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What Crazy Thing is Going on With That Carmichael Short Sale?
This Carmichael short sale needs a 100% committed real buyer.
The reason I am writing this blog is so I can email it to buyer’s agents who call me with the question: What’s going on with that Carmichael short sale? Because it’s too convoluted and crazy to talk about otherwise. Yup, I also wanna see what happened in black-and-white myself because I can’t quite believe it myself. The good news is this home is now available to buy as a short sale in Carmichael, soon as as we get the cancellation from the buyers.
Our first set of buyers for this Carmichael short sale were just “practice” buyers. Not really willing to wait out the short sale process for an FHA short sale, which is like the horror of all horrible short sales, even though they promised. Next. My team and I fought and escalated and argued and got the trustee’s sale postponed. New buyers entered the picture, investors, represented by their agent mom. Submitted offer, which clearly stated mom represented the buyers. Many lenders allow that relationship.
Three months later, the negotiator says nope. The mother cannot represent her children. When I relayed that new twist to the buyer’s agent, the response was not what one would expect for Mother of the Year award. Her immediate retort was she would tell her children to cancel. What? No, she could let another agent represent them. She didn’t know any agents. I knew an agent. I put the two together. But we needed the addendum to upload to Equator by a certain time or the negotiator threatened to cancel. I’ve had them do it. Nasty negotiators are not joking around with these deadlines.
Begged for the addendum over a day and a half. Called, left voice mails, sent text messages. Please, please. The agent did not make it a priority to get us the addendum. She sent it the following day, after the negotiator, as promised, canceled the file. The negotiator sent a note stating she denied the short sale. We canceled the buyers, returned the deposit and put the home back on the market. We were up against another trustee auction. Immediately sold to a new set of buyers. Fought and argued and escalated and yes, once again, got the auction postponed by the hair of its chinny-chin-chin.
The only problem was the new negotiator picked up the existing file where the previous negotiator had left off. Ignored our new buyers in contract on this Carmichael short sale. Even though I had uploaded the new offer, entered terms of the new offer into Equator, the new negotiator approved the previous buyers. The buyers who had been rejected were now approved. Never had that happen. Never. Now we had no choice but to cancel our existing buyers and notify the previous buyers.
Except, after further inspection of the home, the buyers, after all of this time, after everything that happened, decided to cancel. My sellers say there is a special place in hell for those buyers. By canceling at this late date, it is possible the new auction date will now be set and HUD will not allow another postponement. Of course, we will sell this again and submit a new offer, and argue and escalate and plead for the sellers. Because that’s what we do. That’s my job as the #1 Sacramento short sale agent in town.
It would be nice to get a little support from the other side, though. May I suggest that buyers who are not 100% committed to buying a Carmichael short sale perhaps should not enter into a contract to buy a short sale? Don’t be “maybe” about it, guys. Because those kind of buyers simply endanger hopeful sellers who are praying to do a short sale. Sellers don’t want to go to foreclosure simply because buyers flake out. If buyers don’t know what they’re getting into, they have no business buying a short sale.
The only shining thing in today’s world is the number of short sales in Sacramento have fallen from an all-time high in 2011 of making up 75% of the sales to about 10%. Thank goodness. My heart can’t always take it.
How a Sacramento Short Sale Goes to Foreclosure
The failure of a Sacramento short sale is often attributed to one party.
If a Sacramento short sale goes to foreclosure, odds are it is not the bank’s fault, like most people believe. When you spot that sign falling over in the yard of a short sale because that sign has been there for a year or longer, it’s probably not the bank that is keeping the sale from going through. Sure, there are situations in which banks swap out negotiators like flicking dead fleas off a dog, and that can delay the short sale process, but most of the time, it is not the bank.
The reason a Sacramento short sale goes to foreclosure is typically not the seller’s fault, either. Responsible sellers choose to do a short sale over a foreclosure because they want to do what is best for their family. I can think of zero situations in which a foreclosure beats a short sale for a homeowner. Foreclosures more severely affect credit ratings and hamper a person’s ability to buy another home.
Also, it is not the Sacramento short sale agent who is to blame, either. Although there are cases I’ve seen in which the seller was never qualified by the agent prior to taking the listing. Some agents think a short sale is easy: just list it, find a buyer and hire out a third-party negotiator, and magical fairy dust will get it closed — while that approach seems to be a recipe for disaster. If a seller has hired an experienced short sale agent who has closed hundreds of short sales, her short sale is likely to close.
