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A Countrywide Short Sale in East Sacramento
I recently closed a double Countrywide Cooperative Short Sale through Bank of America in East Sacramento in which the seller received almost $17,000. He had been recommended to this Sacramento short sale agent by a former client who had insisted that he call me. That’s probably because I handle each of my short sales with focused attention. Because each one is different. See, another agent might have just listed this short sale and sold it without giving the seller any cash. But if there a way I can get my sellers cash without making them totally miserable in the process, I go for it.
This home in East Sacramento was also owned by a lawyer. I handle many short sales for lawyers, and I really enjoy working with lawyers. One of the super fun aspects of working with a lawyer is when I get to say that I cannot give legal advice. That tickles me to no end. At least lawyers understand this concept, though, and they don’t keep grinding me.
The minute I spotted the double Countrywide loans in the public records, I suspected this short sale would make a good candidate for the Cooperative Short Sale program at Bank of America. I don’t know if B of A specifically targets those old Countrywide loans, but if I were Bank of America, I know I’d want to get rid of them. It’s not bad enough that Bank of America is being sued by the Feds for Countrywide’s old HSSL (high speed swim lane) — a loan process of pushing loans forward, allegedly with little regard for accuracy or conformity — but the process had became known as the Countrywide Hustle, a practice carried on after Bank of America took over Countrywide. Bad on so many levels.
Still, we started this short sale in May of this year. A time of year so beautiful in Sacramento that it’s like living in Carmel without the prices of Carmel except, yeah, we don’t have any dogs running on the beach or a beach — just clay soil and skunks in the yard. By August, we finally had our Cooperative Short Sale agreement signed and approved. I don’t put my short sales like this on the market until we get the short sale preapproved. Why drag sellers and buyers through that process? I’ve learned over the years that it’s much better to just wait. After we got the approval, it took B of A another month to come up with the BPO. By mid September, we were ready for the market. Who says a Sacramento short sale agent doesn’t have patience?
However, the good news is once we had everything in place and received an offer, the bank approved the short sale in 3 weeks. Bank of America just zips along when finally in Equator, and receiving the preapproval for the Cooperative Short Sale upfront really speeds up the process. Plus, the seller received almost $17,000, which he wasn’t expecting. He was happy to simply short sale the East Sacramento house and to obtain a release of liability. The cash was simply icing on the cake.
Beware of the Short Sale Service Release
When writing to another agent today about short sale service releases, it made me realize how little the average consumer knows about this practice. A service release happens when a bank sells the servicing rights for a loan to another bank. Some banks are the actual investor, the entities that own the note, but many banks are nothing more than a collection agent for the loan. The bank takes the money from the borrower, pockets a fee for its services, and then distributes the rest to the investors. It has other duties outlined in the PSA such as handling the foreclosure, which pays the bank even more money. That’s one of the reasons why some banks can prefer foreclosure to short sale.
Bank of America seems to be in the middle of a big sell off. It is selling servicing rights to other banks. At first I thought maybe it was Fannie Mae who fired Bank of America, but it seems to be the other way around. In one such Sacramento short sale, we had put a pre-approved Bank of America Cooperative Short Sale into escrow. The seller had signed the Borrower Acknowledgement of Interest — known in short sale lingo as the BAI. This is not a commitment on the part of Bank of America but most people take it as such.
The short sale progressed smoothly, as most Cooperative Short Sales do these days. We received the counter in Equator, which removed a few miscellaneous fees from the purchase contract that Fannie Mae would not allow. Usually, when we approve the counter offer, we get the short sale approval letter anywhere from 24 hours to 10 days later. Instead of receiving the approval letter, though, we received a decline of short sale because the bank had sold the servicing rights to Seterus. Our old friend, IBM.
Seterus does not Cooperative Short Sales. Seterus does traditional short sales. Long story short, Seterus rejected the short sale. The seller did not receive her $3,000 relocation incentive. The buyer did not buy the home. The entire transaction blew up, and there was nothing we could do about it. The home went to foreclosure. If you don’t think service releases produce horrific results, here is one for the record.
REDC Threatens B of A Seller on Turkey Day
An unnamed person at Bank of America confirmed for me last week that the bank is indeed pulling its HAFA and Cooperative Short Sales in-house — which is music to any short sale agent’s ears. And not the crappy kind of music like Barry Manilow, but more like early Beatles, before Yoko Ono messed everything up. And not just to this Sacramento short sale agent, but every short sale across the nation is putting down her pumpkin-pie laden fork and giving thanks to the decision by B of A to do away with its third-party vendors like REDC for these short sales. With any kind of short sale, though, these miraculous changes don’t happen over night. As a result, we are stuck with REDC for a handful of Cooperative Short Sales still on the road to Pocatello.
I have asked negotiator, let’s call her Mao, through Equator over and over and over to clarify for us whether she is negotiating a Carmichael short sale as a Cooperative Short Sale because everything about this particular short sale has gone sideways. It’s not being handled at all like a regular Cooperative Short Sale. This negotiator has ignored all questions. Then, on the day before Thanksgiving, she gave us 24 hours to send her financials or she would close the file.
24 hours on Thanksgiving Day!
