Short sale negotiations, as we are doing them now, consist of collecting a complete short sale application and an offer and then working through the bank to get them to agree to accept less than they are owed so the contract can close. The presumptive position in the negotiation inherently disadvantages the agent/negotiator as they are asking for a tangible discount by providing evidence that the lender will be better off in the long run based on subjective evidence of value (BPO).
I have had many of my short sales derailed by poor BPO's or policy statements that defy logic and leave us as negotiators without leverage to put the deal together or to force the lender to accept corrections to bad information in their system. This leaves our clients to potentialy suffer the consequences of a foreclosure and us without compensation for months of effort.
If you do an searching around the internet you will run accross the "produce the note" and "forensic audit" strategites for gaining leverage in the loan modification or short sale negotiations. In the hay day of the market lenders were turning and burning loans with reckless abandon and you will find few people dispute there were abuses in the banking system. Poor and non-existant disclosures, yield spread abuses, lost documents, and other deficiencies in the origination and subsequent sales of mortgage loans.
The produce the note and forensic audit strategies seek to expose deficienies in the lenders position in the origination or documentation of the mortgage. In the worst of cases the borrower may get reimbusment for undisclosed costs and principle reductions and, I expect, the average case will yield enough information and violations to give us as negotiators some leverage to get lenders to accept reasonable deals. I am not a flipper and am not seeking to get the lender to accept less than market for the property. I am seeking to gain an advantage for the benefit of my clients, and to increase the efficiency of my business where short sales are concerned.
The challenge is in finding a provider of forensic audits that can perform the services for a reasonable fee and in a reasonable amount of time. The goal is to shorten the time we are carrying short sales and increase the closing ratio enough to cover the added costs and effort to employ the service. So I am posing a questions to our members, "are you using forensic audits or produce the note strategies?". Do you have a resource or system that allows you to employ them in your short sales and what is the effect? I have 22 pending deals and a few that I know are ripe with RESPA violations.
Banks continue to press their advantage and regularly abuse their defaulting borrowers and I for one would like to put an end to it for my clients.