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Can This Carmichael Short Sale Be Saved?
A short sale home in Carmichael closed escrow this week that might not have closed at all if it had fallen into the paws of some other Sacramento short sale agent. But fortunately, the seller called me. It was kind of like a story that could be printed in a national magazine. Remember those magazine articles from Ladies Home Journal: Can this marriage be saved?To be honest, I wouldn’t read the story, you know, I’d just say NO and throw the magazine back on the table in the doctor’s waiting room. Well, this is a version of what I call: Can this short sale be saved?
It had everything set against it except willing participants. There were a lot of drawbacks. See, as a Sacramento short sale agent, I know that the secret to closing a short sale is to correctly assess the situation upfront and address potential issues. Here were some of the issues with this particular Carmichael short sale:
- Green pool
- No water service
- Charged-off first mortgage
- Second Bank of America mortgage
- Seller had no additional funds
Not to mention, the comparable sales could go either way. Up or down. It was a non-conforming Carmichael neighborhood with a mix of expensive and entry-level homes. That meant we could have difficulties with a BPO. There was also a slight odor from a cat. All the ingredients for a challenging short sale.
My first and foremost duty is always to the seller. We had to figure out a way to close this short sale with the least amount of problems and try to put some cash into the seller’s hands. We had to make sure the delinquent water bill did not become a lien, because in a HAFA short sale the seller cannot pay a recorded lien from the relocation incentive, but a seller can pay a utility bill. An agent who doesn’t do a lot of HAFA short sales would not know this fact.
We also needed to clean up the pool because the buyer for this house would most likely be an FHA buyer. You can’t get an FHA loan with a green, slimy pool. To clean up the pool, we had to turn on the water. The water had been shut off because nobody lived there anymore and the bill was a few months overdue. Another requirement for a HAFA relocation incentive is the seller has to occupy the property. The seller can do a HAFA without living in the home but she won’t qualify for the incentive if she’s not physically living in the house.
However, the icing on the cake with this short sale was the fact the loan had been sent to charge-off. The new lender was not a participant in HAFA. That meant the seller could not do a HAFA short sale. So, that idea was a moot point. On top of all of this, the short sale would be delayed because the second was held by Bank of America. This meant dealing with Equator for the second just like it was a first, except it wasn’t. Archaic procedure for a second mortgage. 90-day escrow period minimum. Every time I turned around, an obstacle presented itself.
Another Sacramento short sale agent might not have listed this short sale. I couldn’t do that to the sellers. The sellers were some of the nicest people you’d ever want to meet. Sweet, kind, caring. They had a strong attachment to the home. There was an emotional bond. It was not easy for them to sell this house. But I knew we just had to find the right buyer. There is always the right buyer for a home, even a home scented by a cat with kidney disease.
It took a while but we found a buyer. The sellers borrowed money from relatives, worked out a deal with the water company and shocked the pool. It was a struggle to keep the utilities on. People don’t think about what sellers have to go through to sell a short sale when they no longer live in the home. They have to pay for utilities in 2 homes. Many people can’t afford the utility bills for one home much less 2 homes. They have to protect the home and check it after showings because careless agents can leave doors unlocked, which is a disgrace in itself.
I was able to work out a compromise with the new first lender to pay an incentive to the seller even though she did not qualify for a HAFA short sale. It was enough to repay her relatives, pay the remaining balance of her water bill and ease other expenses. The lender gave us a break on the BPO due to the cat odor. We got approval from both lenders. And perhaps the nicest ending was the seller met the buyers the day it closed and was able to talk with them, show them how to operate the pool, listen to their ideas for home improvement projects and gracefully exit. That’s the ideal ending for every short sale: a graceful exit.
A Chase Bank Short Sale Loves Me, Chase Bank Loves Me Not
Usually I do not talk about Sacramento short sales until they close, just as a matter of policy. But this particular Chase short sale is so bizarre; whatever happens the seller is beyond giving much of a hoot, even though the bank is offering, let’s say $50,000 in cash for a home worth, let’s say $200,000.
The problem is there is a second loan held by a collection agency. The second has been sold over and over. It’s amazing that there is a market, a physical financial market for a second loan without any equity. There is a way that collection agencies can make big bucks buying up worthless instruments. You would think there is something illegal or against the law with this kind of practice, but everybody just looks the other way and shrugs their shoulders when I ask about it. It’s not a small financial practice, it’s a huge money-making venture. Hand-over-fist piles and piles of money is manufactured out of thin air! Nobody is talking about it.
The second problem is Chase has flagged this short sale as a file that needs a huge cash payment by Chase to the seller. To a person with an underwater home. Why does Chase need to give the seller $50,000? Nobody is saying. It’s unrelated to the National Mortgage Settlement because it’s been going on for more than a year. See, the thing with a Chase short sale is these short sales are not in Equator like almost every other short sale. These short sales are negotiated directly with Chase so they take forever to get approval. On average, my Chase short sales get approved in 3 to 4 months.
