Buying a Short Sale House - 4.5 months in - Throw in a Bankruptcy

[marys]

I’m in need of suggestions for moving our Countrywide short sale purchase forward.

Here, is where we are today and how we got here.

May 22, 2008 – My Husband and I made an offer to purchase a home in California listed as a short sale. Countrywide held the 1^st and 2^nd notes. The listing agent told us our offer would not take long to get through the short sale process because there had already been another offer which had been accepted; however, that buyer had walked away and bought a different house. (Now I laugh when I read that!)

Sellers/Owners had recently divorced and were in default on their payments. Within a couple of weeks of our offer, the house was virtually vacant – a few belongings in the closets and garage, but all furniture gone. The owners had moved their separate ways, each with their own new residence, in different cities.

We went home and listed our own house for sale. Sold in 7 days, to close at end of July.

End of May through June 2008 – We waited and heard nothing. Our agent got updates from the sellers’ agent and all we knew was they are working on it and should hear "next week." They tell us this every single week for six weeks.

July 2008 – Same stuff. By now I'm reading this website and others and gathering info, with a sense of doom for the idea of getting into the house by the end of July. I realize we need temporary housing arrangements and start looking. Every landlord wants a 6-month lease or more.

End of July – Our move-out day approaches. We go house shopping, figuring we ought to let the short sale house go. We put in an offer on another house and it is accepted.

We are told that another offer (a bit higher) has been made on the short-sale house and asked if we want to withdraw our offer. We say, "No, we will not withdraw until we are settled into a different house – who knows what could happen to that offer."

Because the short sale house is our favorite, I decided to email Countrywide and see if I can get some answers --- one last ditch effort to get the house we want. I email our negotiator (following the email tips I have found here), telling her we are in escrow on another house but theirs is the one we want most.

Aug 5-10 – The seller’s agent on the short sale informs us that the other offer has been pulled and the buyer walked away. We decide to pull out of our escrow on choice #2 and wait for this short sale house which we really love. We are told that Countrywide approved that other offer in one week. We are told ours should move ahead now that their offer is dropped.

Aug 15ish – No news. I called the seller’s agent myself (good way to frustrate your own agent!) and asked for an update. She does not take my call (as expected) but calls my agent (appropriate way for her to handle my call, I know.)

My agent reports the sellers are nervous that we will walk. I tell her we don’t want to but will as soon as we find a house we like better. I tell them I need more info and want to talk to the owner to ask some questions (based on my research here and on a couple other sites.)

I met with the seller’s agent, and told them I wanted to be authorized to talk to Countrywide. They said okay and filled out the forms, had the buyers sign, and sent it in. My own agent is in shock. I am not. The sellers don't want to lose us, I'm an attorney and convince the seller's agent I can conduct myself professionally and maybe get somewhere.

End of August – I am able to get my own updates from Countrywide, since I'm now authorized, but this amounts to nothing but being told that after the other offer walked (beginning of Aug) they had to restart the entire process again to assess our offer. I ask if there’s a way to expedite it.

I call every single day. We are getting no where and go house shopping again. I email about 20 Countrywide contacts (from this website). Another effort to force them to get moving.

Amazingly I get a telephone call back from someone and an email from the office of the Vice President of Investor Relations – Lisa Riordan. They tell me they will assign a high level supervisor to look at our file. I am hopeful.
Beginning of September – I receive an email from our negotiator telling me she has approval on the short sale but cannot proceed because the owner has filed bankruptcy. WHATT??!!

Everyone tells me we’re through.

I persist. Multitude of phone calls to seller's agent, seller's attorney, and Countrywide over several days. Bottom line: I’m told if we can get the house released from the bankruptcy, we can proceed.

That process requires a motion to be filed, a mandatory 15-day wait, and a court order. We begin (cost $500).

I go on vacation for 2 weeks (planned a year ago, now bad timing). Strict instructions to everyone involved on how to proceed if the court order comes in while I’m gone. It does. My agent faxes it to Countrywide. Typical 2-day wait while it enters their system. Then they say it’s not the right kind of order. Conversations with me from out of the country convince my agent it’s the right document and she argues this with Countrywide for a couple of days. After a week, the file is sent to bankruptcy for review. I get home just as the file is supposedly sent.

I have to interject here that at this point, wasting a week arguing before the file is sent on is enough to send me over the edge. It is always "another week." Meanwhile, we live at my son’s house in a guest room, with our stuff in storage. A week is nothing to Countrywide. To us it’s HUGE.

Early Oct - I’m home and back to work. The file is at bankruptcy. I call daily (usual process).

