In many situations, the mortgage lender or servicer cannot get out of their own way. They create inane reasons why they cannot make a decision on whether to approve a real estate short sales. Below are just some of the reasons we have seen.
1. The sale contract had the buyer’s name misspelled in one section, and the servicer refused to make a decision until a fully corrected contract was issued. The contract had the correct spelling of the buyer’s name elsewhere, and the buyer’s signature was authentic, but the servicer insisted upon having no misspellings anywhere.
2. The IRS tax return was not signed by the seller, and the lender refused to consider a short sale until the seller signed the tax return. Note that the seller’s tax preparer had submitted the tax return to the IRS on the seller’s behalf. The IRS considered the tax return to be valid with the tax preparer’s signature. However, the lender insisted upon having the seller sign the tax return even though it was good enough for the IRS.
3. The bank negotiator went on a three-week vacation, and no one else in the company would cover for him in his absence.
4. The sale contract did not have the seller’s middle initial, and the servicer refused to render a decision until the middle initial was added. Even though the contract was legally sufficient in that state, it was not good enough for the servicer.
5. The bank negotiator was fired and no one else at the bank took over the file. It simply sat in limbo for months. One would think that a manager who fired a staff member would reassign the file to someone else, but apparently, that did not happen.
6. The bank stated that they would not speak with the seller because the seller was represented by an attorney. The bank stated that even though the seller is the borrower and was being called several times a day as part of the bank’s collection efforts, their policy is that when the seller hires an attorney they only speak with the attorney. Here’s the kicker: the bank would not speak with the attorney because they could not find the Authorization to Release Information Form in which the seller granted permission for the attorney to speak to the lender.
7. So the bank would not talk to the borrower, who was trying to grant permission for his lawyer to communicate with the lender.
8. When dealing with one bank negotiator at Wells Fargo, her voicemail stated that she wouldn’t return any calls. Interestingly enough, her voicemail was full and thus no one could leave any messages either.
9. A Bank of America negotiator stated for weeks that the investor was close to making a final decision. Eventually, the buyer threatened to terminate the contract. When pressed for an answer, the Bank of America negotiator admitted that he had never submitted the file to the investor for a decision. When told to submit the file immediately or the buyer would walk away, the negotiator replied that the appraisal had expired and therefore he would have to wait for a new appraisal. The buyer walked away, and shortly thereafter thieves stole all the copper and wiring from the house. Bank of America lost tens of thousands of dollars because a file sat on the negotiator’s desk.
