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The Golden 1 Short Sale is Not Golden
I know of agents in Sacramento who will not touch a Golden 1 short sale with a 10-foot pole, but I am not one of them. The reason many agents don’t want to do a short sale that involves The Golden 1 Credit Union is because the Credit Union slashes the agents’ commission into shreds. It shows little respect for the vast amount of work a Sacramento short sale agent undertakes or for the buyer’s agents who faithfully and unknowingly guide their buyers into waiting for an approval on a Golden 1 short sale.
I am a shareholder of The Golden 1 Credit Union. As such, and as a short sale agent, I put forth a plea last week that fell on deaf ears and glued-shut eyeballs. I pleaded for an exception for my seller. He is a sudden widow. His wife occupied the property, not he. He came over to check on her and the back door was open. She was in bed. Dead. She had been dead for 3 days. But he’s on the loan, along with the deceased.
This is a second loan in a short sale. The first lender offered The Golden 1 10% of its unpaid principal balance, which is unusual. Typically, the amount that is offered to the second lender is about 6% of the unpaid principal balance. The Golden 1 denied and rejected that offer. The Golden 1 is demanding more than three times that amount. The management at the credit union has no mercy for this seller nor his unfortunate situation.
We sent them the death certificate to show the seller died in the house, but Golden 1 doesn’t care. The negotiator suggested that the agents should work pro bono and donate to the credit union all of the commission, and then perhaps borrow additional funds to make up the deficit. Because even all of our commission payment is not enough to satisfy the Credit Union. This is how the Credit Union treats a sudden widower. It makes me embarrassed to be a stockholder. This is not some guy trying to stick it to the bank. This is a guy in bereavement who is trying to do the right thing by doing a short sale.
Because I am an experienced short sale agent, we have other avenues to pursue to try to save our seller. But it’s not pretty, and the buyer is in tears. Why can’t The Golden 1 make this situation an exception? I’m a member. You’re probably a member. It says it wants to protect its members but instead it shows it has no heart. No big surprise there, I guess. It just goes to show that The Golden 1 will probably kick you when you’re down, too.
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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