I took at listing last fall for a seller in foreclosure.  At the time of the listing, his mortgage company was Saxon (another favorite of mine … read below).  I agreed to assist this seller in doing a Deed in Lieu with Saxon.  My seller was super cooperative and got me all his financial information quickly and in no time we got confirmation that Saxon was working on the Deed in Lieu approval.  THEN during that time they sold the mortgage to Ocwen – even with it in default and through the Court system.

Had to start the whole process over again with Ocwen since I was told they did not have any financial information from Saxon.  I immediately resent all the financial information and then we received an offer.  So our goal was now to do a short sale instead.  Ocwen had a COMPLETE short sale package in January.  I called twice a week for follow-up on the status of the short sale approval.  I heard everything from we lost the BPO to you should have written approval in 48 hours.

Fast forward – It is one day shy of April and do you know that they STILL have not given approval or even a counter?  To add to the issues, the Sheriff is set to sell the property on Monday with a starting bid $15,000 lower than their net should they take the short sale.  At this time, Ocwen is telling me they will not postpone the Sheriff sale.  To me and the average Joe, this is a NO BRAINER!!  If I made a $15,000 error on a deal, I wouldn’t have a job let alone a license!  Are you kidding me?

I have had a buyer in the loop, a cooperative seller – all still willing to see this deal through.

I am so sick of reading how much help there is and how there are going to be rules, changes, and regulations to help these short sales work more smoothly and swiftly.  HOW? WHEN? WHERE? WHO? Really?  I don’t believe it for a minute until I can see it with my own eyes.  I am in the “field” 24/7 and I am NOT seeing it.  In fact, I am noticing that the problem is getting WORSE and not better.   These deals are taking much longer to process.  There are not enough hired hands to help process and push these deals through. 

So, now I have to wonder… just how many other good deals are out there that have gone to the wayside like this one?  How much money are we talking if we were to add them all up together?  Thousands? Hundreds of thousands?  Millions?  Dare I continue?

What benefit does Ocwen receive, or any other bank for that matter, for letting a good deal fall through and go to auction?

Granted this is not the outcome I had hoped for, but I have learned so much from this ordeal.  I know I did everything I could for my seller.  My seller did everything he could as well. 

If you have read this – thank you.  Another lesson I have learned, I should not call my sellers or blog immediately after speaking with Ocwen.

How can a bank continue to operate in such a manner when every day and every dollar count?  Don’t they realize that they are going to lose even more money if they don’t start negotiating these deals in a timely manner?  I have never dealt with a company that was so slow and unorganized in handling these before.  While I do not know anything about their company, their worth or their size … but if this is the way they do “business,” my guess is they won’t have any “business” to do in the future.

Unfortunately, I highly doubt that I will ever take on another short sale when Saxon Mortgage is involved – whether it is my buyer or my possible seller.  It seems it is a battle that cannot be won!

A couple of items to consider regarding a deed in lieu:

1. Be sure to talk with the lender regarding their requirements to do a deed in lieu.   Each lender has their own requirements that may include: 

•  a financial package (hardship letter, pay stubs, income tax records) before they will entertain a deed in lieu.  Note that getting their approval to do the deed may also take some time, so do not wait too long to start this process;
• that the house be listed for a minimum of 90 days with a Realtor in an attempt to do a short sale first;
• that the house to be in good, clean condition.

       2.  If there is a second mortgage or any liens on the property, odds are the  lender will not do a deed in lieu.  Once again, a call to the lender to verify their requirements is necessary and recommended.

     3.  Be sure to talk with an attorney if you have any questions about relinquishing your rights to the property.

     4.  Generally when doing a deed in lieu, the lender will waive their right to obtain a deficiency judgment. Be sure this is the case so there are no surprises later.

You can never ask too many questions! Always speak with an attorney regarding legal questions and a CPA regarding any possible tax ramifications! Note that every state is different and every lender is different!

When I took the listing, I immediately contacted Ocwen to verify their fax number and sent them over the authorization signed by my seller, the listing agreement and the MLS print out.  While my conversation went okay, I had a funny feeling this was going to be a difficult process because when  I asked the lady on the other end of the phone a couple of generic questions, she was not real sure how to answer them.  In fact, she sounded like she was reading the answer to me and she had the same “answer” for two entirely different questions.  Yikes – not a real good sign to start with.

 However, after I submitted an offer and followed their “short sale list requirements” exactly to the “T” – six weeks later I had a written acceptance.  Now, please note that there were calls made twice a week to check the status of the offer, if they received the BPO back, etc. - but surprisingly and overall my deal with them went really quite smoothly.  I will definitely take on another short sale with them.

Their short sale department phone number is: 877.596.8580.

Their short sale fax department phone number is: 407.737.5071

First, the article mentioned loan modification and then it began discussing the nooks and crannies about a short sale. “Hire a qualified team” that knows the process and will not take advantage of you. Tip #1: I try to impress upon individuals and families facing foreclosure who are getting bombarded with mailings – if it sounds too good to be true, IT USUALLY IS!

It then mentions the short sale package and the type of documentation that needs to be provided by the seller: the hardship letter, proof of income, and income tax returns.  The next important item I tell sellers in shorts sales – Tip #2: I CANNOT do this without YOUR help.  If you do not want to provide financial information to the lender, then I canNOT help you because they will not entertain a short sale contract without YOUR documentation.  I will not be able to the job I have been hired to do.  I will not be able to help you in this situation if you are not willing to help yourself.

In bold type, the article continues: “Prepare buyers for a lengthy waiting period.”  Kudos!!  Unfortunately, there are too many Realtors that do not understand the process and then, therefore, are unable to educate their buyers.  Tip #3: I educate my sellers, 9 times out of 10, the first offer (buyer) that comes in will, in all likelihood, not be the buyer who ultimately purchases the house.

The article wraps up discussing possible consequences from a short sale.  It further mentions that the Mortgage Forgiveness Debt Relief Act has been extended through the year 2012.  Normally, debt that is forgiven or cancelled by your mortgage lender (short sale or even a sheriff’s sale) must be claimed as income on your tax return.  It is taxable – so you are paying taxes on money you never received. But this Act states you are exempt from claiming this amount as income on your principal residence. 

(See the IRS website for further information and if you qualify under the Act: http://www.irs.gov/individuals/article/0,,id=179414,00.html)

In summary, the article was short, to the point and mentioned all the very KEY and IMPORTANT steps.

I truly feel the negotiators at Saxon are over-worked and suspect their case load is too much to truly handle in a timely manner.  I continue to call to verify they have all the documenation, do they need anything else – but it still seems the progress is extremely slow when comparing them to other banks and the short sale process.  It then becomes a chore to keep the sellers and buyers at the table.

Just wondering if anyone else has had any success in dealing with this company or if everyone running into the same issues with them?

I am a full-time Realtor in the Cleveland, Ohio area focusing mainly on Cuyahoga County (South-West) and Medina County.  The bulk of my current work focuses on helping homeowners facing foreclosure – otherwise known as the “short sale.”