Short Sale Backlog Stats

I'm in the middle of a so-called "short sale" at this time. My wife keeps asking me why they are called short sales, because it is taking so long to complete the sale! I've read that many short sales are taking 90-120 days to complete these days. The backlogs at large banks result from a combination of the high number of homes in foreclosure combined with understaffing.

4-5 years ago, mortgage brokers held most of the market share on the origination of mortgage loans. As they lost market share, banks cut staff. However, with the tightened credit market, many mortgage brokers have gone out of business. That means ordinary banks are taking up the slack and have once again begun originating the majority of mortgage loans. Apparently they have not yet re-hired the people who were replaced by mortgage brokers a few years ago.

Here are some details from a current deal with which I am involved:

The offer was accepted on February 29. Two banks need to approve the deal before it can be closed.

The first lienholder was GMAC. Upon hearing of the accepted offer, GMAC told us their backlog was 30 days. That is, we would need to wait 30 days before an analyst would even be assigned to look at the deal.

We waited patiently for 30 days. We waited 30 days plus one week...then another...then another....then another. On April 30, 60 days after the offer was accepted by the sellers, GMAC finally approved the deal.

The other lienholder is Washington Mutual. They were notified of GMAC's approval on April 30. WaMu did not estimate their backlog time up front as GMAC did, but we have now been waiting 30 days for them as well, and it is becoming tiresome.

Side note: it's amusing that both banks need to have a BPO performed, since there are only two brokers in town who do them. There is a 50% chance the same person will do the BPO twice.

We got an update this week that the WaMu negotiator had the folder on his desk and had ordered the BPO. We're hoping the deal can close in the next week or so....but we've been hoping that for months now!

I'm interested to hear stats from other people on how long backlogs were for specific banks for recent short sale deals. When/if my deal finally closes, I will update this entry with final numbers.

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