Email Elizabethcooperative short sale
Closing a Bank of America Short Sale After Two Years
It’s not really fair to call this a Bank of America short sale when in reality it is actually a Bank of America short sale with Fannie Mae as the investor, which is a different kind of animal from other types of Bank of America short sales. When Bank of America is merely the servicer, it means Fannie Mae short sales are handled differently. In fact, Fannie Mae now has its own website for submitting short sales, which tremendously expedites the process.
But the procedure and short sale process still needs to follow Fannie Mae guidelines, which at times, I realize, can be difficult for sellers and buyers to wrap their heads around. The valuation placed on some Fannie Mae properties astounds other real estate agents. I suspect it’s because we work under the premise that valuation means market value, like an appraiser would do it, but that’s not how Fannie Mae seems to work. Its valuation, I suspect, has more to do with whether it is more economically feasible to sell at its suggested valuation over being paid to do a foreclosure and, yes, banks make money on foreclosures.
This supposed simple short sale began life as a Cooperative Short Sale. I met with the sellers in August of 2012. We listed the home and signed the paperwork for the Bank of America short sale to proceed as a cooperative, with no financials, sort of a short path to a preapproval. REDC was involved as the third-party vendor, which added a bit of red tape, and what usually would take Bank of America 10 days ended up taking 45 days, but we eventually received a pre-approved price for a Cooperative Short Sale that was $80,000 over the comparable sales. Not yay for us.
That Fall 2012 Sacramento real estate market was one of the hottest markets I had seen for 7 years. We held numerous open houses that should have resulted in a half dozen offers and nothing. No nibbles. No offers. We finally accepted an offer we believed to be reasonable and submitted. It was rejected. Over the next two years, we submitted a total of 5 offers, each a little bit closer to the price Fannie Mae expected. At one point, on Thanksgiving Day, I kid you not, a guy from REDC called the sellers and threatened to close the file if the sellers didn’t immediately submit a document he suddenly wanted.
The home needed work. On top of this, the roof was shot and at end of life. This meant either we needed a buyer who would pay cash or a buyer able to obtain an FHA 203K loan. Investors called and begged us to take their offer. These buyers felt we were being obtuse and cruel but in reality, after 4 rejections from Fannie Mae, it became pretty clear even to the most dense of us that we had better the submit the offer Fannie Mae expected if we wanted to receive short sale approval.
At another point in this short sale, I made a deal with the third-party vendor hired for this Bank of America short sale and obtained verbal approval for a lower price from Fannie Mae. We submitted an offer at the slightly slower price, and Fannie Mae then promptly demanded another $5,000 on top of it. The investor walked. Over $5,000. I couldn’t believe it. This is a fabulous neighborhood in Carmichael, and many of the homes around this particular home are much larger and in better condition.
It was a little disheartening, listening to buyers after buyers yelling and screaming at me on the phone about why we refused to accept their offer. They called me names. They swore at me. They wrote mean emails about me. They insisted I was prejudiced against investors. They just could not understand that this was not my call nor my decision. They felt they knew better how short sales operate, even though they may have never dealt with a Bank of America short sale through Fannie Mae, and this Sacramento short sale agent has worked on Fannie Mae short sales for years.
We finally got to the point this summer when market value had moved up enough, even with the mounting repairs and required new roof, that a buyer who wanted to live in the home decided to make an offer. At list price. A foreclosure notice had already been filed and we were in the final 21-day countdown to a trustee’s auction. I cried, I pleaded. We then received approval from Fannie Mae on this Bank of America short sale in 18 days. It was a miracle.
And you know what’s really odd about this? This was the first time ever in which we were able to stop a trustee’s auction due to short sale approval. We were literally days from foreclosure, but once we received that short sale approval letter, all foreclosure proceedings had to cease due to the California Homeowner Bill of Rights. We were saved in the nick of time. I’ve always felt that the dual tracking portion of the law passed in 2013 was pretty useless about stopping foreclosure during a short sale because it doesn’t apply to short sales until January of 2018 (when we probably won’t need the law) unless we get short sale approval. Generally, by the time we get approval, we still have plenty of time to avoid the foreclosure, so it doesn’t matter.
But in this case, our California short sale law made all the difference in the world.
We closed today, 30 days later. See, this Sacramento real estate agent does not give up, regardless of what I have to go through to close a short sale, I hang in there and make it work for the seller. But no short sale should have to drag on for more than two years like this Fannie Mae / Bank of America short sale in Carmichael.
