A few days ago we covered, What Is The Difference Between A Loan Servicer, Investor and Lender? today we’ll basically be doing a “part 2.” Many time servicers will transfer or sell the rights to a loan. So you might ask What Happens If My Loan Sold? If you’re current on your loan then there’s no need to stress, nothing really happens. However, if you are with Bank of America for instance and you are in a short sale process, then you should be aware.
Bank of America services mortgage loans for hundreds of investors. As a part of normal servicing, investors may decide to release or transfer servicing from Bank of America to another company. Servicing may be transferred on first, second or stand-alone liens. In most cases, once the servicing transfer occurs, the short sale process ends with Bank of America and the homeowner must contact the new servicer to determine what foreclosure alternatives may be available.
Keys to remember if you are doing a short sale.
Some key activities that may occur during servicing transfer:
All lenders should send a letter 15 days before the transfer date.
If you are with Bank of America, then they may call the agent to advise of the impacts to the short sale.
The new servicer will send a letter or statement advising the homeowner where to send payments.
If an offer has already been accepted on your short sale, a closing has been set and an approval letter issued, the new servicer will determine if the short sale will continue. [In other words, you’ll be starting over, but hopefully “fast tracked.”
What Is The Difference Between A Loan Servicer, Investor, Lender and Bank?
What Is The Difference Between A Loan Servicer, Investor and Lender?
This entity is essentially like a “property manager.” They simply collect the payment and process it. They also act as a buffer between the home owner and the “investor.” Most loans have “servicing rights” that can be sold. So the owner of the loan can retain these rights, sell them or have companies sell and transfer these rights to one another. This is why sometimes home owners will get a notice that they need to write payments to another “bank.” Bank of America is the largest servicer of loans in the world, yet they don’t own most of the loans they have.
Loan servicers are the ones that handle your short sale file for the most part, at least initially. Keep in mind they are usually located in a cubicle in another state, so they won’t know the difference between Georgia Real Estate laws and say, Florida Real Estate Laws.
This “entity” isn’t the same kind of investor that you are likely thinking of (the kind that “invests” in buying homes). Fannie Mae, Freddie Mac, FHA, and Bank of New York are all “investors.” Investors are sometimes lenders, sometimes banks but not always. In a short sale, the investor is the one who “owns the paper” or owns the mortgage.
In a longer more convoluted answer, when you got your mortgage, it was put into a “pool of loans” then sold to an investor while the “servicing” rights were sold to another party. To add to the confusion there’s also parties that “back” or insure the loan.
This entity “lends” the money. Most home buyers will confuse this one with “bank” and many times it is the bank but not always. The lender then can keep the loan or sell the loan as a package. When you hear mortgage professionals speak about “fannie mae guidelines” then you know they are doing a loan and it will be sold to fannie mae. They may retain servicing rights or sell those as well.
This isn’t so much as an entity as it is often a misnomer to describe who you are dealing with. A bank could be a lender or an investor or a loan servicer or all three.
What Is The Difference Between A Loan Servicer, Investor and Lender as it relates to a short sale?
When you start your short sale process you start by talking to the loan servicer. Often they will take your package and evaluate it. In many cases, they will know if they can move forward but in some cases all they do is put the “file” together. From there they send it to the Investor for approval. If the investor approves the short sale, they will send it back to the servicer.
If you caught all of that then you also need to know that in that exchange there may be little things that either the investor or the servicer will do to hinder your short sale.
Keep in mind that servicers can sometimes get paid to “service” the loan whether you make a payment or not. If they are getting fees for your loan they might be inclined to drag their feet.
We’ve answered this before but we did want to update what a short sale is in Georgia just to be clear. After all it’s been 4 years of short sales in Georgia. The definition is still pretty much the same:
The short sale in real estate is where the lender/investor/bank lower’s their payoff (what is owed) to allow the sell of the home to a buyer at today’s (lower than what home was purchased for) market value.
How to Short Sale In Georgia is so common of a question I thought it’d best to try to answer it.
Ultimately, there’s a bunch of other questions like when to short sale or why to short sale, but How to short sale is relatively easy to answer.
The short answer would be to contact the Jarvis Team.
The longer answer is that you really need to get a real estate agent and get an offer on the home for the bank to even consider you for a short sale. That coupled with your hardship information is enough for you to “qualify.” I do get angry when I see signs and advertisements for pre-foreclosure or “potential short sale.” If your home is up for sale as a potential short sale, then your agent doesn’t know what we know. If you’re upside down on your home and you have an offer, we can do your short sale.
That’s really the reason we think “How to short sale” is kind of silly question, because the only real components are:
This is one of those questions that doesn’t have an easy answer for anyone. Most of the time the answer to how long a short sale will take is bank specific. Most short sale timelines are completely situational. However, we can give you some guidelines on short sale timelines.
Most Banks won’t consider a short sale without an offer, so we’ll start here.
Short Sale Timeline
0- 30 Days – Jarvis Team Gets An Offer on the home. 90-120 Days – Negotiating with Bank for Approval of Short Sale 30 Days – Buyer to close on property
Total: 180 days (6 Months) for a short sale to be completed from start to finish.
If you happen to be worrying about the foreclosure notice during this time, then rest a little easier. We’ve not lost any homes due to foreclosure while we have a valid offer. We can usually postpone the foreclosure without much trouble.
Do you have questions about the Short Sale Timeline? Remember, it’s bank specific, so Suntrust short sales are going to take much longer and Bank of America Short Sales are now much shorter.