Here is what people tell me.
“The banks can’t afford to approve loan modifications because they don’t want to take the losses on their books that fast.
Also, their investors may not approve the short sale, because they can’t afford to write off too much loss at once. And the circle goes around and around”, they say.
This common myth isn’t true. Let me explain why. The odds are that your loan is not owned by your lender. For example, 80% of all Bank of America’s loans are not owned by them.
The biggest holders are the Government Sponsored Enterprises, also called GSEs. The GSEs are Fannie Mae, Freddie Mac, and Ginnie Mae. These entities are accustomed to losses.
In fact, they have loan loss reserves on the books. The other entity that is accustomed to losses is FHA and VA. Between 65-70% of all US mortgages are owned or insure by the GSEs or FHA & VA.
Even small local banks don’t own a large percentage of the loans they hold on the books. For example, another agent I know lives in a small town of 60,000 people.
There is a bank that dominates the lending market in the area. You would think this small bank was lending their own money. Not so. The majority of their loans are sold off within 12-18 months after they are written.
Here is the real reason that loan modifications and short sale are so tough. Remember, loan modifications and short sales will usually net the owner of the loan more money than a foreclosure.
The people who process the loan modifications and short sales won’t lose any money if the home is foreclosed. Here is a classic example of this. An agent is negotiating an FHA short sale with Bank of America.
The short sale negotiator told him it would take her 2-3 weeks to review the offer and then submit it to FHA for final approval. How long was it going to take FHA to review the submitted file and respond?
She told the agent that that FHA had a 72 hour turnaround from when she submits the file to her. It’s pathetic. In this example, BOA isn’t losing the money, FHA is losing it instead.
So, the person who is actually losing the money has a faster turnaround time on reviewing a short sale file. No, the system isn’t working.
However, no one in Washington or at the big banks really seems to care. Thinking about a short sale?
I can help you short sale your property and get back on your feet. Send me an e-mail at email@example.com. I will contact you for a free consultation.
When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at (919) 606-8751
Discover how other sellers successfully completed a short sale and request a free consultation by clicking VA Appraisal.
Thinking about a loan modification? Our Raleigh loan modification kit has the instructions you will need to get a loan modification approved with your bank. Click here to request a copy.
Thanks for reading this, Ken Smith.
Ken is a Real Estate Broker at Goldens Realty. Raleigh Short Sales Realtor:
Phone: (919) 606-8751. firstname.lastname@example.org.
Friendly, loyal, intelligent service!
View My homes for sale at www.GoldensRealty.com.
Ken Smith specializes in loan modification assistance and short sales in Raleigh North Carolina. Raleigh Loan Modification Help, Raleigh Short Sales. Raleigh Short Sale Realtor. Raleigh NC Short Sales. Raleigh Realtor.