Email ElizabethHow to Time Your Sacramento Short Sale
Two things potential sellers tend to ask this Sacramento short sale agent. The first is whether the bank will do a short sale. The answer to that is generally yes, unless you just bought a new home in your name. If you’ve just bought a new home in your name, unfortunately, you’re pretty much hosed and you should probably talk to a lawyer about that bad advice. The second question is how long does it take to close a short sale? What a seller is really asking is not how long it takes to close but when the seller must move.
Closing hundreds of short sales give this Sacramento real estate agent a unique perspective. Based on a seller’s individual situation, I can pretty much predict when the seller will have to move out. In some short sales, a seller should not move out at all until closing. A little known and recent supplemental twist to the HAFA short sale, for example, withholds the $3,000 payment to the seller if the property is unoccupied.
I also ask sellers why are they in a rush to move out? If they are not making a mortgage payment, and most of them are not making a payment, it’s free rent to stay in the home. Why move elsewhere and pay two sets of utility bills? Plus, moving out leaves the home vulnerable to vandals. There are good reasons to stay put.
Timing the short sale is important. A seller’s convenience is the most important. A potential seller from Granite Bay called me last week. He wanted to know if he could rent back and close his short sale. I’m glad he called me and not somebody else because the answer to his situation is no. He needs to delay his short sale until he’s ready to move. His short sale will take 120 days and he needs 6 months. On top of this, few short sale banks will grant a short sale to a seller who intends to rent back. In fact, one of my team members brought a short listing in MLS to my attention last week. The listing agent had noted in the confidential remarks the seller would sell only to an investor who would let the seller rent back. The lender was Wells Fargo. Lottsa luck there, buddy.
In a Wells Fargo short sale, all parties sign an arm’s length. No exceptions. See, the thing is if a seller and listing agent commit mortgage fraud — and violating an arm’s length could be considered mortgage fraud — a seller has given the bank a potentially legal reason to set aside the deficiency waiver. That means the seller could end up owing the bank the difference between the sales price and the mortgage payoff after the short sale closed. Simply because the agent gave the seller bad advice. Legal advice, on top of it, which an agent is not allowed to do.
My time frame for closing a short sale is my seller’s time frame. I am in no rush. I won’t push a seller to put her home on the market. To do a short sale, a seller must be ready to move forward. I advise my sellers along the way and help them to adjust their moving plans depending on their particular short sale circumstances. Stuff happens. Are you ready to do a short sale? Timing that short sale is everything. Hiring the right Sacramento short sale agent is a close second. It’s OK to ask your agent if it’s time to put your home on the market based on your own personal situation. In fact, I insist.
Wells Fargo Returns Short Sale Fund Wires
A Wells Fargo short sale is generally a pretty efficient transaction. Its negotiators are well trained, perform specific duties and work within well defined parameters. It’s almost like you put people into a cubicle so small that they can’t move around enough to even raise their arms, and this prevents them from messing up too badly. Caged egg-laying chickens might have more room. In some ways, I bet Wells Fargo doesn’t like the fact that we are stuck with human beings at all in the work force, but what the hey. Yet, even with all of this efficiency, a local title company says it has been “inundated with returned fund wires from Wells Fargo.”
There is a glitch in the Wells Fargo short sale closing process. For some reason, lately the closing instructions on the final HUD conflict with the closing instructions in the final short sale approval letter. In less than 24 hours from closing a short sale, Wells Fargo last week began sending back the funds to title. The funds are returned in some cases because the Wells Fargo arm’s length affidavit is missing a notarized signature, but in other cases, Wells Fargo has supplied no reason at all.
It happened on two of my Sacramento short sales yesterday, among many others at the title company. A representative from Wells Fargo called me to request documents. She gave me 15 minutes to deliver the docs. Not only did my escrow officer stop what she was doing and email them, but my TC immediately uploaded the docs to Equator. One of the reasons I always answer my phone. You never know what kind of emergency can pop up in a short sale. We beat the 15-minute deadline but Wells Fargo still returned the wire.