Because of California Civil Code 580e, the seller cannot make any contribution in a short sale. The second lender says if the seller is receiving a huge wad of cash from Chase, they want more of it. But the seller can’t give it to them. So, the answer is the seller gets nothing. We received short sale approval on this with Chase giving the seller nothing, and then the buyer split. Sorta par for the course.
Now we are back with a new buyer trying to get a second approval from Chase. This time Chase says it can’t issue approval unless the seller takes the $50,000. What? It’s a Chase Bank short sale like this that can make a Sacramento short sale agent pull out her hair.
Take Xanax for a Bank of America HAFA Short Sale
In some Sacramento short sales, I want to grab an ax and hack Bank of America into itsy bitsy pieces. Hey, don’t call the cops. In other short sales, I’m littering the doorway with rose petals. There is no one-size-fits-all explanation when it comes to a Bank of America short sale. But there is also no middle ground. No median. It reminds me of that nursery rhyme about the girl with the curl in the middle of her forehead. When a Bank of America short sale is good, it’s very very good. When the short sale is bad, it’s horrid.
I tell my short sale sellers in Sacramento that there are two kinds of customer service reps at Bank of America: the brilliant and the morons. Nobody in between. They always laugh, but they and I know it’s the truth. I am also at an advantage with that statement because I know by the time a seller gets to me, that seller is pretty much ticked off at Bank of America. That seller has probably tried to do a loan modification and failed, often miserably. I don’t have to do much to poke the hornet’s nest and find common ground.
By the time a seller calls this Sacramento short sale agent, the seller is often exhausted, tired and angry. Oh, they can try to disguise their anger, and most do try to be polite, but I hear it in the cracking sounds of their voice and I see it in the fire raging behind their eyes. Bank of America has pushed them over the edge. They’re not even sure if they want to do the short sale because they are worried it will favor Bank of America in some way. Or, that the bank will reject their short sale. There’s fear and loathing. Believe me, I understand and empathize.
Moving a Bank of America short sale forward has its roots in patience. In not expecting too much from bank employees. Lowered expectations is key. Especially for a Bank of America HAFA short sale. A HAFA can expire. You’ve got about 4 months to close a HAFA. When you have a Bank of America HAFA coupled with a Green Tree second mortgage, that’s a lovely treat. Because Bank of America will take so long to approve the short sale, the Green Tree file will close. Green Tree keeps its files open for 90 days, and then they close them.
Those pesky laws about time frames in a HAFA? Ha. Bank of America thumbs its nose at those laws and slaps your face twice with its glove.
By the time we received short sale approval from Bank of America for our last HAFA short sale, Green Tree was long gone. We reopened the file with Green Tree and pushed. More than 60 days later, Green Tree issued approval, but then the Bank of America HAFA had expired. Could the bank extend? Yes, but it refused. Instead, Bank of America closed the file and reopened it, started over from scratch. New RASS, new TOS, new BPO, new HUD, it’s a new day at Bank of America, and it’s welcome to more hell for these Sacramento short sale buyers and seller.
On Wednesday, I sent a Tweet to the Social Media team at Bank of America about this file. I’ve Tweeted them so many times over this that they ignored the Tweet. It’s very unusual not to get a call back from Bank of America. I think I wore out my Tweets. The negotiator noticed the ZIP code was wrong. She asked me to send her a change of address when it was Bank of America that entered the wrong ZIP code. Oh, please.
We have a buyer’s loan about to expire if we don’t close by the end of the month. We have the Green Tree second loan going to charge-off at the end of the month. And we have a Bank of America negotiator lamenting about a ZIP code on a file that had already been approved once. This was already an approved HAFA short sale at Bank of America! Slap the Xanax into my hand.
I hope that today is the day we receive the new approval for this Bank of America HAFA. That’s one thing you can count on from this Sacramento short sale agent, I never give up hope.
Bank of America Cooperative Short Sales vs HAFA Short Sale
Don’t ask a third-party vendor for Bank of America whether a Cooperative Short Sale is better than a HAFA short sale. Because I’ll bet you dollars to doughnuts the vendor will pick the HAFA. Doesn’t matter whether it’s DTS, REDC, AMS, and so forth, all the acronym companies, they’re all the same. Call me silly, but that’s what I see happening, even though the HAFA is not necessarily the better option. It’s possible that Bank of America would push / promote HAFAs as well because there might be more money to the bank through a HAFA.
