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A Ditech Short Sale in Elk Grove That Seterus Tried to Hijack
Green Tree short sales are now Ditech short sales and not any easier.
In case you don’t know, Green Tree short sales are no more, and the company name has changed to Ditech. I predict this is not the last Ditech short sale I will see. Many real estate agents in Sacramento discovered Ditech when their borrowers dumped our local lenders and opted in for a sparkly shiny new mortgage company they found online, which on many occasions could not perform. I personally recall having several transactions held up because the Ditech mortgage guys were not familiar with our local appraisers nor how we do business in Sacramento, and it caused complications. Hopefully they are better now, but I haven’t run into a mortgage through Ditech for years.
This is a story of a short sale in Elk Grove that has so many bizarre twists, I hardly know where to start, so I will start at the beginning. I listed this home in November of 2014 and it took us 4 months to get an offer anywhere near the comparable sales. We received 4 or 5 offers, all around 80% of market value, which banks don’t take. I’ve been selling short sales for 10 years and have closed more short sales than any other agent in a 7-county area of Sacramento. That makes me the top short sale Realtor for Sacramento. I don’t know if it’s the buyer’s agents or the buyers themselves who don’t understand how short sales work, but I’ve been doing it long enough that I know better than to throw lowball offers at the bank and hope they will stick.
One Sacramento agent even admitted that’s his method of operation. Throwing crap at the wall to see if it sticks. He says he always takes the first lowball and sends it to the bank and then when it’s rejected, he know how much the bank wants, so he changes the price and puts the home back on the market. That seems so defeatist to me. Why not do your homework that you’re trained and paid to do, figure out market value (based on condition) and sell the home ONCE? That makes a lot more sense, doesn’t it?
We sent the offer and HUD to the first lender, which was good old’ Seterus, and the investor was Fannie Mae. In reviewing the file now, I see we received the payoff from Seterus a few days after we received the short sale approval letter, although the payoff was dated the day prior to the approval letter. This tells me that Seterus knew how much it was owed. Instead, it sent a short sale approval letter for $100,000 more than its payoff. Seriously. If it was owed $155,000, for example, it approved the short sale by accepting $255,000. If this makes your head hurt, it’s because the first mortgage was NOT short. I guess Seterus just found a way to collect an additional $100K or they can’t read, and I’d hate to think they can’t read their own payoff statements.
The seller had owned this property for more than 15 years. There were many refinances and a subordination refinance in the public records. The seller hadn’t made a payment in so long that we had no mortgage statements, and although requested from Seterus, we did not receive the payoff until after the short sale approval was issued. There was no way we could have accurately predicted the payoff was so low as to not make this a short sale unless we prematurely paid for a prelim, which we don’t do, and even then, we still need the beneficiary statement.
We told Seterus no thank you to the short sale and proceeded with Green Tree, which held the second loan. It took Green Tree from February to the end of July to issue the approval letter and it bumped up the price by $10,000, during which time the company morphed into Ditech and this became a Ditech short sale. Then, the buyer’s appraisal came in $10,000 less, right where the price should have been in the first place, which was the price we had originally submitted. We spent another month obtaining a revised approval from Ditech.
The Elk Grove short sale closed this week. This has been almost a year of hell for the seller but we got it done. The buyer waited almost 9 months to buy this Elk Grove short sale. They could have had a baby in that time. This is another reason to only sell the home once and to sell it to a committed buyer, if at all possible. And a listing agent’s odds and seller’s odds are increased if the buyer is willing to pay market value.
In closing, it’s interesting to note that Green Tree was fined $63 million for abusing customers. The Consumer Financial Protection Bureau and the FTC went after Green Tree for its deceptive business practices and harassment of borrowers. No joke, some of those negotiators at Green Tree would scream at us over the phone and threaten to cancel the short sale if we didn’t drop what we were doing and send in documents. My clients hated Green Tree with a passion. And now, they are Ditech.
When a Short Sale Buyer Blows Off a Nationstar Auction . . .
There are benefits to registering for a Nationstar short sale auction.
This is a story of a Nationstar short sale for which the buyer did not register during the online auction and, as a result, did not participate in the online Nationstar auction. I always advise in-contract buyers to register for the online auction and to place a bid, even if it’s the identical amount that they’ve already offered, during the last few minutes of the auction. There are advantages. First, no 5% premium applies to a buyer who is in contract with a seller to buy a short sale. Second, upon winning the bid process, Nationstar promptly issues an approval letter within the week — OK, maybe another week or so when the investor is Fannie Mae, but still.
These particular buyers did not want to participate in the online auction. OK, they don’t have to. Nationstar doesn’t force them to register nor to bid. But the consequences that happen when they don’t is the approval process starts over and can take another 3 months to obtain the approval letter.
My experience has shown that a Nationstar auction typically doesn’t get a lot of action, especially when the reserve price is set so much higher than the initial starting point. I heard that N.A.R. has stopped shill bids from Nationstar now, so that helps as well. Plus, when you have Fannie Mae as the investor, you can be fairly well assured that Fannie Mae will set a reserve price on the high side of market. But buyers don’t always listen to the listing agent’s advice.
We had already lost one buyer in September who had made an offer and then immediately reneged. Some lame excuse about his parents not wanting him to buy a home. When my seller finally entered into a purchase contract with our new buyers, it was October of last year, a few weeks before Halloween. The Nationstar auction process did not take place until the last few days of December, that quiet time between Christmas and New Years when I flew off to Vanuatu, probably the very worst time of the year for an auction. But like I mentioned, the buyer did not register for the auction.
