A disturbing trend is emerging in the Short Sale world. In the last two months, I have had locks mysteriously changed and signs removed on two of my Short Sale listings, one in Gulf Breeze Florida, and the other in Santa Rosa Beach Florida. In both cases, I had lockboxes on the properties. The houses were vacant, with sellers out-of-state. I am certain the mortgage lenders performed the lock changes. In instances where properties may be considered abandoned, the lender may secure the property. The bank's rights are commonly stated with language as follows, from a standard Freddie Mac mortgage:
9. Protection of Lender's Interest in the Property and Rights Under this Security Instrument. If .... Borrower has abandoned the Property, then Lender may do and pay for whatever is reasonable or appropriate to protect Lender's interest in the Property and rights under this Security Instrument, including protecting and/or assessing the value of the Property, and securing and/or repairing the Property...... Securing the Property includes, but is not limited to, entering the Property to make repairs, change locks, replace or board up doors and windows, drain water from pipes, eliminate building or other code violations or dangerous conditions, and have utilities turned on or off. Although Lender may take action under this Section 9, Lender does not have to do so and is not under any duty or obligation to do so. It is agreed that Lender incurs no liability for not taking any or all actions authorized under this Section 9.
In the case of the Santa Rosa Beach property, I had an ACTIVE OFFER working with the lender, Saxon Mortgage. Apparently, the banks' property preservation departments got a little overzealous, and didn't bother to call my LARGE telephone number on the SIGN in the front yard. In two other instances, I have had the property preservation companies call me first, and ASK if they could change the locks. When I told them I had the house actively on the market, they backed off. But obviously, this is not always going to be the case. Each lockbox I purchase is $90. My signs are $70. They now have been stolen. Every time this happens, my choices are:
1. Change the locks back at a cost of $100.00, and install another $90 lockbox - for potential loss of $190 (in addition to the $160 in property I've already had stolen)
2. Re-install another $70 sign, and risk that, too, being stolen
3.Try to track down the property preservation company by going through endless loops at each bank, and somehow recouping my property and regaining access
4. Removing the listings from the market
In conclusion, Short Sales, touted as the top alternative to foreclosure by the lenders themselves, are being physically prevented BY the lenders themselves.
It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
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Wendy Rulnick specializes in real estate sales, short sales, traditional sales on Emerald Coast of Florida: Destin Florida real estate, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Dune Allen, Blue Mountain Beach, Crestview, Freeport, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field. Wendy Rulnick, Broker and Realtor, has been selling real estate for 20 years. She has won numerous awards, including the coveted ADDY for advertising design. Wendy is in the top ½ percent resale agents on the Emerald Coast, and was featured in Kiplinger Personal Finance Magazine as a short sale specialist.
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Wendy: Good post and a problem I had not had happened, nor considered...Kelly
Wow, these banks are definately making it hard for the property to get sold. The removal of your property is a great expense and inconvenience. I would definately not want to reinstall a lock box and sign to risk losing them again. Doesn't the preservation company leave any information on the home? I know in our area it is posted in the window.
Kelly - I think it's going to become rampant.
Kim - There was no clue left at either property! I am thinking along your line as well.
GEEZ!!!! How many ways can the lenders shoot themselves in the foot?
Hi Wendy... I am seeing this more and more often with alarming regularity and the losses of signs and lockboxes DO add up quickly! I recently had a property where an out of town buyer who wanted to see the property was prevented from doing so by the bank due to a lock change and it cost the seller the sale. Who did this really help in the long run?
Hi Wendy, I had a call from a person who wanted me to take over their short sale listing. They then called me and said the bank must of taken the home back, because the locks where changed. The poor woman thought she had already lost her home, which was not the case. The bansk should notify someone about what thy are doing.
Hi Wendy - It may not always be the lender who does this. There have been incidences in Las Vegas where thieves have done just what you said, and then advertised the home for rent. They collect first, last and security and then disappear. As far as the 'property preservation departments', I would submit a bill for your lockboxes and signs. What they've done is criminal and they need to pay the price.
Lenn - It could be Laurel and Hardy, but it's not funny.
Steve - If they think about it, they are losing money. Costs to foreclose are generally greater than short sale by $50,000.
John Palmisano - These companies are out of control
John Novak - WOW that's a NEW ONE- criminals renting out vacant homes? And... if I could only find out WHERE to send a bill!!
It sure seems they throw everything out there they can so that we cannot successfully sell a home. Just when we think we got it licked - they kick something else in there to make us stumble and climb over. Definetely frustrating!
Jeez Wendy does it never end. I will say that internal communications for banks needs work, not just with the property preservation divisions!
Valerie- Indeed, very frustrating.
Laura - You are right.
Yes Wendy we have had that happen as well on two listings in the past 60 days. Luckily they left the lockbox and only changed the front door locks and not the back. Just a heads up! It took three weeks to get the key from the bank and I am waiting on the other one. One of these has 2 active offers on it and the other had a file open. I just don't get it . We are located in Tampa Bay and one of the banks said they were going in to "WINTERIZE" the home. It was 70 plus degrees HELLO! Another fun day in the short sale game.