When I open a Cooperative Short Sale in Equator, the first thing that happens is my requests for a Cooperative are ignored. The third-party vendors pursue the HAFA. I send emails that say do NOT review this for HAFA because the seller wants to pursue a Cooperative Short Sale. Then, I ask the seller to call the customer service number and repeat over and over Cooperative, like a mantra. If the customer service rep says HAFA, the seller is counseled to say “No, Cooperative.” Yet, the bank opens a HAFA anyway. You’ve gotta ask yourself, why is that? I’ll tell you why I think they’re doing it, and it’s not because they’re stupid, although you may disagree. It’s because there is probably more money in it for the bank.
Is the HAFA better for the seller? Speaking strictly for a California short sale seller the answer might be no. Let’s make it clear I am talking about a streamlined Cooperative, a short sale in which Bank of America has delegated authority to approve without financials. I have a certain Cooperative approved, and Bank of America is telling the seller that in order to do the Cooperative without financials, the seller must be 90 days delinquent to satisfy this particular investor. But in a regular Cooperative short sale, the seller is better off with the Cooperative over the HAFA.
Especially if the seller qualifies for the HIN Cooperative Short Sale, because that minimum payment starts at $5,000 and can go up to $30,000. A HAFA short sale maximum payment is $3,000. However, you can combine the two types of short sales, when you get right down to it, if you’re willing to submit financials and tax returns, and I’m getting approval on one of those in a few weeks.
But if you’re not willing to hand over your sensitive personal information and you just want to do the Cooperative Short Sale without financials, the Cooperative beats HAFA in the PITA classification every time. Some types of Cooperative short sales pay $2,500. Even when you take into consideration the $500 difference vs the PITA, let me tell you, a Cooperative short sale wins hands down. In fact, the only thing worse than a Bank of America HAFA short sale is a Bank of America HAFA Fannie Mae or Bank of America HAFA Freddie Mac short sale — with Freddie Mac HAFA having the slight edge for winning the crawling-through-broken-glass-naked award because it doesn’t use the ARASS.
If you’re got a choice, pick the Bank of America Cooperative short sale. Your Sacramento short sale agent will thank you. Your mother will thank you. Your doctor will thank you. And you’ll sleep better at night.
Fannie Mae and Other Things That Don’t Work Right
It seems like I have to fix a lot of things that don’t work right. It’s not necessarily that they are broken as much as it is they simply don’t work correctly. Stuff goes haywire. In fact, I am so used to things that don’t work right that I have become somewhat complacent. I don’t get upset over it. I just fix it.
Almost nary a day goes by when I don’t run into some short sale negotiator telling me the bank won’t authorize seller credits on the HUD. Since when did a bank negotiator become a HUD expert anyway? I realize they don’t know how to read a HUD. If they had to prepare a HUD from scratch, they’d be up a creek without a paddle. Yet, here they are telling me to remove fees that are not credits under the assumption they are correct. They’re not correct. This problem has become so commonplace that I keep a stock answer prepared and ready to email. They don’t work right.
Last Friday my company email went on the blink. Stopped downloading to my computer. None of my settings changed. My email client stopped receiving. The company’s exchange server was not updated or altered. The IT department signed on to my computer to check but they couldn’t find anything wrong, either. We ended up doing a redirect. Because it doesn’t work right.
Yesterday we had to call out an electrician to remove a bulb from a kitchen pendant. We’ve had the pendants fixed twice. Third time they stopped working, we bought new pendants. None of this Lumen’s back-basement discount crap. We ordered blown-glass Oggetti. Then, the darned burned-out bulb got stuck in the socket and a wire connection busted. That’s why it doesn’t work right.
In many Sacramento short sales, I routinely encounter the dreaded Fannie Mae problem with second loans. Now, I heard a guy at DTS admit the other day that they kick out Bank of America Cooperative short sales when the investor is Fannie Mae. He said DTS has had too many problems with Fannie Mae. Because Fannie Mae is a government-sponsored entity, it doesn’t work right.
Fannie Mae has guidelines that are often somewhat restrictive. Like telling borrowers to stop making mortgage payments. Yeah, that’s your government telling you to go into foreclosure. Or, choosing foreclosure over a short sale by refusing to postpone a trustee’s sale. Another involves the payment it will approve to a second lender. Second lenders want to negotiate and try to get more, but Fannie Mae won’t allow it.
Most second short sale lenders realize the problem with Fannie Mae. They tend to get on board. Especially since Fannie Mae rarely makes exceptions. I even had the gatekeeper at Green Tree back down on a second demand a few months ago when I explained that since Fannie Mae was the investor he needed to accept 6% of his unpaid balance. He said: Why didn’t you say so? As though telling him my name was Dorothy would get me into the Emerald City. The system for some second lenders, though, is broken. They don’t work right.
And you can’t fix Fannie Mae.
Photo: Shutterstock
