail one to two days later. If you are not immediately available to answer their call, you will get a message. So, you return the call, get their voice mail, you leave a message and it could be another two days.

Another example is Bank of America. They get between 500 and 1,000 short sale packages a day. So, the negotiators do not have time to talk to you at all. You communicate by the cover sheet on the fax or the documents in the package. So, if you have a message for the negotiator, put it in the fax cover sheet or a letter on top of the package.

What is the solution? Creativity! Most Realtors are good finding a way to get in touch. With Citibank, I found that the gatekeepers (i.e. the first line of defense in the phone system) had access to the loss mitigation negotiator’s files. So, when I wanted to find out what was happening, I called so often that I got to be on a friendly basis with a few gatekeepers. They would read me the notes in the files.

Keep on calling. Many loss mitigation departments will not contact you with the results of their review. I found out that Countrywide had rejected one of my short sale applications six days earlier when I made my weekly call. They did not give a counter offer, just a rejection, so I got the buyer to increase the proposed price and submitted that offer. In other words, I  have to be the one who communicates, because they do not have time to get messages to you.

Even though communication with loss mitigation is difficult, it is far better than any of your other choices because the purpose of the loss mitigation department is to get the short sale reviewed and possibly approved. Patience and the ability to hold your temper is key when you get transferred a dozen times or disconnected just when you are getting to the right person. If you make the negotiator mad, you will get an approval that you can never perform. So, once again, it is all about the relationship.


Realtors are good at communication, this is just another opportunity to improve our skills.

Will I have to pay for closing costs and prepaid items out of pocket?

Not necessarily. This can be handled one of two ways; Either the closing costs and prepaids can be paid out of pocket or they can be included in the sale price and be specified as closing costs to be paid by the seller. It is not possible to finance these items separately from the home purchase. However, the seller is allowed to contribute toward your closing costs. When the seller pays the buyers closing costs and prepaids this is referred to as seller paid concessions. Some loan programs limit the amount the seller is allowed to pay. Your mortgage advisor will be able to give you the specifics that apply to your situation.

Help Portland Street Youth Today thru 104.1 FM The FISH

TODAY help us provide food and care to Portland Street Youth! Bert and several TY staff members and volunteers are manning the phones at 104.1 FM during Transitional Youth’s all-day Radiothon.

Partner with Transitional Youth and 104.1 The Fish as we help make a positive difference in the lives of our local homeless street youth. They are hungry and hurting, especially during the rainy season.

The majority of homeless youth have suffered from physical, emotional or sexual abuse. Some youth end up homeless because they are literally abandoned by their parents. The stark reality may be the streets are safer than their former living environments.

Through our Hungry for a Future campaign, your gift of $43 will provide 30 Portland street youth a hot meal and temporary relief from the weather. Click here to learn more and see how hunger and hope can begin with a meal and your support. Or click here to donate now. Then tune in today as we reach out to provide hope and a future to our homeless youth!

Thank you for your ongoing support … please share this message with your friends!

Sincerely,

Your friends at Transitional Youth

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Forbes ~ Portland Oregon is one of the U.S. cities where renters should buy now!

By Francesca Levy of Forbes ~
The gap between what you'd spend on rent and paying a mortgage is shrinking in these metro areas.

The U.S. government has pushed hard to make homeowners out of the one-third of Americans who still rent their homes. It introduced and later extended a tax credit for first-time homebuyers, and has kept federal interest rates at their lowest levels since the 1940s.

Market conditions are such that now is a particularly good time for some renters to take the hint.
In Portland, Ore., San Francisco, Minneapolis and Washington, D.C., the premium to buy - the spread between what you'd spend on renting and what you'd pay each month for a mortgage - is far narrower now than its 15-year average. And economists predict a significant home-price hike in five years. So upgrading will cost much less than usual, and homebuyers are likely to get a good return on their investment.

Note that buying isn't necessarily cheaper than renting in these metro areas. In fact, it often remains a more expensive proposition. But for those determined to own, that investment is a better one now than it normally is.

Will I have to pay for closing costs and prepaid items out of pocket?

Not necessarily. This can be handled one of two ways; Either the closing costs and pre-paids can be paid out of pocket or they can be included in the sale price and be specified as closing costs to be paid by the seller. It is not possible to finance these items separately from the home purchase. However, the seller is allowed to contribute toward your closing costs. When the seller pays the buyers closing costs and prepaids this is referred to as seller paid concessions. Some loan programs limit the amount the seller is allowed to pay. Your mortgage advisor will be able to give you the specifics that apply to your situation.

Will I have to choose all of the Key people involved in the transaction?

It is critical to have top key professionals. Finding a good real estate agent is an important staring point. Your real estate broker can be a valuable resource when it comes to selecting your mortgage advisor and your title and escrow officer. The working relationship your real estate broker has with them will help ensure you are well served. If they do not do a top job for you, their relationship and future business are at risk.

Your real estate agent can also recommend professionals they have worked with who consistently provide a high-level of service for all aspects of the transaction. From inspectors and repair men to cleaning and landscape services.

Having top key professionals handling all aspects of a home sale or purchase can be the difference between a successful move and a disastrous one.

WHAT IS YOUR HOME REALLY WORTH RIGHT NOW? Is Zillow right?

What Is Your Home Really Worth?

The most commonly asked question from clients is "What is my home worth right now?". There are three basic ways to estimate the value of a home. They are: 1) value estimation web site; 2) comparative market analysis and 3) professional appraisal.

There are a number of web sites which offer value estimates of your home based on data you input in their web form. The value these sites offer is an estimate of your home's worth based on their system which may use a proprietary formula. If you read carefully, you are also advised to do the following: 1) obtain a comparative market analysis (CMA) from a licensed Real Estate agent and 2) have a professional appraise your home.

Since these on-line valuations use a proprietary formula which is not shared with the public, the only way to verify the true value of a home is to have professionals with "boots on the ground" visit the property and generate a value based on first hand knowledge.

The hard reality is a home is worth what the market will bear at the time it is sold. The most reliable estimate comes from the sale prices of the SOLD homes in your neighborhood for the past three months which are similar in size, condition, etc. This Comparative Market Analysis is an average of those values. Because home prices may not have reached the bottom yet, the value may be a percentage point or two below that average. If you've done quite a bit of updating and remodeling, it might be a few percentage points higher.