What are the consequences of a returned wire? Hmmm, apart from egg on the face (sorry for the chicken joke), in many instances not much, depending on whether the short sale approval letter has expired or whether there is a per diem clause in the terms. As long as there is time left on the approval letter, apparently you’re OK. But if there isn’t, I imagine Wells Fargo would demand its due. That’s the sign of efficiency.
Take Xanax for a Bank of America HAFA Short Sale
In some Sacramento short sales, I want to grab an ax and hack Bank of America into itsy bitsy pieces. Hey, don’t call the cops. In other short sales, I’m littering the doorway with rose petals. There is no one-size-fits-all explanation when it comes to a Bank of America short sale. But there is also no middle ground. No median. It reminds me of that nursery rhyme about the girl with the curl in the middle of her forehead. When a Bank of America short sale is good, it’s very very good. When the short sale is bad, it’s horrid.
I tell my short sale sellers in Sacramento that there are two kinds of customer service reps at Bank of America: the brilliant and the morons. Nobody in between. They always laugh, but they and I know it’s the truth. I am also at an advantage with that statement because I know by the time a seller gets to me, that seller is pretty much ticked off at Bank of America. That seller has probably tried to do a loan modification and failed, often miserably. I don’t have to do much to poke the hornet’s nest and find common ground.
By the time a seller calls this Sacramento short sale agent, the seller is often exhausted, tired and angry. Oh, they can try to disguise their anger, and most do try to be polite, but I hear it in the cracking sounds of their voice and I see it in the fire raging behind their eyes. Bank of America has pushed them over the edge. They’re not even sure if they want to do the short sale because they are worried it will favor Bank of America in some way. Or, that the bank will reject their short sale. There’s fear and loathing. Believe me, I understand and empathize.
Moving a Bank of America short sale forward has its roots in patience. In not expecting too much from bank employees. Lowered expectations is key. Especially for a Bank of America HAFA short sale. A HAFA can expire. You’ve got about 4 months to close a HAFA. When you have a Bank of America HAFA coupled with a Green Tree second mortgage, that’s a lovely treat. Because Bank of America will take so long to approve the short sale, the Green Tree file will close. Green Tree keeps its files open for 90 days, and then they close them.
Those pesky laws about time frames in a HAFA? Ha. Bank of America thumbs its nose at those laws and slaps your face twice with its glove.
By the time we received short sale approval from Bank of America for our last HAFA short sale, Green Tree was long gone. We reopened the file with Green Tree and pushed. More than 60 days later, Green Tree issued approval, but then the Bank of America HAFA had expired. Could the bank extend? Yes, but it refused. Instead, Bank of America closed the file and reopened it, started over from scratch. New RASS, new TOS, new BPO, new HUD, it’s a new day at Bank of America, and it’s welcome to more hell for these Sacramento short sale buyers and seller.
On Wednesday, I sent a Tweet to the Social Media team at Bank of America about this file. I’ve Tweeted them so many times over this that they ignored the Tweet. It’s very unusual not to get a call back from Bank of America. I think I wore out my Tweets. The negotiator noticed the ZIP code was wrong. She asked me to send her a change of address when it was Bank of America that entered the wrong ZIP code. Oh, please.
We have a buyer’s loan about to expire if we don’t close by the end of the month. We have the Green Tree second loan going to charge-off at the end of the month. And we have a Bank of America negotiator lamenting about a ZIP code on a file that had already been approved once. This was already an approved HAFA short sale at Bank of America! Slap the Xanax into my hand.
I hope that today is the day we receive the new approval for this Bank of America HAFA. That’s one thing you can count on from this Sacramento short sale agent, I never give up hope.
The Vanishing Golden 1 Second Mortgage Loan in a Short Sale
That Golden1 short sale with a second mortgage? It can be like a case of now you see it, now you don’t. Second lenders in California are often fairly creative in how they deal with California Civil Code 580e. But these are generally hard-money loans we’re talking about. Hard-money loans can carry recourse, especially as second loans that could be wiped out in a foreclosure. This is the thing people don’t stop to think about because they’re often not made to realize the consequences of tapping a home equity line of credit or taking out a second mortgage.
