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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.
The Broken Sacramento Short Sale is Not a Real Listing
When the phone call starts out with the caller apologizing for not calling this Sacramento real estate agent earlier in the game, I tend to go on red alert. Because if they knew to call and didn’t, there might be something wrong that I can’t fix. But you never know. Particularly in a Sacramento short sale, sellers often end up listing with the wrong agents — those who don’t live up to their expectations — but sometimes the expectations themselves are out of line. I have to figure out which.
Real estate agents can end up as the punching bag simply because there’s generally nobody else around when things don’t pan out. That comes with the territory. Sometimes they deserve the fickle finger of blame pointed in their direction but not always; we’re all different. Here are two different types of situations. In this first transaction, a seller called to say he hadn’t heard from his agent in months, and didn’t know what was happening with the sale of his home. Wha?
There was no sign in the yard when I went over to the house. It was listed in MLS and this Sacramento short sale had expired in pending status, which is a status that can draw a fine from MLS because expired pending status listings are not allowed. Yet, there it was. Lonely and forlorn. Weeds overgrown. The lockbox was still on the gate with a key inside. The gate was unlatched, banging in the breeze on the fence. It’s hard to say what had transpired in that listing, but it’s now in escrow with me, sold again and pending.
Earlier last week a seller called to plead that I sell her home as a short sale because she discovered that I’ve closed hundreds of Sacramento short sales. I do hold the dubious honor of having sold more short sales in a 7-county area than any other agent for the past 8 years. She had a hard-money second with 21st Century, so I know the problems associated with that particular type of short sale and how to handle them. We talked for a while, and it was beginning to look like I could help her but it was bugging me that she had dinged around for more than a year and did not receive some type of approval or rejection letter. The facts just weren’t adding up.
Then I asked the important question. Was she living in the home? Nope, she had moved about a year ago. OK, second-most important question: Did she buy another home? Yes, she did. All right, third-most important question: In whose name? It was her name. Ding, ding, ding. Like I told her, she can easily find some agent to list it — many so-called short sale agents don’t understand short sales even though they may have a certified designation next to their name — and there’s a small chance, maybe a 10% chance that her Sacramento short sale might get approved, but those odds aren’t high enough for me to take that listing.
I prefer to take listings that close. Much of my successful career is due to the fact that?I inherently gravitate toward the 100% closings. Even an overpriced listing will eventually come down to a point where a buyer will want to buy it, but one can’t fix a broken short sale. Before any of my Team Weintraub members allow a buyer to sign a purchase offer for a short sale, we check it out to assess whether it will close. Not all of them will because not all of those short sale listings are a short sale to start with.
Another Chase HELOC Short Sale Closes in Spite of Chase Bank
I wrote about a Chase HELOC short sale earlier this spring that was messed up 10 ways from Sunday by Chase, yet due to sheer determination and copious amounts of perspiration, and in spite of the ineptness of Chase’s HELOC short sale department, I got it closed. (I can hear my dead mother in my head whispering: women don’t sweat, we perspire.) In that blog, I described Chase Bank as ambling along “like a fat walrus after a big lunch drooling fish guts down its chin,” and that perspective hasn’t changed one iota.
It’s not like we don’t have enough other distractions as a Sacramento short sale agent that we need to pile more crap on our plate by throwing the completely abysmal methods Chase Bank, as a junior lender, employs on top of it. But you get what you get in Sacramento short sales.
We can’t always choose our dancing partners, and I would not put a short sale seller through more misery by turning down her short sale simply because she has a second mortgage with Chase Bank. That would be ridiculously unfair to the poor seller to be penalized in that manner. But I’m not saying other agents won’t refuse because they might. Especially if they have a lick of sense in their heads, unlike this glutton for punishment of a short sale REALTOR .
When I think back to when this short sale began, I was kicking my toes in the sand at South Beach, strolling along the water’s edge with my husband during our winter vacation last December, when my phone rang. I dug into my cute little Kate Spade wristlet a client gave me as a closing gift and pulled out my phone. Like I said, I’m a glutton for punishment. What other kind of moron would answer her cell on vacation like this?
I assured the caller I could handle her short sale when I got back to Sacramento in January, snatched a pen from my husband whom, as a gritty journalist, I can always count on to carry a pen even while we’re on the beach shooting photos of brightly colored umbrellas with a beach-ball blindingly brilliant blue sky on the horizon, to write down her information.
We closed this short sale this week, 7 months later. But not before we weeded through a lot of difficult buyers and a break-in by thugs that resulted in the theft of all of the built-in appliances, which required additional security methods much to the chagrin of the out-of-area sellers. Even though we sent all of the paperwork to both banks, Wells Fargo gave us turnaround in 4 weeks, but Chase chugged on. Escalations help somewhat but the fact is Chase HELOC seems to remain a Neanderthal when processing a short sale.
Window Lengthens to Buy Again After a Sacramento Short Sale
Coinciding with the dropping rate of short sales in Sacramento, Fannie Mae has announced it will not allow a buyer with a short sale on his record to buy another home for four years, beginning August 15th, 2014. The waiting period to buy again after a short sale used to be 2 years. This means is you’re a home buyer seeking conventional financing who completed a short sale less than 4 years ago, you need to enter into a purchase contract to buy a home before August 15th. That’s only about a month from now. You’ve got to get cracking.
A few years ago, it was not unusual to see almost 3 out of 4 of the homes on the market for sale as a short sale or a foreclosure. Not so today. Today, the real estate market in Sacramento has shifted and fewer than 10% of the homes for sale are short sales. That’s a dramatic drop and shift in the marketplace.
If you are selling a home as a short sale, it means fewer buyers will want to buy your home when 90% of the other homes for sale are not a short sale and do not involve approval from one or more short sale lenders. Unless you’ve got an extraordinary home in high demand, like a 4,800 square-foot mansion in The Rivers that I just put into escrow or an entry-level home below $200,000, you might wait a while to sell your home as a short sale.
But the sellers who have already sold as a short sale and now want to buy again after a short sale could get locked out of the marketplace for a while if they don’t buy before August 15th. FHA loans still carry a 3-year waiting period, but Fannie Mae for conventional loans, without extenuating circumstances, well, you have to wait 4 years if you don’t act within the next 30 days.
If you have 20% down and want to buy a home within 2 years of your short sale closing, now is the time to buy a home in Sacramento. You can call Elizabeth Weintraub, the best Sacramento short sale agent in the Sacramento valley, at 916.233.6759 for more information.
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.