Friday, October 10 - I get a phone call from the bankruptcy guy. He tells me he has requested a review of the appraisal and needs a whole updated short sale package sent in again, including financials, etc. I arrange to get that going to him. He says the appraisal will take a week and after that, the whole file will go to a negotiator (a new one), where it will be reviewed, then off to get approval from the investor ( a 4-5 week process) – which basically means they are redoing everything from the start AGAIN.

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A few notes: we have a person from Lisa Riordan’s office working with us, saying she is trying to expedite, but seems to be not working well as we still face another 5 weeks or so before we can again get approval. We have our old negotiator (pre-bankruptcy) who says she’ll try to help. The seller’s agent says she found a new contact who may be able to help.
I have not repeated everything that is in everyone else’s stories – the multitude of calls, difficulty in getting responses, and basic process already described very well on this site. The frustration is enormous. Last June, reading this site, I thought no way our deal would take as long as the others. Now here I am knowing Oct 22 will mark 5 months, three of which we've been guests at our son's.

I know it’s rare for a buyer to get authorization. I’m an attorney (though this is not an area in which I have worked before – though I may be tempted when I’m done with this and settled in a home again) and I am very persistent. This has probably helped.

The seller/owners have moved on with their lives and would like the sale to be done so they can put this behind them. Our offer is all cash and at a fair price, though far below what they owe – typical story in this market.

Do you have any ideas that might help us get this moving ahead more quickly?

Thanks.
Mary

[Cat Damiano]

mary,

Unfortunately you are already dealing with the highest dept...............and waiting on the investor to look over and approve or deny the offer...........that is what could take a while, because they will now see if foreclosure would be a more profitable outcome for them as the investor. The only thing you can do is to stay in touch for updates with the office you are dealing with.

Good Luck!!

Let us know how it goes.............

[marys]

I'm writing from our new house. After arguing with Countrywide for several hours on Monday, 10/13/08, I was completely frustrated. They had told me that now that the bankruptcy issue was resolved, they had to basically start over again, reviewing our offer, getting a new appraisal, getting investor approval, etc. to determine if they would sell us the house. The process would take about 6 wks; if expediting was successful, maybe as little as 3 weeks, just to get approval. In my arguments, I tried to explain that property values had fallen, not risen, and that their appraisal from June/July was certainly not going up. Blah, Blah, Blah -- all the same logical arguments that get nowhere. Nothing doing, just a wait.

I had asked for the name of the investor. (They must give this info, by law, but can require the home owner --- or his authorized rep --- to send a written request.) I was prepared for the written request to be demanded, but surprisingly, they told me Bank of NY. So I called BNY's head of investor relations (listed online under corporate directory.) Of course, the person I reached (the actual head of dept.) on a bank holiday --- Columbus Day --- of all times (must have been in the office sans secretary) who was very surprised to get a call from a potential buyer across the country. Anyhow, he of course explained he was the wrong person to talk to but said if I sent an email, he'd direct it to the right person the next day (after the holiday.) So I sent an email.

Then, Monday evening around 6:30, I got a call from the seller's agent telling me she had just received an approval letter by fax. No call saying it was coming, no nothing. I had been given a firm "no" as explained above, and here it was, out of the blue.

We decided to move quickly, me not believing it could be right, and planned to close that Friday (4 days notice that we are accepted, to then move.) And believe it or not, it all went smoothly and we moved in officially on 10/17.

Here I am now, in my dream home. And the sellers were able to get a short sale done and finish up this sad part of their own.

So the message to those reading is this:

1) When you read everyone's messages of frustration and think your situation is different and will take only a couple of weeks, think again. Make a plan for 4-6 months wait. If you aren't willing to do that, find another house.

2) Be persistent. I use that word instead of some others that don't sound quite so nice. Call every single day until you talk to someone. Be VERY friendly on the phone, never yell, never berate, never forget that the person on the other end is just doing their job, looking forward to going home at the end of the day, and never forget that they have a couple hundred files on their desk just like yours, representing people just like you who also are in a hurry, in dire straits financially, or whatever it is that you think sets you apart. The only thing that can actually set you apart is persistence, profesionalism, courtesy, friendliness, and follow-through. When you are asked to provide something, get it done that same day or within no more than 24 hours. Follow up with a call to make sure they got it.

3) Don't take "no" unless you clearly see why or unless there is no choice. This applies to "wait" messages. Contact another person, keep looking for other contacts. Don't give up.

4) Make it your job -- no one will care about your case as much as you do, so do what you can to pitch in and help. Ask what you can do to help move things along. Do the homework for them. Make sure everything you provide is in perfect order so that your file is an "easy" one.

5) Good luck!

--Mary