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Insight Into a Green Tree Short Sale in Sacramento
I know a Sacramento short sale agent or two who will not work on a Green Tree short sale, but I manage to get these short sales accepted. I will admit that it’s a bit easier when Green Tree is in first position (and perhaps just the servicer) than it is when Green Tree is in second position and say, hard money. Especially in California. Because those hard-money second loans carry recourse.
This means if the bank did not approve the short sale and the home went to foreclosure, a second lender may have the right to go after the seller and try to collect if that loan was not purchase money. It’s also a reason that some banks, not necessarily just Green Tree, might think twice about approving a short sale. Because if the bank approves the short sale, the bank needs to release the seller from personal liability. That’s not the case with foreclosure of hard-money loans. Moreover, sometimes banks are paid more money to go to foreclosure.
Green Tree’s policy is to approve a short sale in 90 days. It’s not unusual, depending on the negotiator, for Green Tree to issue the short sale approval letter in a shorter time frame. One of the troubles that can arise is Green Tree, when in second position, might issue short sale approval before the first lender. If the first lender takes too long, that approval from Green Tree can expire. If it expires, Green Tree might not issue an extension. A short sale extension is not always guaranteed, even though some people might think so.
On the other hand, if the short sale approval from Green Tree has expired, it might also send the file to its charge-off department, depending on the length of time that transpired after the last mortgage payment. Once the file gets to the short sale charge-off team, there is no guarantee that the department will accept the same terms as stated in the previous approval letter.
If you’re looking for a short sale agent in the Sacramento Valley to handle your short sale, you should select an agent with vast experience. I’ve sold more than $65 million in short sales since 2006. Call Elizabeth Weintraub at 916.233.6759.
Sellers Who Refuse to Close a Sacramento Short Sale
Never thought I’d run across sellers who refuse to close. Sellers always want to know how long it will take for their short sale to close. From listing to closing, that average time period is 90 to 120 days. That’s because the average time for short sale approval is 60 to 90 days. Once the short sale approval letter is received, most banks give the parties another 30 days to close escrow. Every so often, a bank such as Bank of America might allow 45 days for closing, but 30 days to close escrow is about the norm.
This doesn’t mean that your particular escrow will close 30 days from short sale approval because your particular escrow closing period is defined by your Residential Purchase Agreement. Right on the first page, close to the top, there is a box that will probably be checked and the number “30” or “45” written into the space. That number could be “10” or “14.” The closing date is defined in paragraph 1 D. It can also be written into the blank line such as “10 days after bank approval.” But whatever date is agreed to as closing, it always follows the short sale approval letter. The time frame for closing begins on the date the short sale approval letter is received. In the event of dual lenders, the time frame begins when the second approval letter is received.
If the buyer needs to get a VA loan or some other type of loan that might take a few days longer, one might need to get an extension to the short sale approval letter. In other words, the parties to a short sale can close sooner than the date in the approval letter if the purchase contract so stipulates, but cannot close later than the date in the approval letter, unless the agent obtains an extension from the short sale bank.
Closing escrow after short sale approval is sometimes very stressful for sellers. Especially if short sale approval is received faster than the Sacramento short sale agent initially estimated. Lenders are unpredictable at times. There can be no rhyme nor reason why one month the approvals take 90 days and the following month, an approval arrives at 4 weeks. Approval times like this can throw a seller into hysteria. A seller might not be prepared to move, either financially, or emotionally, or both.
To be fair to all parties, though, if a seller has concerns about closing and moving, the first thing the seller should do is talk to her short sale agent about it. The last thing a seller should do is wait 3 days before closing to announce that the seller is unprepared to move. Sellers who refuse to close can cause extreme havoc in a transaction and incur legal ramifications.
If a seller needs more than one extension in a short sale, the bank is within its rights to withhold that extension. Often banks will not issue a 2nd or a 3rd short sale extension. Furthermore, the bank can cancel the short sale. A seller can’t call the bank and ask for an extension, because the seller won’t be speaking to the short sale negotiator but instead will talk to a customer service representative who is not authorized to give out that type of information — and might not be able to decipher notes in the file even if she has the ability to discuss it.
When a short sale starts over, it means several things. First, there will most likely be a new BPO completed. That means the sales price can change. Moreover, if the seller qualified for a HAFA incentive, the bank might not allow the HAFA the second time around. Disqualifying for the first HAFA is often grounds to dismiss any further HAFA actions. But in actuality, the worst that would happen is the seller would need to find a new buyer, which is the place the seller was in when the short sale first began. It’s not a big headache for sellers to refuse to close a short sale.
