Why I Like and Don’t Like Negotiating Short Sales with Select Portfolio Servicing – Massachusetts

Why I Like and Don’t Like Negotiating short sales with Select Portfolio Servicing

We just got another short sale approval this week from Select Portfolio Servicing, Inc.  This was for a property in Scituate, Massachusetts.  I’ve noticed the same trends each time we negotiate a short sale with SPS.  Overall, they get a two thumbs up.

Let’s start with the positives.  They are a smaller servicer, which means they can respond to files in a faster manner.  From what I’ve seen one of the biggest investors they service for is Deutche.  Unlike a Chase, BOA, Wells Fargo or GMAC loan, they seem to have one department dedicated to short sale negotiation and you really don’t get assigned a specific negotiator.  That seems somewhat alarming to type out, but it works well for them.  When you get someone in the short sale negotiation department on the phone, they ALL know what is going on with the file.  So one person can easily stand in for another.  This is UNLIKE Ocwen where every time I call in NO one seems to know what is going on and you can get 100 different answers.

The speed of approval from SPS is really quite good.  Although we’ve gotten approvals from other larger lenders fairly quickly, I would say overall, SPS has it down to a science and you can get most approvals within a week or less SO LONG as the valuation is in line with the offer.  Select Portfolio also will issue 30 day approvals and seems ok if you ask for an extension.  I haven’t run into any problems getting an extension with them and one of my sales had to be extended 90 days which is UNUSUALLY long, but there were issues with the property being in a residential/commercial zone and 4 unit on the tax card and 5 units inside, but I give credit to SPS they worked with us and we were able to close.  I wish some of the larger servicers could take a line out of the SPS rule book when it came to the speed of approvals.

SPS has never issued an approval to any of my clients without releasing them of the full deficiency.  Again, SPS could show the larger lenders a thing or two about this.  Most homeowners want a full release of deficiency and honestly, it’s a gamble through every short sale.  Most of our approvals are issued with a full release, but some of the second lien holders can be quite problematic.  What these servicers fail to realize is most homeowners will never be able to pay the balance of the note so the one thing they all look forward to is a full release.  New Hampshire and Massachusetts are recourse states so if you have a short sale approval where the lien holder has not issued a full satisfaction of debt, then the lender has every right to pursue that money in court after the sale is complete.  There is not much incentive for a homeowner to do a short sale if the deficiency isn’t released, but usually the alternative is foreclosure so the homeowners don’t have much choice.

So, I guess it’s time for the negatives.  In each sale we’ve done with SPS, a drive by BPO was ordered.  There is NOTHING worse in the world for a servicer AND a homeowner than a drive by BPO.  The value is ALWAYS off in my opinion.  The servicer is trying to get off cheap by doing this.  I wish servicers would order full blow appraisals all the time, but I understand everyone is trying to save money.  At LEAST an INTERIOR BPO is superior than a drive by BPO.  On the interior BPO, the agent can collect important information that will affect the valuation of the property and MOST likely the interior valuation will be closer to true market value UNLESS you have an agent that has a different motive.  We’ve run into that on more than one occasion.  Ever have a BPO agent send in a value ridiculously HIGH?  Of course that affects your short sale approval.  We’ve had that happen in more than one case, but thankfully each lender listened to some of the data we were able to collect and ultimately made the decision to allow the property to sell short.

It’s important to show the lender why the offer is in line with the market value.  You can’t have an offer too far under market value or it will never get approved.  The lender will look at the overall costs and most likely foreclosure is in their better interest.  You have to clearly show why the offer substantiates market value.  Of course BPO agents make mistakes, but when you can clearly show sold comps, or other conditions that affect value, they should be able to see why the offer makes sense.

So, in our case we had a very high BPO, but SPS took the time to review a 45 page packet of information we had collected on the property and actually took it into consideration.  Within 48 hours of an auction cancelation we received approval.

So in reality SPS is still one of if not the favorite lender for us to work with.  Other than some crazy valuations from the 3rd parties they hire, they have the process down, issue fast approvals, are smooth to work with and you can get someone on the phone who knows what they are talking about.

I will say I like Bank of America lately too, but they still can’t touch SPS for speed. SPS should stand for Super Processing Speed!!!

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