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Elizabeth Weintraub
Who is Your Sacramento Short Sale Bank?
The seller’s mortgage lender is what will make or break the Sacramento short sale. Oh, sellers think it’s the value of their home or the dire circumstances detailed in the hardship letter, but none of that is as important as the short sale bank. Second to the Sacramento short sale bank is the investor. You can have a great short sale bank, for example, like Bank of America, but the investor can totally suck, like Fannie Mae.
When I talk to potential short sale sellers in the Sacramento area, the first question I ask is who is the lender. Generally, people don’t know if they have a Fannie Mae or a Freddie Mac loan. While they are busy vehemently denying their loan is held by Fannie Mae, I am busy running the address on my computer through Fannie Mae’s loan lookup site. By the time the seller finishes telling me how she is absolutely positive her loan is not held by Fannie Mae, I can find proof that Fannie Mae holds her loan.
It’s important to know whether the short sale bank has delegated authority or if the investor will be required to approve the short sale. All of these things are taken into consideration when giving a seller an estimated time frame to complete the short sale process. I’ve worked with so many banks that I’m often right on the nose with the amount of time it will take to do the short sale. I can look up my closings over the past year — I average about 10 short sale closings a month, more than 100 a year — and give my best guess based on how long it took me to do those short sales.
There is no reason for a bank to take longer than 10 days to approve a short sale. Seriously. But some banks routinely take 3 to 4 months. Some 6 to 8 weeks. And God forbid should a buyer walk away, many start over even though they swear it’s a soft decline, it’s not. It’s a do-over. Which is the dumbest thing ever. That’s ranks right up there with walking through an unmarked intersection blindfolded. It’s just stupid.
Here is a partial list of the banks / lenders this Sacramento short sale agent has closed short sales with, and I’m sure there are more that have slipped my mind. Some, perhaps, on purpose:
- Aurora Loan Services
- Bank of America
- Bayview Financial
- Carrington Financial
- CCO Mortgage
- Citimortgage, now One Main Financial
- Colonial National
- EMC Mortgage
- Flagstar
- First Horizon
- GMAC
- The Golden1 Credit Union
- Green Tree Financial
- Home Eq
- Horizon Bank
- HSBC
- IBM Lender Business Processing (LBPS)
- IndyMac
- JP Morgan Chase
- LCS
- Litton Loan Servicing
- M&T Bank
- Met Life
- National City Bank
- Nationstar
- Navy Federal Credit Union
- Ocwen Financial
- OneWest Bank
- PNC Bank
- Paleco Credit Union
- Saxon Mortgage
- Select Servicing Portfolio
- Seterus
- Specialized Loan Servicing
- Sun Trust
- US Bank
- United Bank
- United Guaranty
- Wachovia
- Wells Fargo Bank
Are You Ready to Do a Short Sale?
Not every seller is ready to do a short sale. You would think that by the time a seller puts her home on the market that she’s thought through the process, but sometimes not. Sellers can get cold feet or have a change of heart; it’s known as seller’s remorse and it’s not always the seller’s fault. Sometimes, it takes listing a home as a Sacramento short sale before a family member will offer to help.
The trouble with that is sometimes the help offered by family is not much more than a BandAid. The help can be temporary assistance or it can mask the present situation without offering a long-term solution. A permanent solution is to reduce your principal balance. If a financial alternative doesn’t accomplish that, it’s not really an alternative. In those types of situations, a seller is often putting the gun to her head — just not pulling the trigger until later.
As a Sacramento short sale agent, I’ve represented sellers who have changed their minds about selling as a short sale. It can happen within minutes of going on the market, all the way to short sale approval and beyond. That’s why it’s important to talk through a short sale with a seller. Still, even then, a seller can do a 180. Selling is an emotional business. Any agent who has been in real estate for a decade or two can attest to that. Making sure a seller understands that doing a short sale involves selling the home is one of my first qualifiers when a potential client calls me.
A few weeks back a seller told me her parents offered her financial help. They were willing to supplement her mortgage payment and give her money to help pay that mortgage payment every month. She asked if she could cancel her short sale. I looked at her file. She had originally paid, oh, let’s say $700,000. She had put down $300,000 in cash. The problem was her mortgage balance was about $400,000 and her home was worth about $200,000.
