Specialized Loan Servicing (SLS) stalling short sale

Anyone have a good contact at SLS? It would be much appreciated.

I've had a short sale file with SLS since April '13. This was originally a B of A loan whose servicing was transferred to SLS (likely as part of B of A's settlement late last year) in January of this year.

I've had a cash offer in to them since April and they have been very obviously delaying the short sale since. Ive done over 130 SS since 2009 so I know how to submit a complete package and we have been meticulous in that regard. It started with the usual "we didn't receive this doc or that doc"....but now it's gotten to asking for items that I know are irrelevant.

It feels very reminiscent of the horror stories I've heard from clients who tried to do loan mods but were repeatedly and deliberately stalled.

My theory is that since SLS is only the servicer and since they are generating fees they have NO incentive to approve the short sale and have likely not even presented the offer to the investor.

We've submitted a detailed QWR for information, including investor contact but it has been ignored.

My borrowers are retired and really want to get this done before the end of 2013 else they risk losing out on the Mortgage Relief Act cancellation of debt exemption and get hit with a huge capital gains tax bill for 2014.

If anyone has a good contact at Specialized Loan Servicing (SLS) I and my clients would be very appreciative.

Thanks

Alex

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Replies to This Discussion

Permalink Reply by Short Sale Superstars LLC on September 20, 2013 at 12:04pm

Alex,

       SLS can often be a nightmare to deal with and their system move forward slower than average. I've had success in the past reaching out the CEO or the VP of the recovery department. Also, if you haven't spoken to any of the floor managers I would be getting them on the phone simultaneously.

Warm regards,

[email protected]

310-564-6389

Permalink Reply by Alex Brana on September 20, 2013 at 8:51pm

Ask for Darren Bronaugh. He is over all of Default. Also try Adam Shechter. He is over Loss Mitigation or, Kory Eller, Supervisor of Recovery. I've worked with Guy Goodenov too. Supervisor of Customer Resolution.

 

I wouldn't use my name!

Thanks for the names

What docs do you think are irrelevant? There are too many to list but for example: The borrowers are retired. The wife retired from Pitney Bowes in 1979. Their retirement checks are issued via direct deposit which are clearly indicated in their monthly bank statements. SLS demanded a copy of their retirement benefits letter. THAT is irrelevant in CA as they can't even ask for a contribution to any deficiency. This isn't a loan modification.

What fees are they generating? The servicer SLS generates fees from the investor...whether the borrower is making payments or not. That's why they have no incentive to move the SS forward.

 

A QWR doesn't need action for 60 days other than an acknowledgment of receipt within 20 days. Did the seller submit the QWR? A detrailed QWR was ORIGINALLY sent certified mail in May. Additional copies were sent in June and July. Receipt was acknowledged but the requested information has never been sent. Countless phone calls have resulted in useless placations  designed to get us off the phone, They tell me what I want to hear but produce NOTHING. 

 

Also, what capital gains would they get hit with if they are underwater? The Mortgage Relief Act of 2007 is set to "sunset" Dec 31 2013. This is critical for anyone undertaking a short sale because all indications are it will  NOT be extended again. That means that any cancellation of debt (COD) amounts will be taxable under capital gains. In my clients' case they have over $900k in loans on property that's now worth $600k. Not getting this done before 12/31/13 would essentially sentence them to somewhere in the neighborhood of $180k tax debt.

Permalink Reply by Wayne Brooks on September 21, 2013 at 8:45am

They are verifying all income, retirement or otherwise, for the purposes of the short sale.

Alex, the income from forgiven debt in a short sale, or foreclosure, is Ordinary income, not capital gains.

Permalink Reply by Alex Brana on September 21, 2013 at 10:48am

The verification of income is clearly established by the direct deposit shown on their bank statements (amounts and sources are identified). Given that we are in CA and the lender can either deny or approve the short sale, but CANT request any contribution from the borrower regardless of income, or even savings (if they had any, but don't) a 33 year old retirement benefits award letter is irrelevant. I've never had a lender request the pension awards letter (unemployment,... yes, Social Security.... yes). Fortunately I was able to track down the pension fund manager and get a letter but I don't see it as even remotely reasonable or relevant. And this is just one example of many. They ARE deliberately stalling. 

Thank you for correcting the capital gains vs standard income point. I looked it up on the IRS website and you are correct.

The pertinent issue, (for my clients as well as anyone else doing a short sale on their primary residence) is losing the opportunity to exclude the cancellation of debt tax liability if we close after the MRA 2007 sunsets ...assuming it isn't extended again of course.

Thanks again

Permalink Reply by Jeff Payne on September 22, 2013 at 5:26am

Is this their primary residence?

Permalink Reply by Alex Brana on September 22, 2013 at 5:09pm

Yes

Permalink Reply by Jeff Payne on September 23, 2013 at 6:47am

If it is their primary residence, they need to speak with their CPA ASAP.

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