Yes, on Thanksgiving Day, instead of celebrating with his family, a seller scrambled to pull together financial documents he was promised he did not need to submit. I suspect part of this request is due to the fact that Fannie Mae changed its guidelines on November 1. But even so, it is inexcusable that a representative for Bank of America would purposely cause a borrower, a client of Bank of America, such grief on Thanksgiving. This negotiator has continued to ignore requests, too.
I will say, Mao, do you realize this is a preapproved Cooperative Short Sale? And she will say: Remove the incentive from the HUD. Again: Mao, are we on the same page that this is a preapproved Cooperative Short Sale? Instead, she will ask how much the seller is willing to contribute. She outta lay off the eggnog.
It’s a good thing that Bank of America is getting rid of REDC. It’s just a shame it’s taking them so long to pull the plug.
A Cooperative Short Sale is a Privilege; It’s Not a Right
If you ask a lawyer if you should file a lawsuit, that answer will probably be yes. Just like if you ask a Sacramento real estate agent if this is a good time to buy, you’re gonna hear YES, this is a good time to buy. Because that is asking a person in business for himself or herself if you should do business with that person. It is rare for a person in business to turn away that business. If a person routinely turned down a source of potential cash flow, sooner or later that person would go out of business. But many people do not understand that concept.
Another concept people do not understand is if you are trying to buy a short sale, that short sale might not be approved. No bank is required to do a short sale. A short sale is a privilege; it’s not a right. Even if the bank agreed to do a short sale, a bank can say no later on. For example, if I were an investor who needed to do a 1031 exchange, I would not be trying to buy a short sale. Because when you do a 1031 exchange, you have a certain period of time in which to identify a property and a certain period of time in which to close. Once those time frames have come and gone and you haven’t closed, you’re hosed. Your preferential tax treatment goes bye-bye.
I have closed short sales in which an investor was doing a 1031 exchange. But it was risky for that investor. Because there’s no guarantee. It’s risky for any short sale buyer. It says so right in the documents a buyer signs.
Just like there is never a guarantee with a Bank of America preapproved Cooperative Short Sale. Just because the bank approved a Cooperative Short Sale does not mean the bank will approve an offer from a buyer. And just because the bank might approve an offer from a buyer is no guarantee that Bank of America will close escrow. Bank of America reserves the right to pull the plug at anytime, and there’s not a darn thing a buyer can do about it. There is even less recourse when the investor along the way fires Bank of America, like Fannie Mae seems to be doing lately.
Oh, Bank of America has a fancy name for getting fired. It’s called a Release of Servicing. But it’s being fired all the same. Fannie Mae recently fired Bank of America right before final approval of a short sale. Instead, Fannie Mae hired Seterus to handle the servicing of that loan. Bank of America was about to approve the Cooperative Short Sale for a 1031 exchange buyer. It had issued a counter offer in Equator and was getting ready to draw the final approval letter. But when Seterus took over the servicing of that loan, Seterus said nope. No can do. Seterus does not do Cooperative Short Sales like Bank of America.
You know who got the short end of that stick? Welcome to the world of short sales. If it were me, I would not give my money to a lawyer to pursue a case without merit against Fannie Mae (aka our government), but some people have little respect for money, much less common sense.
A Bank of America HAFA Short Sale Broke the Record
It’s too bad this isn’t Talk Like a Pirate Day because I’d like to say shiver me timbers — I got a Bank of America HAFA short sale approved in fewer than 6 weeks. None of this year-long craziness with 25 HUDs. Start to finish, from the day Bank of America mailed out the paperwork to the day we received the short sale approval letter for the buyers of that Hollywood Park short sale. How did this happen? Did the Sacramento River open up and part? Did a lightning bolt slap the Sacramento Capitol? And more important, how can this Sacramento short sale agent make that happen again? Over and over?
Because I did the same things I always do. I reviewed all of the paperwork upfront for the short sale, which is an extremely important component some short sale agents miss. We discussed the hardship letter in detail. I immediately turned around the revised HUD and Terms of Sale. I wasted no time in uploading the short sale offer and responding to the counter in Equator. I did my job as usual, including selling that home in record time. So what was different this time that I didn’t want to poke out my eyes with a stick?
It wasn’t a true HAFA, now that I stop to think about it. Oh, yeah, the tenants are getting a check for $3,000, but the seller is also getting some money. The seller is getting more money than the tenants. I’m calling it a hybrid short sale — a combination HAFA short sale and HIN Incentive — which is like a Cooperative Short Sale but it’s not. That’s the best explanation. But not the only explanation.
The other part is the third-party vendor for Bank of America wasn’t one of my usual assignments. There’s an entire smorgasbord of acronym vendors who handle the HAFA and Cooperative Short Sales for Bank of America. Definitely was not one of those. It was Service Link. I’ve worked with Service Link in the past, and they are so responsive. It’s almost like they were raised on another planet.
The guys at Service Link are trained. They are professional. They know how to communicate. They do what they say they are going to do. In short, they must be German. They do their job efficiently. And they do it remarkably well, especially in comparison to those other guys.
I’m still slapping my face to wake up. Six weeks, start to finish, for a Bank of America HAFA short sale. I feel like admitting, yes, Virginia, there is a Santa Claus.
