SBA Loan Workouts: Fifteen Months, 3 Lost Sales, and We Are Just Now Getting Someone to Talk to Us

It is beyond hard to believe, no it is well beyond that, who would possibly believe this could be happening, but it is true. My client went into default on his home two years ago. He understood that he could no longer afford his ocean front large beautiful brick English Tudor home. The recession has reduced his income dramatically and thus he went into default. Rather than face the public embarrassment of foreclosure, after discussions with the bank, he offered to sell the property for the benefit of the bank knowing it would be a short sale, less than the mortgage, but also knowing that this was the best he could do and it was the honorable thing to do for the benefit of the bank. The bank agreed.

Thus he promoted, marketed, listed, engaged a broker and worked hard to get an offer to purchase for what was then market value although less than the mortgage amount, a short sale.

He received an offer and we sent it to the bank. We called the bank daily for over 6 months, and never ever got to speak to a person qualified to handle the matter. We were told daily that we would be assigned a negotiator in due time that it could take six months and we had to wait. "What about our sale?" we asked. No response.

We eventually lost the sale and never got a negotiator. In the interim we sent the full and complete package of voluminous financial information, appraisal, and other required documentation, 3 times, as they lost the package internally three times while we waited and never were able to speak to anyone with any authority to handle this matter. Each time we sent the package it was sent by return receipt, which we have and by email.

So we continued to stand in line and wait for a negotiator while we looked for another buyer, and in another few months we received another offer less than the first one, and we continued to wait for a negotiator to be assigned and called daily, actually twice a day and while still 'waiting in line' from the first sale, not even having an opportunity to explain we lost the first sale, no luck, still waiting. Six more months, no negotiator, lost the second sale.

Still waiting in line and now peppering upper management with daily calls searching for someone to assist us in getting a sale accepted and eventually after about a year we finally had a negotiator assigned. It took another few months and we held onto the buyer until the short sale was finally accepted.

We then entered into the closing, yet with a three week window to close we were unable to move the buyer fast enough and we ran out of time. We were thus thrown out of the process and was forced to go back into their system to get an extension, we needed to stand in line again to get a negotiator and we soon lost our second sale as we remained waiting while calling them twice a day asking for a mere extension to close.

We then got a third buyer to step up and spent another few months waiting in line calling twice per day and finally have been assigned a negotiator, after climbing up the executive pole and demanding action, which from my observation had little impact, our number simply came up and it was our turn.

Of course throughout this process we were requested to resend our huge package 5 times...amazing.

Now 15 months later we are waiting for the negotiator to simply allow us time to close the previously accepted deal, but we were informed that the entire process must be done again and the negotiator must take our offer back to committee for full review and a final conclusion, again. Who knows if we will ever close?

Amazingly, they have now demanded the unpaid daily per diem to be added to the sale price, as if we were responsible for fifteen months of unpaid interest while we waited for them to consider three different sales.

We will see if we actually close. I have grave doubts. It is fifteen months, three sales later and all we need is an extension to close and we must start all over again.

What bank is this you may wonder? WaMu. Washington Mutual. Now out of business but still acting totally inefficiently. This is what is going on in many banks, not just WaMu, it is another indication of the deplorable state of our banking system... When will this nightmare end?