Wachovia, a Wells Fargo company, is among the first major lenders to create an aggressive, proactive short-sale program. While the company continues to process borrower-directed short-sale offers, it has also launched a pre-approved, lender-directed approach that results in greater file velocity.
As a portfolio lender, Wachovia is not hamstrung by investors or others making the decisions on short-sale approvals on its World Savings and Golden West Financial portfolios, which are the focus of this pilot program. Wachovia does not pre-select or direct any particular listing agent to work with borrowers for obvious liability-associated reasons. The company encourages its borrowers to interview at least three agents and select the one with whom they feel the most comfortable.
Pivotal differences of the Wachovia pilot program include the following:
•No hardship letter, pay stubs or financial statements are required.
•Negotiators approve or counter offers within seven to 10 days after the offer is received.
•There is no requirement for delinquent borrowers to have experienced a hardship.
•Generous cash-for-keys payments are used to gain borrowers’ cooperation.
•The listing agent is involved to develop a pre-approved strike price at which the property would likely be sold (much like the REO process). If a property doesn’t sell at the pre-approved price, reductions may be requested until offers are received.
•The amount of the outstanding loan is not a factor in determining the list price. Unlike many lenders, Wachovia is focused solely on the economic benefit of short sales.
Other major lenders, including GMAC, have implemented or are about to implement more aggressive short-sale programs, as well. Some companies are far better at managing short sales than others, but all of them should focus on proactive communication, adequate staffing and training in order to streamline the short-sale process for both borrower-requested and lender-directed short sales.
GMAC has a special unit called “The Counsel to Sell Team” within its short-sale department that proactively contacts borrowers who have been denied loan modifications. The unit conducts outbound calling and mail campaigns to entice borrowers to consider a short sale, and GMAC reports a higher rate of success through this proactive approach