Will there be compromise?
I love to travel, and I’ve visited a lot of interesting places throughout the world. Some of the most fascinating places to visit are the marketplaces or open markets, where people have stalls or bring their wares to sell or trade. And, when I think of the word ‘negotiate’, I often think of my visits to markets from Mexico to Morocco where I have had the opportunity to negotiate in the purchase of an item.
The word negotiate actually has a few meanings. The most common meaning is to confer with another or others in order to come to terms or reach an agreement. What this generally means is that each side has to be willing to come to compromise in order to reach an agreement.
Short sales often require compromise. Sellers must understand that a short sale is a form of debt settlement, and the lender is not required to settle the debt.
There are some situations where the lender cannot compromise. Specifically, when you are working with a servicer, the servicer often has limited decision-making power. Servicers often make an offer or a counter offer based on the guidelines that the noteholder has given then them. If you disagree with the terms, you can speak with the servicer until you are blue in the face, but the servicer cannot and will not budge.
Do you have negotiating power?
Understanding when the negotiations will be worthwhile is vital to success in closing your short sale. Here are three things to consider in order to identify whether this negotiation will be a successful one:
- Identify whether the loan is owned my Fannie Mae or Freddie Mac. With the new streamlined short sale guidelines, many decisions can be made by the lender with out conferring with Fannie Mae and Freddie Mac.
- Ask the lender whether decisions for this particular loan are made internally. Learn about submission procedures for short sale approval and ask about procedures for valuation dispute.
- Find out whether this is a HAFA short sale. If this is a HAFA short sale, there are specific guidelines with respect to what the second lien holder can obtain and what can be approved.
Each short sale is unique. With an understanding of the overall process for your particular short sale, you will have a better idea whether your short sale negotiation will be more like a negotiation at a bazaar in Morocco or whether you are talking to the hand.