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Short Sale: Transfer of Servicer

Short Sale TrasnferAs it is, short sales, among the gambit of real estate transactions, are a bit more challenging than most. They require more patience,  personnel and a depth of emotional counseling uncommon in standard sales. As such, it can be daunting when the loss mitigation department you have been negotiating a short sale with for months, without warning, decides to change servicers, potentially derailing your short sale. Not to worry, in most instances, with the right real estate talent in place, this circumstance can be remedied and short sale approval granted.

Banks change servicers all the time. When we recently refinanced our income property, our loan changed servicers twice in the first month. Pretty standard really. Just part of the liquidity and portfolio classification process that takes place over the life of a loan. By the same accord, this transfer or servicers can take place during short sale negotiation and even after short sale approval has been issued. Depending on where you are in the short sale process, will determine the next course of action to make your short sale a success. However, we should explore the transfer process further, prior to discussing remedy.

The transfer of a loan to a new servicer, is a heralding task, involving carrying over of official debt collection documents from one corporation to another. A complete history of the loan and all docs pertaining therein are “pushed” from one bank to another, a process which takes anywhere from 10-30 days. During this period the new servicer will have potentially limited or incomplete visibility of your account. In fact, contacting the new lender via traditional customer service means would yield little information until the vetting process is complete. The new servicer, will assign a new account number in reference to the loan, for which the borrower will be informed by mail prior to completion of this process.

Given that short sale approvals often expire after 30 days, it is pertinent that seller’s cooperate and inform their agent of the new loan specifics as soon as this transfer takes place, as most new servicers will honor the previous banks short sale approval letters (this includes BPO as well, which are typically good for 60-90 days).  It will take finesse of the loss mitigation staff to escalate the file to the correct supervisor prior to expiration, but it can be done. It is important that to insist on getting the new bank’s official written commitment to the short sale, which typically mirrors the previous lenders approval, with a few company specific nuances. Typically this does not require that the seller resubmit a new distressed packet and supporting documentation. One may have to re-fax the previous distressed packet and supporting documentation to assist the escalation process along. Agents will most certainly be required to execute a new third party authorization form to correspond on behalf of the borrower. Once you have the new servicer’s short sale approval it is a pretty typical short sale process thereafter, with all that entails. The key is to patient yet diligent in reestablishing new contacts, process and relationships.

If you or some one you know is experiences financial hardship, please know they are not alone. We have helped numerous families navigate distress scenarios. Our network of credit counselors and agents will ensure they are aware of your options so you can begin to repair your finances and build again anew.

For more information on short sale assistance or other alternatives to foreclosure, please see our short sale page and or contact us for free consultation.

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