Perfecting the Art of Short Sale ESCALATIONS

It is always frustrating to have file reviews fall behind schedule; the short sale process time line is long enough without such delays.  For short sale specialists, escalations are the primary tool at our disposal to correct review hold-ups.  All short-pay lenders implement procedures to correct any short sale negotiation process that has derailed from its expected review course.  Although each lender might use a different name for such a procedure, the end result is the same.  The most widespread identifier for this lender, corrective process is the ESCALATION, so for the sake of this article, we’ll use the same.  If used properly, the escalation will minimize your negotiation time and bolster your closing rate!

The escalation is a coined loss mitigation review term used by realtors and 3^rd party negotiators to red flag a short sale review.  For each and every bank task, an expected due date (or time frame) is provided.  As soon as the due date (or time frame) has elapsed, the file should become eligible for a red flag escalation.  The escalation message will usually be sent not only to the delinquent review party, usually the assigned file negotiator, but to the review party’s immediate manager / oversight team.  The escalation will then have an expected turnaround time for the delinquent party to bring the file back in good standing.  Should the escalation time period elapse with no file advancement or account note updates, the file will again be eligible for an additional, phase 2 Escalation.  This additional escalation will have a new response date, and will usually include even higher management than the initial escalation request.  As such, the escalation really has two benefits:

1.       Places a red flag tag on the file until the review process has been brought up to speed

2.       Includes upper management to make these parties aware of the file delays, establishing a way for agents and 3^rd party negotiators to walk up the bank’s chain of command

Keep in mind, that should an initial escalation go unanswered, not all is lost.  In fact, each and every escalation documented in the account notes will add strength to our short sale negotiation leverage.  A history of under-performance by a bank employee, as evidenced by an account record full of escalations, will eventually place the file under review of upper management with more immediate access to the overall decision team.