Disbelief Was the Order of the Day
We saw a new side to the lending community as well. Banks were losing a ton of money, and they didn’t want to face it. Short sales are handled by a separate department, called loss mitigation. Unlike asset managers who want to get REO properties off the bank’s books, loss mitigators were just like our distressed clients. They saw everything in negative terms and fought the process every step of the way. After all, until the property is sold short or taken back in foreclosure, the loan is still on the books. Disbelief was the order of the day, and the bankers questioned everything. The lenders were in distress.
Short sales grew to 35 percent of the homes for sale, and REOs retreated to 35 percent. It was still a 70 percent bank-controlled market, but the distress meter was off the chart.
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