Short Sales can be really simple, or very complex. Let’s us a real life example of a short sale we are working on with Suntrust.
In this example, Suntrust is just a servicer, while another “investor” is holding the “investment” Suntrust takes orders from this investor which can delay the process significantly. This situation puts Suntrust in the middle of an already crowded transaction. To make matters worse, the investors can be several types of “players,” with the worst being that of the Government Kind, otherwise known as Fannie Mae, Freddie Mac and Ginny Mae.
This relationship is analogous to a property manager, landlord and tenant. In some cases, the property manager has a right to do anything they want. As long as the property cash flows, there’s no need to disturb the owner. In other cases, they can’t do anything. A lightbulb goes out and the tenant needs it fixed, they need to involve the landlord to approve the lightbulb or evict the tenant.
The most successful banks doing short sales and property managers for that matter are the ones that have a hybrid approach. One that allows the “middle manager” to make a decision under certain conditions. So if the toilet leaks and it cost $500 to fix and the limit is $1,000 then the landlord doesn’t get interupted and the tenant is happy. The banking world calls this “delegation,” in property management, as an investor we just call this “sanity.”