Another Amazing Bank of America Cooperative Short Sale
I closed another Bank of America cooperative short sale yesterday, this time in West Sacramento. The entire short sale was processed as smooth as silk. Our on market date to closing was fewer than 60 days, start to finish. This is because I prequalify my sellers whom I believe will be a good candidate for the Cooperative Short Sale. By the time we go on the market, we have the agreement in place to do a Cooperative and we have the preapproved price from Bank of America. Which in this case, was about $50,000 less than I anticipated.
There doesn’t seem to be a lot of rhyme nor reason to the valuations we receive from Bank of America. Most of the time, they are right on the nose, but sometimes the prices are too high and, every so often, they are a little too low. Even when they are low, though, it sets the stage for multiple offers, and multiple offers can push up that price.
When I sat at the dining room table with the sellers, I could see the little clouds of doubt lingering in their eyes. They were sharing with me their net worth and retirement plans, and I was explaining how Bank of America will most likely not request any financials, no tax returns, no bank statements; not even a hardship letter. It was clear that saying this was akin to telling them the Easter Bunny would hop into their yard in the early morning hours to hide Easter eggs. They nodded and looked thoughtful, but they had reservations, as any normal person would.
We went on the market, received several offers, and were in contract a few days later. The buyers absolutely loved the home. When Bank of America asked the sellers to submit a 4506T, that was the other shoe they had probably been waiting for to drop. But the 4506T was just a form, and whether the bank requested tax returns or didn’t, it had no bearing on the short sale.
The nicest part about the short sale is the fact the buyers gave the sellers permission to move at leisure, so there was no big rush at closing to get out. The sellers were able to stay current on their mortgage payments and were released from liability, plus the bank paid them a relocation incentive on top of an HIN incentive. Everybody got what they wanted, which makes for a very happy ending!
If you’re wondering whether you might qualify for a Cooperative Short Sale through Bank of America, call your Sacramento short sale agent, Elizabeth Weintraub, at 916 233 6759. I’ve closed many cooperative short sales; I know how everything works, and some sellers qualify for different types of programs. Don’t trust your future to some agent with an unproven track record. Get an expert.
What You Need to Know About The Short Sale Approval Letter
Bank of America broke out its Cooperative Short Sale program in California about 3 years ago. Since then, many short sale agents have taken advantage of the fact that they can get their sellers preapproved for the program prior to going on the market. Preapproved is probably not the right word, although, that’s pretty much what happens. Preapproved suggests that nothing can go wrong, and things can go wrong.
For example, a preapproved Cooperative Short Sale seller last year lost her chance to close on a short sale because Bank of America assigned the loan servicing in the middle of her short sale. The new lender did not participate in the cooperative short sale program, so she was denied. She was denied because under ordinary circumstances, this seller had too many assets and her disposable income was too high. There was no hardship.
Some sellers think that they when they receive the Buyer Acknowledgement of Interest that they will receive a short sale approval letter before submitting an offer, but that’s not how the program works. First a seller will receive the BAI, and then a valuation letter. The valuation letter assesses and predetermines the minimum approved listing price. If that price is reasonable, you’re in luck. If it’s not, you’re kinda hosed. Most of the time, though, unless the investor is Fannie Mae, that price is reasonable.
Then the home goes on the market at the preapproved sales price. Generally, the seller does not submit financials nor a hardship letter unless the investor specifically requests it after the offer has been submitted. The short sale approval letter arrives after Bank of America has approved the purchase offer and the buyer. The buyer is named in the short sale approval letter and generally another buyer cannot be substituted.
In California, a deficiency judgment is not permitted, and by agreeing to do the short sale, the bank waives any right to pursue a deficiency judgment. If the property is a personal residence, odds are the seller will qualify for relief from paying any taxes on the amount of the mortgage that was forgiven. Talk to your personal accountant and seek legal advice before starting a Cooperative Short Sale so you feel comfortable moving forward. Do not ask your Sacramento short sale agent for legal or tax advice.
The short sale approval letter will arrive somewhere between 10 days and 4 weeks after the offer is submitted to the bank. The letter will most likely give the seller 30 days to move, so a seller might want to start making plans to relocate when the home goes on the market, especially in our fast-moving Sacramento seller’s market. Sometimes extensions are granted but not always. Sometimes, instead of granting an extension, the bank makes the seller start over with the short sale and will order a new valuation, which could increase the value for the buyer, if the buyer elects to wait. It’s not a good idea to ask for an extension because it is risky.