Wouldn’t it be nice if homeowners would receive a disclosure upon refinancing that explained hard-money loans to them, and how they are changing a non-recourse loan into a recourse loan, like in big red letters? Something that said: Warning! By signing these loan documents, you are giving the bank the right to pursue you to the ends of the Earth to collect this debt in the event of default. You can be held personally responsible for this debt to the extent it exceeds your previous purchase-money mortgage.
But, no, they are entranced by low interest rates dangling in front of their faces. Not to mention, they probably need the money for something else. And they don’t think about this hard-money loan until they are facing a short sale or foreclosure. If the lender won’t play ball with them, they might need to pay it off in full or in part. Not every second lender is reasonable in a short sale. There are limits to how much a first lender will give them. If they’re like The Golden1, that amount might not be enough. So, The Golden1 might refuse to do the short sale unless the seller negotiates with them outside of escrow.
That’s because a seller cannot be made to contribute to a short sale in California, and some first lenders won’t allow a contribution by the seller to the second even if the seller offers it. Oh, you can have the buyer offer to pay a shortage but sometimes the first lender will refuse to let the buyer pay the difference between the amount The Golden1 demands and the amount offered by the first lender. Or, maybe the buyer’s own mortgage lender won’t let the buyer pay it.
The best way to negotiate with The Golden1 is before you even start your short sale. However, it is possible that the first lender will not object to a second loan suddenly disappearing from the HUD statement. You would think a bank would say: hey, wait a minute, buddy, if you’ve got money to pay off a second loan, we want that money. But not necessarily. Sometimes, the bank will just close escrow and not look sideways.
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Bank of America Cooperative Short Sales vs HAFA Short Sale
Don’t ask a third-party vendor for Bank of America whether a Cooperative Short Sale is better than a HAFA short sale. Because I’ll bet you dollars to doughnuts the vendor will pick the HAFA. Doesn’t matter whether it’s DTS, REDC, AMS, and so forth, all the acronym companies, they’re all the same. Call me silly, but that’s what I see happening, even though the HAFA is not necessarily the better option. It’s possible that Bank of America would push / promote HAFAs as well because there might be more money to the bank through a HAFA.
When I open a Cooperative Short Sale in Equator, the first thing that happens is my requests for a Cooperative are ignored. The third-party vendors pursue the HAFA. I send emails that say do NOT review this for HAFA because the seller wants to pursue a Cooperative Short Sale. Then, I ask the seller to call the customer service number and repeat over and over Cooperative, like a mantra. If the customer service rep says HAFA, the seller is counseled to say “No, Cooperative.” Yet, the bank opens a HAFA anyway. You’ve gotta ask yourself, why is that? I’ll tell you why I think they’re doing it, and it’s not because they’re stupid, although you may disagree. It’s because there is probably more money in it for the bank.
Is the HAFA better for the seller? Speaking strictly for a California short sale seller the answer might be no. Let’s make it clear I am talking about a streamlined Cooperative, a short sale in which Bank of America has delegated authority to approve without financials. I have a certain Cooperative approved, and Bank of America is telling the seller that in order to do the Cooperative without financials, the seller must be 90 days delinquent to satisfy this particular investor. But in a regular Cooperative short sale, the seller is better off with the Cooperative over the HAFA.
Especially if the seller qualifies for the HIN Cooperative Short Sale, because that minimum payment starts at $5,000 and can go up to $30,000. A HAFA short sale maximum payment is $3,000. However, you can combine the two types of short sales, when you get right down to it, if you’re willing to submit financials and tax returns, and I’m getting approval on one of those in a few weeks.
But if you’re not willing to hand over your sensitive personal information and you just want to do the Cooperative Short Sale without financials, the Cooperative beats HAFA in the PITA classification every time. Some types of Cooperative short sales pay $2,500. Even when you take into consideration the $500 difference vs the PITA, let me tell you, a Cooperative short sale wins hands down. In fact, the only thing worse than a Bank of America HAFA short sale is a Bank of America HAFA Fannie Mae or Bank of America HAFA Freddie Mac short sale — with Freddie Mac HAFA having the slight edge for winning the crawling-through-broken-glass-naked award because it doesn’t use the ARASS.
If you’re got a choice, pick the Bank of America Cooperative short sale. Your Sacramento short sale agent will thank you. Your mother will thank you. Your doctor will thank you. And you’ll sleep better at night.
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