Green Tree was the second lender, the collection agency that has made enormous profits buying bad paper. Green Tree had previously issued approval, but since Nationstar had dragged its feet on the process, that loan went to charge-off status. Now, Green Tree wanted more money. On top of this, Nationstar came back to say Fannie Mae would not approve the buyer’s closing cost credit, and raised the sales price.
All of this happened because the buyer did not bid at the auction. Good thing the buyer still wanted the property from my seller. Six months from the date of the purchase contract we closed, and the buyer had to pay a higher price, plus wrap the closing costs into the loan. The moral of this story is if you’re trying to buy a short sale and are faced with an online auction from Nationstar, you may want to register and participate. You have nothing to lose but time. And quite possibly, money.
Closing the Escrows of Two Homes in West Sacramento
Closing the escrows of two homes in West Sacramento on the same day is rewarding to me in one sense that I can pick up both lockboxes in one trip from Land Park, just over the Sacramento River. That’s what happened yesterday. Well, of course, I also get paid for my performance but that pales in comparison to the joy and ecstasy felt by my clients and, while a stranger may find that statement difficult to believe, people who know me know it is true. I make a difference in my client’s lives. Especially when they are selling a short sale, which is probably why I enjoy the challenges of short sales so much. The rewards are right there when I hear the song of relief echoed.
One seller told me that he knew deep down that he probably would not have been successful if he had hired a different West Sacramento REALTOR. Apparently, he had called several agents to discuss selling, and they all presented strategies in opposition to what I suggested, so he chose me instead. That was a smart move. He said he also selected me to be his agent because he felt he probably would not get approved for his short sale yet believed I would find a way to do it. He was right.
He did not get approved the first go-around and I successfully changed the bank’s opinion. Yup, the lender flat out rejected his short sale. I scoffed at that short sale denial. The short sale bank was misinterpreting the situation and overlooking a crucial piece of evidence. Because of my vast experience, I knew what to tweak, how to repackage and present to approve. We provided the revised package and the short sale was approved. Other agents might have given up at that point, but I pride myself on the fact that my short sales close. Despite the repackaging time lag of a few days, the short sale approval arrived within 60 days from our “on market” date and we closed 30 days later. Just like I predicted.
We also had received a bunch of inquiries and several offers at the inception of this listing. The difficulty with this short sale, despite seller qualifications, was the condition of the home. I have a background of fixing up and reselling homes, so I have a pretty good handle on what it costs to make repairs to a home that has been damaged. It’s a delicate balance between what a short sale bank will take (market value) and the profit margin for an astute buyer. We chose a sales price, and it sold for $1,000 more. However, we had also received offers that were lowballs from losers and going nowhere. The investor who bought this home will make a pretty profit when he resells. He was smart.
The bank’s appraiser called me to discuss the condition of this home, and we spent a long time on the phone chatting about what it needed. He saw my point of view and agreed with my assessment of value. Second hurdle passed. Short sales are all about jumping the hurdles and making it around the track to closing. If sellers have patience and trust, I’ll get the job done for them. Tomorrow, I’ll share an interesting thing about the second closing. If you need help selling or buying homes in West Sacramento, call Elizabeth Weintraub at 916.233.6759. I answer my phone.
The Sacramento Short Sales Nobody Wants
It’s not surprising that I often agree to tackle the Sacramento short sales that no other real estate agent in Sacramento wants to handle. That’s because I don’t discriminate. As long as the seller’s situation warrants a short sale and this agent can see that short sale closing, I will list it, sell it, negotiate it and close it. If I don’t believe the short sale will close, I don’t accept the listing. Keeps life simple.
But what I think will close and what another agent in Sacramento believes will close is often two different things. That’s because there are agents who will not touch a short sale in which the seller owes money to more than one lender. These agents do not want to work on a short sale with two loans or more. They’ve been burned once or twice by second lenders so they automatically assume all second lenders are reluctant to cooperate with a short sale or they want to blackball certain lenders, which is so wrong.
Every short sale is unique. Every short sale is different. What a second lender might do in one transaction could be the opposite in another. Any Sacramento short sale agent worth her salt knows that it’s a defeatist attitude to automatically wish for the worst.
I’m thinking the reason that agents might lose enthusiasm for a short sale is because they probably haven’t closed enough of them. According to Trendgraphix, I have closed more than $65 million in short sales, more than any other short sale agent in the Sacramento seven-county area over the past 8 years. I’ve learned a thing or two negotiating this volume of short sales. The most important is not to be overly judgmental and to deal with the facts at hand. If it’s a little bit extra work for me, so what? That’s what I’m paid to do.
Just closed a short sale last month in which well-meaning buyer’s agents predicted disaster. They didn’t want their buyers to make an offer on the home because they thought the roof needed too much work. You know what? The roof never came up, and it sold FHA. The home inspector did not find any problems, either. Agents also thought the home was priced too high, yet it sold for a little bit more than its original list price. Other agents complained that the short sale had two loans and would take too long to get approval, if the second lender agreed at all because some agents had a bad experience with that particular lender.
The facts are we accepted an offer on October 18th, and we closed escrow on December 23rd. We had short sale approval from both lenders before the end of November. Plus, the seller pocketed $3,000 through the HAFA short sale program at closing. Everybody was happy, except those naysayer buyer’s agents who did not go to escrow due to ignorance.
