Short Sale Service Release
Bank of America has and will continue to release pools of loans. No loan is safe from a short sale service release even if the short sale is already approved. This seems to be even more interesting because the lender the file is going to seems to be largely dependent on the state the property is in. A large amount of the serviced released loans in the state of California seem to be going to Ocwen Loan Servicing while other states such as Nevada seem to be going to Green Tree Loan Servicing.
WHAT DOES SERVICE RELEASE MEAN? WHAT IS LOAN SERVICING?
In most cases the lender you make your payment to is not actually the beneficiary of the loan. In other words when the loan was created they were not the ones that put up the money; Even if they were the ones that originated it. The lender you make your payments to make money by receiving a portion of the interest that you pay. These “Servicing Rights” are sold in pools depending on many different variables so often when your loan is being sold it is going along with possibly hundreds of others.
CAN MY SHORT SALE APPROVAL BE TAKEN AWAY IF MY LOAN IS SOLD?
Please do not be fooled that because your short sale has been approved that it won’t be sold; Your loan servicing can be sold or “service released” and the approval will become invalid. The worst part is that you signed away your right to allow them to this in the original terms of the mortgage contract.
Approved short sales may still have a chance! In representing many of our clients we have had to escalate these types of files to the highest level escalation contacts to be able to request a service release postponement. If the request doesn’t go through and the transfer of the loan is imminent, if you had the deal in closing, it may be possible with the right contacts to get the deal reapproved or upheld quickly with the new servicer.
NEW BANK OF AMERICA POLICY.
A new policy is taking effect starting as of recently, still being rolled out today, states if a deal is not in closing/approved 14 days prior to the service release date the file will be hard declined (closed out ). This is to help minimize the amount of approved transactions getting transferred and the problems that have arisen since this started to happen.
It’s bad enough most the time that a loan is being service released during a transaction but to go to some of the worst lenders out there just adds insult to injury! If a short sale service release occurs on a file it almost always starts from scratch, but with the right contacts it sometimes can be avoided. Be aware, homeowners should receive notification of a pending service release in the mail, so keep your eye out if you’re processing a transaction especially right now while dealing with BOA.
For assistance in dealing with sensitive files and to potentially avoid a short sale service release on your transaction please fill out the form below.
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