I asked if she wanted to throw good money after bad. She had already lost $300,000. If her parents were willing to help her make mortgage payments, why didn’t she let them help her buy a new house worth $200,000, and she could make her own mortgage payments? Because she can afford payments on a $200,000 home. She can’t afford payments on a $400,000 home. Her home is not worth $400,000. It’s worth $200,000. So why doesn’t she just buy a $200,000 home?
This had never occurred to her. It hadn’t occurred to her parents, either. But that sounded like an excellent idea. That’s because it is an excellent idea. Buying a home in a down market makes sense. Interest rates are exceptionally low as well, we’re at historic 60-year lows right now, less than 4%. You don’t just have to sell your home as a short sale, you can buy a new home as well if somebody else can qualify for your loan. You might not have to wait to buy a home.
Photo: Shutterstock
A Couple of Short Sale Rumors
An agent friend in northern California said yesterday that Wells Fargo and Chase are planning to rollout new short sale programs this fall. There are a couple of short sale rumors that they are handing over short sale leads to their REO agents. The banks’ thinking, no doubt, is all Sacramento real estate agents are the same, which is pretty insulting to some of us. Some of us are very different. For starters, I get my nails done at a nail salon versus the usual method of chewing them off with my teeth.
Call me silly but some REO agents don’t own a cellphone. That can be a major problem. You and I know they don’t have a phone because they don’t answer it. And their attention to detail, which is required for a short sale, is legendary, right? But hey, we’re talking about Wells Fargo and Chase. What do you want? A cake to go with that nail file?
In other short sale rumors circulating, REDC, a third-party vendor for Bank of America, is pushing Auction.com. A friend at Bank of America says he thinks REDC got its start as Auction.com, but I haven’t checked out that belief. A rep from REDC called me twice about slipping a short sale listing into Auction.com’s 120-day program. That’s longer than some rehab programs. Why would it take 120 days to sell a short sale in Sacramento? Our market is so tight it squeaks.
He wants my seller to agree to let buyers traipse through his home for at least 30 days and make offers online. Auction.com will get paid its commission from the buyer. Listing agents and selling agents are still paid by the seller. That’s an awful lot of commissions to go around in one transaction. I think he’s drinking Kool-Aid, and not the stuff made with sugar. That sounds totally insane. Because you know what will happen. Crazy and frantic buyers will bid up the price to a place where it will never appraise by the buyer’s lender. Then, it will be back to Square One with that short sale when the appraisal comes in low. We don’t need no stinkin’ auctions for Sacramento short sales. No rational seller wants to turn his home into a three-ring circus to boost the profits at Auction.com.
I should just sit back and look at the bright side. The bright side is my web designer got my new website to finally work correctly for Twitter yesterday. And I put a new short sale in Galt on the market today. I prefer my method of selling real estate. The one where the sellers contact me and not the other way around. Nobody wants to be hounded by a real estate agent.
Photo: Shutterstock
Fannie Mae and Other Things That Don’t Work Right
It seems like I have to fix a lot of things that don’t work right. It’s not necessarily that they are broken as much as it is they simply don’t work correctly. Stuff goes haywire. In fact, I am so used to things that don’t work right that I have become somewhat complacent. I don’t get upset over it. I just fix it.
Almost nary a day goes by when I don’t run into some short sale negotiator telling me the bank won’t authorize seller credits on the HUD. Since when did a bank negotiator become a HUD expert anyway? I realize they don’t know how to read a HUD. If they had to prepare a HUD from scratch, they’d be up a creek without a paddle. Yet, here they are telling me to remove fees that are not credits under the assumption they are correct. They’re not correct. This problem has become so commonplace that I keep a stock answer prepared and ready to email. They don’t work right.
Last Friday my company email went on the blink. Stopped downloading to my computer. None of my settings changed. My email client stopped receiving. The company’s exchange server was not updated or altered. The IT department signed on to my computer to check but they couldn’t find anything wrong, either. We ended up doing a redirect. Because it doesn’t work right.
Yesterday we had to call out an electrician to remove a bulb from a kitchen pendant. We’ve had the pendants fixed twice. Third time they stopped working, we bought new pendants. None of this Lumen’s back-basement discount crap. We ordered blown-glass Oggetti. Then, the darned burned-out bulb got stuck in the socket and a wire connection busted. That’s why it doesn’t work right.