Bank of America will also require that the seller have no preexisting relationship with the buyer. Can’t have done business with the buyer or know the buyer or be related to the buyer. Selling to a friend could be fraudulent if the bank doesn’t know about it. If the bank proves mortgage fraud, it could overturn the deficiency waiver, so it’s just not worth it to try to manipulate the stipulations. If you know a person whom you believe has committed mortgage fraud, you can notify the bank anonymously at 866.880.1232. There is no reason to gamble with your short sale.
If you’d like more information about a Cooperative Short Sale in the Sacramento metro area, call your Sacramento short sale agent, Elizabeth Weintraub, at 916.233.6759 for a confidential consultation by phone.
How Do You Handle a Racist Neighbor in Sacramento?
It’s a bit ironic for me to read that April is Fair Housing month, given what happened yesterday. It happened in a somewhat quiet neighborhood in Woodland, made up of mostly tract homes, built in the mid-1970s. This particular home has 3 bedrooms and 2 baths, and it’s a preapproved Cooperative Short Sale through Bank of America. The family, first-time home buyers, had just received the short sale approval letter and were informed they could close escrow. They arrived at the home early yesterday morning to do a home inspection.
As they walked up the sidewalk toward the home with their agent, the next-door neighbor came out, as next-door neighbors often do during a home inspection. Coming over during the home inspection is a great time to greet new neighbors and welcome a family to the neighborhood. That’s because, for the most part, there is not a lot for buyers to do during a home inspection, except stay out of the home inspector’s way. I was not present at this meeting, so my information is third-hand, but apparently the neighbor did not welcome the new family. Instead, he began yelling and hurling racial slurs at them. He is accused of saying he would move out of the neighborhood if this family moved in. At the top of his lungs. In the middle of this quiet working class neighborhood.
You think it won’t happen in your back yard, but it does. The sellers say the neighbors never exhibited any of this hostility or prejudices when they lived there. The buyers called the police because the neighbor made threats of violence against them.
I’m not even so sure it was a racial prejudice as much as a religious prejudice — but all hatred, because people are different, is hatred. It’s vile. It’s shocking. It’s incredibly painful and sad. It’s sad for the victims who endured such vicious wrath. It’s sad for the racist because he is uneducated and ignorant. It’s sad for all of us because this kind of hatred still exists.
It makes me want to put a sign in the yard all right. A sign that says the neighbor is a racist splashed with a big red arrow pointing toward his house. But he’d just pull it out of the ground and smash it up, maybe use it to break the windows on this house. That’s what people like him do.
An Exception for a Dying Man
I am presently working on a short sale for a seller who is dying from terminal cancer. This short sale seller is trying to get financial affairs in order so his wife is not burdened with more than a broken heart and shattered spirit. After months of negotiation, we are down to the wire. We finally have agreement on terms, conditions and are ready to close between the two short sale lenders. The second lender, CCO through RBS Citizens Bank, says it cannot give a dying man an extra 10 days to close escrow. RBS Citizens Bank says: Merry Christmas and don’t let the casket door hit you.
You might think I am a soft touch who runs around hugging trees and waving the give-my-client-an-exception flag, and you might be partially right, but I am stronger than you might think. As a Sacramento short sale agent, I believe that sometimes rules need to be broken. I don’t always cross the street at the corner — sometimes I jaywalk — but I don’t run through red lights. I am not asking RBS Citizens to do anything against the law, we’re asking to give a dying guy and his family a break and let them close by New Year’s Eve.
The negotiator wants to start over with the short sale. Starting over means a new BPO and all new paperwork. RBS Citizens Bank has been working on this file since July. It took the bank 3 months just to get the first BPO, which was completed in September. The BPO makes no difference in this situation, really, because RBS Citizens Bank is getting the maximum that Fannie Mae will allow. The BPO is just a technicality.
We had this once approved as a Bank of America Cooperative Short Sale, but RBS Citizens Bank fought with us for 5 months. By then, the Cooperative Short Sale had expired. Bank of America refused to renew or extend the Cooperative Short Sale status. That’s why it took us another 2 months to go the traditional route, but we finally got approval from Bank of America . . . and now . . . now RBS Citizens Bank will not give the buyer the extra 10 days the buyer needs to close her loan. RBS says the approval expires on the 20th and they need to start over. By the time they redo the short sale and all of the paperwork, the seller, quite literally, could be dead.
I don’t know about you, but my heart hurts.
