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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.
Seterus Short Sale and the Peter Principle Rules
The Peter Principle often applies to a Seterus Short Sale
The beauty of being so deeply entrenched in Sacramento real estate is there is always something horrible happening every day, some new fresh hell the likes of which you’ve never seen before and, in some cases, with a little bit of luck, you’ll never see again. It’s almost like a storm chaser’s unicorn photo opportunity: double tornados popping up on the horizon under a supercell. You’re mesmerized, wondering how can this happen? Listen to this. We received, for example, a short sale approval letter for an Elk Grove short sale from Seterus when the loan was not short.
Yes, not short. Not a short sale. Yet Seterus approved it.
How does a major lender like Seterus, which forged its humble beginnings in this world as IBM, issue an approval letter for a short sale, accepting almost a 100,000 more than it is owed? It’s the Peter Principle, I imagine, at work in front of our very eyes. As a Sacramento Realtor, we can’t often figure out the unpaid balance ourselves because there might be too many loan modifications noted or the records could be wrong, or we don’t have a copy of the mortgage statement, not to mention, it’s not really our job. We rely on the lenders to provide that information. Sometimes, even the borrower doesn’t know.
After Seterus sent us the approval letter, we moved on to secure an agreement from the second lender. The investor is Fannie Mae, and Seterus is merely the servicer, and even Fannie Mae approved the short sale, which tells you something about how our government is run and another fine example of the Peter Principle. We discovered the error when we finally received the mortgage payoff statement we had requested. Although, Seterus did not discover the horrendous error until we asked for an extension because Green Tree was dragging its feet. A Green Tree short sale often takes longer when Green Tree is in second position.
When the escrow company then ordered a beneficiary demand to payoff the existing first loan, which we would use to compute the proceeds due the second lender, Seterus informed the escrow officer that it would take another 2 weeks to deliver that document. To try to expedite, we asked the seller to intervene with her lender and to try to move up that time frame. Let’s just say the seller reported back, exhausted, with a whole new appreciation for the crap we endure day after day.
But wait, it gets better. After we informed Green Tree that it would no longer be stuck with the maximum payoff that Fannie Mae allows, which is $6,000, and shared the good news that Green Tree will receive at least 10 times that amount, Green Tree muttered: We need to order a new BPO. What? You were just saying the letter was in queue. Take the money and run. Hello, Peter Principle?
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.
Thoughts About Green Tree Short Sale Collections
A Green Tree employee at that notorious debt collection agency offered a vile suggestion to a homeowner in Elk Grove. This homeowner is a single mother with financial struggles, like many other suddenly divorced underwater homeowners in Elk Grove. It’s tough enough to raise children on a dual income much less a single salary. When she tried to explain her budget woes to the debt collector, Green Tree said: You should feed your children macaroni and cheese.
Where do they come up with this stuff? I have to suspect that it’s not in the script because if Green Tree compiled a script — and I’m not saying whether management does or doesn’t as I have no idea, but you’ve got to think that it does hand employees a script of objections — that script would be much more nasty. I suspect the person who made that statement figures a Mac ‘n’ Cheese diet?is a viable solution because it would be a solution in his or her own circumstance.
That kind of thinking probably stems from the same sort of person who might think it’s OK to chain your children to a tree in the backyard when you go to work. Who needs to afford daycare when you’ve got a 50-feet elm out back?
Sometimes short sale sellers hear from Green Tree that if they don’t make a payment, that Green Tree will not approve their short sale. Which is not a true statement. It’s a lie. The short sale department and the collection department are separate.
Green Tree debt collectors are not that different from debt collectors who work at any other collection agency. They will still call a borrower at work and hound. They apply pressure. They aren’t always very nice. Maybe they feed their own children macaroni and cheese as a sole diet? How happy can they be with their own lives if they have to spend all day on the phone calling delinquent borrowers and trying to squeeze a payment out of them? What a horrible job for these poor souls.
What would happen if people refused to take jobs like that?
If you need to do a Green Tree short sale, I close my Green Tree short sales and can offer suggestions to help ease your transition from underwater borrower to free-and-clear relief. You can call Elizabeth Weintraub at 916.233.6759. It doesn’t cost anything to do a short sale, and I’ll never tell you to subsist on macaroni and cheese.
Closing a Short Sale with USAA
Closing a short sale with USAA when the loan is in second position and a hard-money loan is a lot different than closing a short sale with USAA when the loan is a first mortgage with this lender. If you don’t care about reading the particulars, then you might want to click the back arrow on my blog to read a more amusing piece because this one will give you nightmares.
I met with the sellers in February at their beautiful home in Natomas. They were the last holdouts of that community. Everybody else who bought when they did has since sold that underwater home and moved away. The neighbors who paid half a million are gone and replaced by college kids who party on rent free in the rentals recently purchased by their parents for about half that price. The demographics are remarkably changed.
They recalled our conversation later, the images and words still vivid in their minds. This would not be an easy short sale. It would involve stress. It might be tough. I gave it to them straight. But I believed it would close. I have not lost a short sale for a long, long time. It’s why people know me as the best Sacramento short sale agent in town.
The first lender was Green Tree and the investor Fannie Mae, easy to work with for a first mortgage. But the second lender, USAA, was much more difficult. I am used to the way lenders submit demand letters for much more than they are willing settle for, as that’s often a normal method of operandi. We negotiate a bit and they settle. But not USAA. They asked for an astounding amount of money, and issued an approval letter based on that amount, which is basically worthless.
Because the investor was Fannie Mae, the maximum they could receive was $6,000. California Civil Code 580e prevents the sellers from making a contribution or being required to pay anything extra above the proceeds of sale for the short sale. We argued. Eventually, we had received what amounted to as 4 rejections from USAA, each asking for a ridiculous amount of money to settle.
By that point, even my faith was beginning to tremble. I had to wrestle with do I tell the sellers or don’t I? I finally concluded they should know that we had a good chance it might not close. That was not a piece of information I should shelter them from because it was not my place to withhold those pertinent facts. It didn’t mean I was giving up by any stretch, but they needed to be prepared, just in case. They deserved to know my thoughts. Everything I had read about USAA indicated that USAA would not bend, but you can’t always believe online crap, especially from agents who don’t close very many short sales.
I pushed forward though. I sent a 5th request for short sale approval and explained all of the reasons why. Then, it was like an awakening in the Biblical sense. Trumpets playing. Clouds parted. And angels appeared. OK, I overslept. But the fact remains that USAA approved the short sale and accepted the $6,000 payoff. They just needed to deny it 4 times first, most likely in accordance with guidelines. We closed last week.