In many Sacramento short sales, I routinely encounter the dreaded Fannie Mae problem with second loans. Now, I heard a guy at DTS admit the other day that they kick out Bank of America Cooperative short sales when the investor is Fannie Mae. He said DTS has had too many problems with Fannie Mae. Because Fannie Mae is a government-sponsored entity, it doesn’t work right.
Fannie Mae has guidelines that are often somewhat restrictive. Like telling borrowers to stop making mortgage payments. Yeah, that’s your government telling you to go into foreclosure. Or, choosing foreclosure over a short sale by refusing to postpone a trustee’s sale. Another involves the payment it will approve to a second lender. Second lenders want to negotiate and try to get more, but Fannie Mae won’t allow it.
Most second short sale lenders realize the problem with Fannie Mae. They tend to get on board. Especially since Fannie Mae rarely makes exceptions. I even had the gatekeeper at Green Tree back down on a second demand a few months ago when I explained that since Fannie Mae was the investor he needed to accept 6% of his unpaid balance. He said: Why didn’t you say so? As though telling him my name was Dorothy would get me into the Emerald City. The system for some second lenders, though, is broken. They don’t work right.
And you can’t fix Fannie Mae.
Photo: Shutterstock
Yet Another Low Appraisal on a Sacramento Short Sale
Elizabeth, how do you do it? That’s what a seller asked me yesterday. She was very ecstatic that her short sale closed but it wasn’t an easy road. She thanked me for making the process less painful than it could have been. For many Sacramento short sale sellers, I am their rock. I’m not just a Sacramento short sale agent. I am the individual these people rely on to help them through the emotional upheaval. Don’t let anybody kid you, surviving a short sale can be like crawling naked through shattered glass.
Here’s a better example. Short sales are like driving down the road, la-dee-da, and all of a sudden, whammo. You’ve got a deer’s antlers blasting through your windshield, stuck in your steering wheel, inches away from your face. There were no deer-crossing signs on the road. It wasn’t dusk or dark outside. Nothing could have prepared you for that deer who suddenly leaped across the highway. People think that all short sales are the same and they aren’t. Even though I’ve closed hundreds of short sales, I still can’t always predict with pinpoint accuracy what will happen.
Take low appraisals for example. Generally, when the buyer’s appraisal comes in low, the short sale bank will issue a revised approval letter at the appraisal’s price point. Especially when it’s an FHA appraisal. FHA appraisals are assigned a case number. So, if the bank rejects the lower appraisal and the home goes back on the market, the next FHA buyer will get the same appraisal. I hear conventional appraisals are positioned to be assigned case numbers as well.
That didn’t happen in this particular client’s short sale. Her lender was Citimortgage, now One Main Financial. Her buyer obtained 2 appraisals. The first appraisal was conventional and was, oh, say, $200,000. Good thing because that was the sales price and also the amount approved in the short sale approval letter. But wait. Somebody at U. S. Bank ordered the wrong appraisal. It was supposed to be an FHA appraisal. The buyer then paid for an FHA appraisal. That appraisal was, oh, say, $180,000. We were suddenly $20,000 apart.
We signed an addendum lowering the price and sent the FHA appraisal to Citimortgage. Much to our astonishment, Citi said your mother is a hamster and your father smells like elderberries. We argued. Citi refused to accept the appraisal. I sent my own opinion of value and CMA. Finally, I was able to move Citi up to oh, say, $195,000, but we were still apart $5,000. Now, in some other universe, this transaction would have probably blown up at that point. However, the buyer really really wanted this home. So, she borrowed $5,000 from her parents to pay the difference.
This is why selecting the right buyer is key to the successful outcome of a short sale. But the suspense wasn’t over yet. Remember, this poor unfortunate buyer had chosen U. S. Bank as her lender. The bank’s representatives performed poorly, to say the least. U. S. Bank managed to mess up the closing six ways from Sunday, especially funding. It was so bad at closing that the escrow company had to bitchslap them. A quiet, mind-your-own-business escrow assistant really laid into them. But we finally prevailed and escrow closed. Another happy ending in Sacramento!
The way that I do my job as Lyon Real Estate’s #1 short sale agent is I keep my eyes on the horizon, my hands on the wheel. And I hope to god I don’t meet some deer hopping across the road.
Photo: Elizabeth Weintraub
