Working with the Lender
During the process you must keep the defaulted borrower under control. You should be in regular contact and keep the borrower informed. By doing so you are more likely to achieve success with your offer. Part of your effort to acquire the property will include two time-consuming sections:
Determining who at the lender has the authority to negotiate
Assembling a short-sale package for submission to the lender
In today's world of voice mail, do not be surprised how long it may take you to determine who has the authority to negotiate on behalf of the lender with you. Although you should not have too much trouble contacting the loss mitigation department of the lender, locating the person that has the authority to accept a short sale offer may prove to be frustrating.
Don't be surprised if some customer service representatives say that they do not accept any short-sale agreements. They might have been trained to say that, or they may not even know what a short sale is. Keep trying.
You may want to try some different terms to find the right person at the lender. Ask if the lender has a workout, foreclosures, short-sale, loan modification, or reinstatement department. The reason to ask for different departments is that often a new employee is working the customer service telephone. Hopefully one of the terms will click and you will ultimately get to the right person.
Be prepared for a frustrating experience. Even though you may think you have the right person, don't be surprised that the contact you reached does not have the authority to negotiate a short sale. Negotiating any short sale with a lender is often thorny only because it is a daunting task finding the correct person with the authority to accept a discount on a loan payoff. It could take days to figure out who this person is. Often the person you need to speak with is a vice president or similar executive who hides behind voice mail.
Refer to the defaulting borrowers by their first names. This makes them more than just another defaulted loan to the lender's representative. By using the first names you are more likely to get an emotional decision.
Avoid wasting your time by talking to anyone other than the person that can authorize the short sale. Sending your short-sale packet to anyone else at the lender's office is generally a waste of time. Once you are finally in touch with the right person at the lender's office, only then can the negotiating begin.
The person at the lender's office will make or break your short-sale deal. It's time for you to be cordial and professional. Your initial telephone conversation should go something like this:
“Hello, my name is Mary J. Johnson and I am calling on behalf of Tom and Sue Jones. I have an authorization-to-release-information form I'd like to fax to you right now so we can discuss their loan deficiency. What is your fax number?”
Try to keep the lender's representative on the phone while the authorization is retrieved from the lender's fax machine. When you are back on the phone, continue the conversation.
“As you know, Tom and Sue are in foreclosure. I recently met them, and they seem like good folks with a serious financial problem. When I learned about their current dilemma, I said I would try to assist them. They want to sell their property immediately and move on with their lives and someday rebuild their credit. I have a rental unit in the area and I am willing to purchase Tom and Sue's property, but there is a big problem. They owe much more than what their property is worth.”
Be prepared to back up the value issue with current comps. Offer to provide the proof you have assembled to the lender's representative. Continue the discussion by saying something like, “I am willing to help Tom and Sue out of their foreclosure as well as help you get a defaulted loan off your books. But there is no way I could possibly pay the mortgage balance. Will you consider a short payoff?”
Keep quiet as the lender's representative mulls over your proposal. If you get a positive response, ask what you need to submit. If the lender's representative turns your short-sale proposal down, suggest that your name and contact information be maintained in the file.
