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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.
Bank of America is Pro Short Sale
Bank of America has a message for underwater homeowners in Sacramento, it appears. That message is: Bank of America wants to do your short sale. People have heard all of the horror stories about the many, many months it takes to do a Bank of America short sale, and that is not always the case. In fact, it’s rarely the case. This Sacramento short sale agent can initiate and close a Bank of America short sale, from start to finish, in about 45 days. Even without a hardship. Yup, Bank of America is granting strategic short sales and all kinds of other short sales just to get rid of those loans, for whatever reasons.
For example, you might ask when is a HAFA short sale not a HAFA short sale? Because sometimes homeowners don’t qualify for the HAFA. There is a new law that says the banks must explain what constitutes qualification for a HAFA because that’s been left up to each bank to decide, and often that method is a complete mystery. Well, far as I can see, it still is a mystery. We can do our best-guess-scenarios here in Sacramento, and I have few theories myself, but nothing in concrete as to the exact criteria used. So, in that regard, nobody can really figure out if the bank is handing out crap or what because the bank still writes its own rules.
In any case, a HAFA short sale is not a HAFA short sale when Bank of America says it has switched to a Cooperative Short Sale. We started out with a HAFA application for a home in Natomas, a neighborhood in Sacramento in which almost every home is a potential short sale if it hasn’t recently sold. Somewhere in the middle, Bank of America switched the short sale to a Cooperative. If you ask the bank, it will tell you that you need to initiate the Cooperative short sale before you have an offer, not after an offer has been presented to the bank. It will also tell you it doesn’t do Cooperatives in which there is a second loan. But they make exceptions. This home had a second loan. I have, in fact, done other Cooperative Short Sales in which there was more than one loan, and that second loan was not held by Bank of America.
There are exceptions to everything. The banks decide what they will except and which variances they will not grant. That’s the thing about short sales. They use the rules when it’s to their favor, and they ignore the rules when it’s to their favor.
So, if you think you know exactly which end is up and what you are doing, then you are most likely not a Sacramento short sale agent working on a Bank of America short sale.
This Bank of America short sale closed yesterday as a Cooperative Short Sale, paying the seller $2,500 and releasing both the first and second mortgages without liability.
