I don’t like to write about failure—mostly because it’s bad for business—but also because it’s not much fun. Sometimes, however, it’s necessary. Today is one of those days.
After 14 months of short sale negotiations on behalf of my buyer, with all indications that we were fully engaged with the lender and about to cross the finish line and open escrow, the property was sold at a trustee sale on the courthouse steps. Most infuriatingly, the bank gave us no notice that the trustee sale date had not been extended (as had been done over many prior months by our negotiator) and that the trustee sale would take place.
I feel that my buyer at least deserved a shot at bidding on the property at the auction. Why we were given no notice of the decision to foreclose while in the middle of extended short sale negotiations baffles me. I first learned of the pending the sale via an email from our negotiator at about 11:40 a.m. while at a school assembly for my kids. The sale was to take place at noon. Neither I, nor my buyer, had our briefcase full of cash and helicopter ready, so we missed it. Imagine that.
Why and how this happened is a mystery. Since the bank can’t (or won’t) talk directly with me, I’ll never know the how or why. I can’t think of a less transparent business than the behind the scenes mechanizations of the short sale process. As listing and selling agents, we rarely are able to speak with bank employees, let alone meet with them. They have no connection to the seller or the buyer either. The bank personnel are accountable to themselves, but no one else apparently. Naturally, they are not invested and see each transaction as a file they’d like to get off their desk. Whether the result is an approved short sale or a foreclosure doesn’t seem to affect their ability to sleep at night.
The property in question was purchased by a third party for $28,000 more than our contract price with the Seller and short sale lender. I can only guess that the bank looked at our contract date of September 2011 and made the following conclusions: 1) prices have gone up and we can do better at auction, 2) if we foreclose there will be no closing costs due, and 3) we won’t have to pay the 2nd their pennies on the dollar demand. But I think I give them too much credit.
The original lender, Aurora, went into bankruptcy and the lien servicing was transferred to Nationstar, who seems equally inept. The bank personnel are still woefully understaffed, undertrained, and overworked. Their systems and procedures remain archaic and give low-level employees no authority to make decisions, thus the excruciatingly long turn time for even the simplest of matters. Unless and until this changes, we can expect more of the same.
So, what can we do? My buyer called me this week after catching his breath over the weekend and licking his wounds. “How is this right? Can they even do this?” he asked. He could only conclude that somewhere there was gross incompetence. The banks failed my buyer, their seller and lien holder, and the two agents involved. In the end the bank made a choice to lose less money, rather than do the honorable thing and approve the short sale. The third party who bought the property at auction made out just fine (and good for them).
I had no explanation for my client that provided any solace. All I could say was sorry and direct him to this paragraph in the California Association of Realtors Short Sale Addendum that is a part of any short sale contract:
The last sentence states the harsh reality: “Buyer, Seller and Brokers do not have control over whether Short Sale Lenders will consent to a short sale, or control over any act, omission, or decision by any Short Sale Lender in the short sale process.” Have no illusions. The bank is in charge and does not care about you. For that, and for this failed transaction, I’m sorry.