A recent surge in service releases by lenders has significantly impacted the short sale market, resulting at best in lengthy delays for approvals, or at worst with the deal falling through completely. Short sales were always more time-consuming and complex than a traditional real estate transaction. Now there are even more hurdles.
Why the surge of service releases?
A significant factor was the sale of Bank of America’s $215 billion servicing portfolio to Nationstar in the first quarter of this year. That’s a lot of mortgages. Chase and other major lenders are also transferring their servicing. You can count on the trend to continue.
What brokers can expect with service releases
Plan on delays. We recently were working on a short sale with B of A, who had issued an approval letter. The servicing was then released to Ocwen, who refused to honor the approval letter. That required us to start over from square one with Ocwen. While the sale was finally approved, it added three months to the short sale process.
What brokers can do can about service releases
- Advise clients that their loan servicing can be released at any time during the short sale process.
- Stay in constant communication with the lender. Every interaction should include the question: “Is this loan scheduled for service release?”
- Alert clients to pass on to you all contact information and any letters from their lender regarding their mortgage servicing.
- Contact the new servicer to determine what options available to the homeowner. Keep in mind that it may take 20 days or more for the new servicer to access the loan.
Do you have a client who is considering a short sale? We pay a 30% referral fee, and provide you with marketing materials custom branded for you that explain to your client how you can help them sell their property and avoid foreclosure. Call us at 425-381-2233 for more information.