Dixie
Wendy: I just had the same thing happen in Colorado Springs on one of my short-sale listings last week; and we've actively been negotiating on an offer that the bank has received. Also, they winterized the home, even though my sellers had been paying the electric bill on it. Then they went one step further and sent workmen in to fix a cracked window. Crazy stuff .....
Dixie - I fear it will get worse! Next time, maybe I'll file a police report :)
Kathy - Wow, this is really the new trend.
Hey, Wendy. Thanks for your tweet. I have a group question. What if the homeowners are current on their mortgage, or just over the 30 day lates? Is there a line crossed once homeowners have stopped paying the mortgage, or is the line the minute the short sale is presented for 3rd party approval?
Either way, thanks for the "heads up."
Good post, Wendy - it's amazing to me how different "arms" of the same lender can be so out of sync with each other...
Carol - I got lucky - I called and made a fuss with Saxon Mortgage. They are express mailing me the keys!! But this is going to keep happening to all of us.
I had the same thing happen to me on two short sales. On one, the bank had the home locked and you could see my lockbox on the floor inside and the other you could not see in the window.
The home that I could see the lockbox, no one would admit that they changed the locks. Out one lockbox.
The other home I was able to gain access through the securing companies lockbox. They stated that my lockbox is in the home, it is not. I have a pending offer, so when it closes, I will keep the lockbox on the door!
Cynthia - Lockboxes start adding up fast! I just sent one of my staff 50 miles to put our sign and lockbox on a new vacant short sale listing. Guess what? Of course, the key the seller sent us no longer works. The lock's been changed. SO, there's 100 miles of gas, two hours of employee's time DOUBLED when he has to go out again. grrrrrrrrr
Those expenses add up fast - not to mention the time and effort involved.
Another agent and I list REOs for a bank; recently we discovered our new assignment was in the MLS as a short sale. We called the agent, he said he had a short sale offer into the bank, was waiting for an answer. In the meantime, the bank proceeded with foreclosure, so the asset manager called the listing agent, told him to remove the property from the MLS as it no longer belonged to the owners. Apparently the owners knew all along they had been foreclosed on, but chose not to tell the listing agent! It's crazy out there and I felt bad for the listing agent!
Grrrrrr is right!
Susan - I've had similar situations. Our public records are hard to track for upcoming foreclosures without checking on each specific seller name. Tons of time when you have a LOT of listings. I've had sellers sign deeds-in-lieu, claiming they didn't really understand what they were doing, while I am working on their short sale... It is crazy out there!
Wendy,
I recently had the locks changed on one of my short sales as well. The preservation company put a sticker on the door with their contact number. We called them and they sent us a copy of the keys. It took a few days, but we got them.
Jared - Since I wrote this post - it's happened to me FOUR more times. The prop preservation companies are just hungry for their $100 lock change fee, and are NOT doing due-diligence! Glad you got keys! I have called ASC three times to get keys to one of the properties, and somehow, AHMSI "lost" my letter of authorization so I am waiting to contact them to get keys to the another property! The company didn't leave ANY notice on the door! My area is mostly non-owner occupant, so this is really becoming cost-prohibitive for me.
I am beginning to believe that because of the bailout, banks aren't approaching short sale offers in a logical manner. They seem to hold on to inflated appraisals and bpos rather than acknowledge the updated cma I submit with each offer. Ultimately, they will end up selling a foreclosure for a lot less than the offers they have already refused. So much for the concept of LOSS MITIGATION, because they certainly aren't practicing it.
Joanne - You might be right about the bailouts making them LESS efficient. I have written my Senator and am going to start a massive grass-roots uproar in one of my upcoming blog posts. We've got to band together and make them get with the program!
I've had this happen two times in the past week on my short sale listings. Neither have a judgment of foreclosure yet, and one has not even had a lis pendens filed. Luckily on one they put the new key in the lockbox and on the other they just changed the top lock (yeah! makes sense...leave it more unsecured than it was in the name of securing it.)
At least they also "winterized" it...you know how important that is here in Florida! :-)
Stephanie - Just about anyone can get on a "list" to do lock changes.. They are just scrapping for dollars- no other reason!
Wendy: You are absolutely right. Once the lenders determine the property has been vacated, all bets are off! Thanks for reminding all of us of this situation so we can be extra vigilent with our listing such as these.
I had the same type of posting on my blog... Mine was a little more irate than yours but same point. This practice should be stopped and not allowed. I would think that duediligence should prevail not just an agent for the bank, going to the home and saying mmm looks empty.
Acceptance of this practice is just another nail in the coffin of the distressed homeowner where banks take advantage.
I hope we stand up and protest soon. If we do not, it could be your lock changed next time.
KB
Tom - Well, they have changed locks when properties are NOT vacant! A local Realtor called me last week and told me a Santa Rosa Beach rental property, furnished with power,etc, had locks changed and FLAT SCREEN TV STOLEN by the prop preservation company!!! I too have had locks changed on rental properties with power on, maintained, etc. Enough is enough!
KB - YES YES YES absolutely right!!!