First and foremost, always bear in mind that it is in the best interest of the bank to avoid complications with the actual house and pay off the loan. Even if this means taking a loss. Under certain circumstances a smart loss is very smart. To go through with the foreclosure means the lender would have to pay out money on legal costs, foreclosure expenses, advertising the foreclosure sale, trustee's fees, and all kinds of insurance and miscellaneous expenses. The amount spent could without a doubt be over $4000 for any property. This doesn't even entail holding costs, repairs and fix up, and maintenance which can effortlessly amount to another $6,000. And if they must depend on a realtor to make the sale there is additionally a large commission to be paid. Banks would like to sell anyone the house, even if it's at a discount.
Second, bear in mind that the lender's negotiating stance changes on whether or not the loan is insured. Many governmental and private companies back home loans and insure the lenders against non-payment. These private mortgage insurance (PMI) entities include the FHA, VA, Fannie Mae, Freddie Mac and several others. When banks lend money and create home loans they technically take out insurance to cover the difference between what they can sell the property for and what's still not received at the time of the foreclosure. In short this means that mortgagers don't lose any money if they give a discount on insured loans. How do you find out if the home loan is insured? You ask. You ask with tact.
Third, don't ever trouble yourself with negotiating with a bankruptcy attorney. Just take my word for it: you're wasting your time. As vital as they are in the grand scheme of debt repair, bankruptcy lawyers can almost never be of much value in getting a short sale completed.
Fourth, become familiar with the loss mitigator. A loss mitigator is a specialist at the bank, taught to negotiate bad debts and hold the bank's losses to an absolute minimum. In short sales you will always negotiate with the loss mitigators, and they have the final say on the disposition of your proposal. They are assigned to you when you provide your short sale package.
It's easy to imagine loss mitigators being threatening, larger-than-life characters within the financial institution. After all, they have the ability to make deals on behalf of the mortgager. The reality is quite different than this. It might surprise you to know that loss mitigators sit in cramped, isolated rows of cubicles and talk for 8-10 hours a day to real estate investors just like you.
Loss mitigation is not a high paying profession and they are extremely overworked. Politeness, consideration and professionalism go a long way with these people. Since they hold all the cards in the health of your offer, they can effortlessly put you to the end of the list or incapacitate your good efforts if they grow to dislike you for some reason. How can you keep away from that? Keep it easy and treat them like you would like to be treated. Be caring and you won't have any issues at all.
