The mortgage meltdown, depreciating home values and a dragging economic landscape have foreclosures at an all-time high. However, short sales are increasingly emerging as a viable, preferred alternative to foreclosures. But, many short sales can take more than a year to complete, and even when a suitable buyer and price are agreed upon, deals can still fall out and the foreclosure process ensues anyway.
The short sale process involves a number of different parties and moving parts that must all work together concurrently to successfully complete a deal. More than anything, visibility is critical to preventing confusion, lost information, missed deadlines, neglected tasks, etc. Today, utilization technology is key to providing some much-needed visibility into a notoriously convoluted process that is often handled manually. Unfortunately, many lenders and servicers have not implemented technology to adequately handle an influx of short sale applications. The parties involved to complete deals include servicers, lenders, seller, buyer and real estate agents. It is crucial that they have the transparency to all be on the same page, share information, and complete tasks in a timely manner.
By and large, completing a manual short sale involves countless numbers of e-mails, phone calls, voicemails, facsimile transmissions and document imaging uploads that are constantly sent back and forth to various parties. To manage such a complicated process full of minutia, using these types of inefficient mediums is a recipe for disaster. E-mails are missed, voicemails are not picked up, documentation is commonly misplaced, and overall communication becomes hampered from the start. All too often, these types of encumbrances create a prolonged “waiting game” with little visibility into status, which quickly causes buyers to become frustrated and pull out of the deal. Then, a new suitable buyer must be found and the process starts all over again. By this time, an NOD (Notice of Default) has probably been filed, which inserts a new party into the equation—the foreclosure attorney. The servicer must then begin timely, closely monitored communications with them or the house can potentially be foreclosed upon with little notice.
With technology, however, short sales can be completed in as little as 60 days, not 12-plus months. Technology establishes visibility, speed and efficient processing, thus dramatically cutting down on the length of time it takes to complete a short sale. Web-based short sale applications are commercially available that automate short sale workflows and streamlines communications.
Typically, these types of solutions encompass a centralized Web portal that the buyer, seller and real estate agents can log into, view the status of the loan and upload documents in a standardized format. Servicers then use the application internally to effectively manage communications between all parties, monitor tasks and reduce the sheer volume of phone calls, voicemails, e-mails and faxes.
Servicers no longer have to contend with lost or misplaced information, and stacks of paper and files. Short sale requests can be kept as separate and distinct, offer negotiations are managed and centralized, and borrowers and agents are continually involved and updated on the status of the process. Servicers can easily receive and complete short sale packages directly from the borrower or its listing agent, which includes complete financials, property valuation data, lien verification and all supporting qualification documentation that is needed. In addition, these applications integrate directly with leading mortgage servicing platforms and third-party partners, which improves data integrity, workflow and response times.
So what does all of that boil down to? The need to eliminate terrible communication, tremendous inefficiencies, a lack of visibility, and an overall disjointed process that’s incredibly slow. With the use of the right technology, you can dramatically speed up time frames to successfully get short sales approved in as little as two months. You should note that most servicers use antiquated back-office technology that is ill-equipped to handle heavy short sale volumes. With a flurry of increasing short sale applications, having old technology, or worse yet, no technology, is a huge problem.
There are mortgage technologies that are commercially available on the market today that bring much needed transparency, ease of communication and data exchange to the detail-intensive short sale process.
Lenders could enjoy the benefits that various mortgage technology providers offer such as short sale processing platforms, business rule-driven workflows, data collection and imaging, document management, priority queues, system-to-system integrations, real-time visibility, automated approvals and more.
The technology is there. It’s just that some lenders and servicers never implemented platforms, and are now challenged in handling an ongoing influx of short sales very inefficiently. The bottom line is that the short sale process doesn’t need to be so broken. Technology can cut a 12-month-plus process down to two or less months. The value of technology is clear-cut … it just needs to be implemented.
Laura Hadley is vice president of product development for Quandis Inc., a default management mortgage technology provider. She is a 20-year veteran of the mortgage industry and has extensive experience in default servicing and mortgage technology. Throughout her career, Hadley has held executive-level positions at USRES, UBS, People’s Choice Home Loans, LPS and Option One. She may be reached by phone at (949) 382-1178 or e-mail [email protected]