But it is a huge, gigantic headache for the buyer who has paid for an appraisal, paid for a home inspection, canceled utilities, transferred mail, lined up movers, packed up the house and was ready to move until the bombshell fell. It’s risky to try to buy a short sale because nobody is gonna make the seller close escrow if the seller doesn’t want to close. There is never any guarantee that the seller will close escrow.
However, it doesn’t mean a buyer doesn’t have recourse or that a buyer can’t sue.
When the Short Sale Bank Says No
You know the people I have empathy for? Is it my inlaws stuck in Chicago or my sister and niece in Minnesota who are enjoying those not-so-balmy temperatures? Or, is it the house sitters who are taking care of our home in Land Park? Nope, it’s those buyer’s agents in Sacramento who emailed some 20 offers yesterday for a home in Elk Grove. I answered email after email late last night after we landed in Tahiti. Explaining how many offers we received and how the seller is leaning toward accepting a cash offer. But the best news I got was not the short sale approval on yet another short sale in Elk Grove (which also arrived via email), it was the fact we received an extension from CCO Mortgage for my seller who is dying.
Short sale bank CCO at first said it would issue no such extension and would, in fact, start the short sale over if we could not close by December 20th. Sometimes it does not pay to take NO for an answer. I wrote a letter to the negotiator, set forth a plea for an extension, and the “absolutely no extension declaration” turned into a yes, here is your extension!
My Elk Grove seller is not a short sale though, which is another reason that buyers are climbing all over each other to buy that home. The dilemma is should the seller take a cash offer without an appraisal contingency or a financing offer? That’s a decision she needs to make. A cash offer will probably not yield as much cash as a financed offer as buyers who choose financing will pay more. They’re not forking out hard cold cash; they are financing that price increase. Of course, if the home doesn’t appraise for a ridiculous price, it doesn’t matter what a buyer offers to pay if it won’t close due to a low appraisal.
But how many offers does a seller need? Excuse me, there seems to be a large pelican-like bird on my deck that I need to check out. This is the view I woke up to this morning. Helps to put some of these dilemmas into perspective. All I have to say is Thank You, RBS Citizens Bank . . . and I hope my Elk Grove seller makes her decision soon.
How the Short Sale Arm’s Length Can Backfire on a Seller
Some Sacramento short sale sellers could be headed for a big surprise down the road after signing an arm’s length. I know this because I’ve talked with a Sacramento short sale agent here and there who see nothing wrong with letting the parties to a short sale make agreements outside of the closing. They can agree to all sorts of things that are against the law and without the bank’s knowledge, but a common happenstance is over possession. Sellers sometimes have a hard time moving so they want to rent back, but most of the short sale arm’s length agreements prevent a rent back. Therein lies the problem.
Now, you can ask the bank for an extension but a short sale extension is not always possible. Especially if the bank has already issued an extension. A bank is not always eager nor willing to issue a second extension. I’ve had banks say they would close the file and start the short sale over. In some instances, that solution would be OK with a seller because not every seller is in a rush to move — especially if the seller isn’t making a mortgage payment. Free rent doesn’t come along every day.
I can tell my sellers we are closing on a certain day but that doesn’t necessarily mean they understand that they have to move out. Doing a short sale is an overwhelming process for many people. Each is different and can be convoluted, so it’s sometimes difficult to predict what a seller may or may not understand. But one thing is for certain. If a seller violates an arm’s length agreement and works out some kind of rent-back with the buyer, it might seem innocent but it can cost the seller big-time. If the parties agree to a lease back, for example, and the arm’s length prohibits such a lease back, it’s possible the bank could rescind the deficiency waiver.
There is a little clause in CA Civil Code 580e that says the deficiency waiver does not apply in the event of mortgage fraud. If a seller intentionally defrauds the bank, the bank might demand that all of that forgiven debt be repaid. Apart from the ethical implications, there could be legal ramifications and consequences to violating the arm’s length. My advice is just don’t do it. Don’t go through the headache and heartache of a short sale just to end up with the deficiency back in your lap.
It’s in a seller’s best interest to plan to move out on or before closing in a short sale. The agents don’t set the closing date, the banks do. And right now, because of the expiration of the mortgage debt relief act, many approval letters are coming in with fewer than 30 days to close. Everybody and their uncles are trying to hit that December 31 closing date.