So who is left in this scenario, you might ask? Out of the remaining parties to the transaction: title, escrow, buyer’s agent, mortgage lender and buyers, there are a few possible guilty individuals. Logic dictates we remove title and escrow because they carry zero culpability. That leaves us with a buyer’s agent, buyers and / or mortgage lender. Ultimately, however, it is the buyers who hire the mortgage lender and buyer’s agent, so I directly point the finger at the buyers and hope they don’t nip my nail polish like some rabid dog.
What are the buyers’ problems? They often can’t qualify for a loan, when the rubber meets the road, because their preapproval letters are meaningless. They don’t have the money, or they once had the money and spent it because they forgot they were buying a house. They have a foreclosure on their own record and can’t get a loan. Somebody lost a job. Or somebody never had a job to start with. They never really intended to buy the house. They found another property they like better, bailed and spaced out informing anyone.
Whatever. Nine times out of 10, when a short sale goes to foreclosure, it’s because of the buyers. The California Homeowner Bill of Rights law does not stop a foreclosure while a short sale is underway. Banks file a Notice of Default after a few months of non-payment and the process does not stop. The only way (prior to January of 2018) to stop a foreclosure is to receive a short sale approval letter. If the buyers can’t close, though, the short sale goes to foreclosure because there is generally not enough time left between the trustee’s auction and the new offer to prevent it.
This is why we put so much emphasis on the buyer’s agent committing and promising to not show any more homes to the buyer. This is why we call the mortgage lenders to verify they have run a credit report and taken a loan application before whipping out that letter. This is why we ask buyers to wait at least 90 days for approval, to deposit funds into escrow and to behave like a buyer should. Even so, ever so rarely, the buyers flake.
And it breaks my heart. I would not be surprised to see foreclosed-upon sellers take buyers to Sacramento Small Claims Court. To seek retribution. Especially if the sellers lose a $10,000 HAFA relocation allowance due to the buyers’ direct failure to perform. Small Claims Court allows $10,000 judgments, where judicial decisions can be based on extenuating circumstances.
Bad Times Ahead for HAMP Rate Resets on Loan Modifications
If you pay your mortgage through a HAMP loan modification originated in 2009, be prepared to be hit with a major rate reset beginning as early as October of 2014. As I read the Treasury FAQ about Hamp rate resets, it became crystal clear why so many of my Sacramento short sales lately involve homeowners who have been approved by the HAMP program. My business of selling Sacramento real estate and especially short sales does not lend itself to helping sellers do loan modifications because, contrary to popular belief, I am not a lawyer. I am a real estate agent and I sell homes. To that effect, loan modifications affect my business only in a peripheral sense.
However, I vividly recall when the Home Affordable Modification Program, HAMP, was initiated by the government in 2009 to help homeowners stay in their homes. When it first began, many homeowners were rejected for HAMP and, having no other course of action, they turned to short sales, which meant eventually moving out of their homes, and not the preferred alternative. But over the years, the government and the banks got their acts aligned together or maybe the banks just figured out how to extract more money from the Treasury, and a large number of distressed homeowners received loan modifications.
One of the key qualifiers for the program was to be employed, so that left a lot of Sacramento homeowners in the dust. For those who managed to hang on by hook or by crook to a job, they probably were qualified for a loan modification. Like the bandage it is, though, a HAMP loan modification is only a temporary solution.
I advised people back then that doing a loan modification might be similar to putting a gun to your head and just not pulling the trigger for a few years. When you’re desperate, you’ll grasp at anything that keeps you in your home. I understand that. People tend to hope for the best. The sad thing is life over the years did not get proportionately better for many people in Sacramento. My husband, for example, lost his job in journalism in 2008 and has yet to recover.
The flaw in the HAMP program, if you will, is the fact interest rates reset after 5 years and every year thereafter. So if you took out a loan modification in 2009, your rate could go up by 1% and your payments could jump by $200 this October. If you took out a loan modification in 2010, you’ll be hit next year. And the rate continues to reset year after year. It doesn’t get any better than you have it right now.
Which is why some sellers will find they can no longer afford to pay their mortgage nor stay in their home due to the HAMP rate reset, and they will turn to the best Sacramento short sale agent they can find, which will be me. I have sold more short sales in the Sacramento area than any other real estate agent since 2006. I know how the banks negotiate, how to get your short sale approved and, best of all, you’ll be done with it now and forever. There is no out-of-pocket cost to you, all fees are paid from proceeds at closing. You can call the #1 short sale agent in Sacramento: Elizabeth Weintraub at 916.233.6759, at Lyon Real Estate.
The good thing — if there is such a thing as a good thing when it comes to short sales — is the fact that if you were approved for a HAMP loan modification, you are practically guaranteed to be approved for a short sale.
