Update on Short-Sales Involving CitiMortgage

CitiMortgage is currently running 45+ days behind on starting the short-sale review process. That means that once the ratified contract has been submitted to CitiMortgage, it takes them at least 45 days to even look at the file. Then it takes them another 45 to 90 days to review and process the short-sale. You’re looking at 90 to 135 days to get a response from CitiMortgage on a short-sale.

Why the delay? Three main reasons:

1. A huge increase in the number of short-sales.
2. Being short-staffed.
3. Lack of an efficient internal review process.

One title company who deals with them often said that the short-sale department of CitiMortgage is getting over 130,000 emails per day. Those emails are a combination of borrowers inquiring about the short-sale process as well as agents, sellers, title companies and short-sale negotiators submitting new short-sales or inquiring about ones already submitted. Some of the folks at CitiMortgage and other banks have literally hundreds of cases on their desks at one time and the pile is growing.

Real life example…

A short-sale I’m currently working on with buyer clients involves CitiMortgage as one of the creditors. It’s been about 75 days since the offer was ratified and submitted to CitiMortgage for approval. The case is still in the review process though we’re hoping to hear back soon. 

And we’re lucky - the only reason it’s this far along after 75 days is because the title company and negotiator knew the direct contact information of someone near the top of the food chain who pushed the process along and put this particular short-sale deal at the front of the line.

So, if you’re wondering why things are taking so long with CitiMortgage short-sales, now you know…

Are the Foreclosure Floodgates About to Open?

At the end of last year, many banks and financial institutions including Fannie Mae adopted some sort of “foreclosure moratorium” and they did the same thing again this year at the request of the Obama administration. The moratorium halted foreclosure proceedings on many who were facing foreclosure or in the process of getting foreclosed on.

Fast forward to April 1, 2009…

The moratoriums have pretty much all been lifted and the banks are back at it - foreclosing and eventually putting those properties on the market. Based on how long foreclosure proceedings take in Virginia and how long banks take to process everything before listing the property, we should start seeing many of these recently foreclosed properties hitting the market sometime this summer to the end of the year.

I’ve also heard rumors and talk about Fannie Mae and other banks thinking about taking an “let’s get rid of it all as fast as we can” approach to their foreclosure inventory (anyone else hear/know anything about this?). If Fannie and other banks release their inventory onto the market all at once, I think we’ll be in trouble. Yes, they’re only rumors and I hope that they stay stay only rumors. But what if there is a flood of foreclosures hitting the market?

These moratoriums have artificially deflated real estate inventory across America. In the Northern Virginia/Washington, DC metro area, housing inventory is down to 2003/2004 boom-market levels. In fact, the housing supply numbers in Loudoun County are indicative of a seller’s market.  We’re seeing multiple offer situations on many almost every property on the market priced below market value (feel free to ask any buyer or agent in my area to confirm that).

It was inevitable that the foreclosure moratoriums would just delay the foreclosure proceedings and eventual bank-owned market inventory. The question is when and how all those bank-owned properties will hit the open market and how great of an impact that influx of inventory will have. If all of these foreclosure properties hit the market at relatively the same time, inventory will go up and we’ll see downward pressure on prices. That would not be good.

Do I think all these foreclosures will hit the market at the same time? Personally, I doubt it - especially if the government has anything to do with it.

Welcome to the new Loudoun Foreclosures!

Welcome to the new Loudoun Foreclosures! I hope that you find the site a bit better and more functional than the last one (that was the goal). As time goes on, you’ll see new features being added to the site. If you’d like to see something here that’s not here right now, just let me know.

Thanks for checking out Loudoun Foreclosures and please feel free to share your comments and feedback on or offline.

D

Things look a little weird around here…

If you're reading this post on http://www.LoudounForeclosures.com rather than your feed reader or via email update, you may be saying something like, "WTH happened to the site?" and/or "Why does it look like such crap?!"

Here's what happened… During the process of moving my other blog, Loudoun Scene, from Typepad to Wodpress.org, something in the back end of Loudoun Foreclosures was changed. The result is this ugly looking thing you're looking at right now. I didn't see this happening nor do I have any idea why it happened.

Not to worry! I'm in the process of moving Loudoun Foreclosures to Wordpress.org as well and the issue will be resolved within the next few days. Once the move is completed, I'll publish a post here alerting you of the move so that you can go check out the new (and hopefully improved) version of Loudoun Foreclosures.

Thanks for your patience.

Percentage of Short-Sales Being Approved Increasing

Yes, there is actually good news when it comes to short-sales - more and more short-sales are being approved!

I've had 4 out of my last 6 offers on short-sale listings get approved. Is a 66% approval rate on short-sales a fluke? Perhaps. But it still is what it is and my clients and I will take it!

In speaking with other agents, they're also seeing short-sales going through at a higher percentage than before. Considering that the national average for short-sales being approved is said to be around 20%, anything more than 20% is great.

What's leading to more short-sales being approved? Here are some of the reasons…

1. Banks are finally realizing that accepting a short-sale is a way to avoid the inevitable (foreclosure)
2. Not having real estate inventory (foreclosures) on their books allows banks to lend and make more money
3. Short-sales are typically less expensive than foreclosures because they don't have to go through the foreclosure proceedings, incur carrying costs, etc
4. Short-sale properties typically have people still living in them which means that they will generally be in better condition than if they sat vacant as a foreclosure for 3, 6, 12+ months. This means that the bank will get more money for the property if sold as a short-sale than as a foreclosure
5. Public sentiment is helping push banks to "work with borrowers" as much as they can to avoid foreclosure, part of which includes negotiating and accepting short-sales
6. More sellers, real estate agents and title companies are using short-sale negotiators to help negotiate the short-sale. Many of these negotiators once worked as bank loss mitigation officers (the folks who work for the bank who approve/reject short-sales) themselves so they know exactly how the process works

Note: Though the chances of a short-sale being approved have increased, it doesn't mean that yours will or that they're any easier to maneuver through. Whether you're a seller trying to negotiate a short-sale or a buyer trying to buy a short-sale, you still have to know what you're getting yourself into and what you're doing (as does your agent).

Related Articles

"The Type of Property You Can Buy May Depend On The Time You Have"

"The Issues With Short-Sales"

"Do You Know What The Bank Addendum REALLY Says?"