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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.
Why Some Agents Hate Sacramento Short Sales
Agents are not always justified when they hate short sales.
Just because there is one bad apple in the bunch or an agent runs into a scheming short sale seller is no reason to decide that all Sacramento short sales are worthless and to not recommend short sales to their buyers — yet, there are many agents in Sacramento who do exactly that. There are agents who hate Sacramento short sales. An agent a while back told me he has listed 40 or 50 short sales. I thought, hmmm, I’ve never heard of him, and I looked up his production in MLS, which goes back to October of 2008. He’s listed and closed 24 short sales. At least I know what kind of agent I’m dealing with.
Some people do fuzzy math. Even so, that works out to about 3 1/2 short sales a year. Enough to know better. Not enough to know anything, though. His attitude seemed to be that short sale sellers are liars and cheats, and they try to squeeze every free day they can out of the lender without paying a mortgage. He tells his buyers to avoid short sales. I imagine lots of other agents tell their buyers the same untruths and perpetuate the same misperceptions. They harbor a lot of anger and they hate short sales.
My experience, on the other hand, has been incredibly the opposite. Since October of 2008, I’ve listed and closed 295 short sales. My total production exceeds 295 because I’ve been negotiating and closing short sales since late 2005. I have the dubious honor of being the top Sacramento short sale agent. But just to keep the numbers simple, let’s run with the 295, which is just my sellers, not my buyers. That breaks down to an average closing of almost one short sale a week for 7 years straight.
Never in all of my short sale experience have I had a seller refuse to cooperate. Only once did a seller elect to accept a bank’s offer of a loan modification (he later went to foreclosure). Yes, sometimes banks offer loan modifications when they realize the seller wants to short sale, but if that loan modification does not involve a principle reduction, it’s pretty much worthless, and most loan modifications do not.
Besides, I ask my sellers qualifying questions. We discuss what will happen during the short sale so there are no surprises. I generally collect all of my paperwork upfront, and we contact the bank at least twice a week. Nothing falls through the cracks. My sellers do not leave the home a giant mess when they move out. They clean it up. Because my sellers are conscientious, which is why they are doing a short sale in the first place and not walking away. There is no reason to hate Sacramento short sales.
A buyer’s agent needs to do a little homework on a short sale before suggesting the buyer write an offer. The agent should check out the track record of the listing agent. It’s easy to do, just put the agent’s ID into MLS, check the sold tab and click submit. Find out from the listing agent if the seller has some place to go, whether all the financials are collected, and exactly how long the negotiation might take. Don’t just throw your buyer into a situation that is likely to cause all of you heartache. True, not every short sale is a short sale. But the qualified short sales are and an agent should learn the difference.
If an agent tells a buyer to disregard a short sale that is perfect for that buyer and all but guaranteed to close, whose interest is that agent best serving? Some agents don’t want to wait for a paycheck. That’s the thing they don’t tell you. They want a 30-day closing so they can get paid in 30 days, and I say shame on those agents. That’s despicable.
The Secret Seedy Underbelly of Sacramento Foreclosures
Contrary to popular belief, sweeping California legislation that changed many of the laws about foreclosures and short sales a few years ago does not contain protection provisions that some people expect, probably due to political compromises. For example, did you know that a homeowner who is in default (behind on mortgage payments) and in escrow pursuing a short sale can be foreclosed upon by the bank? But if a homeowner is chasing down a loan modification, the bank is not allowed to continue with foreclosure proceedings.
A provision kicks in to protect short sale sellers against foreclosure but not until 2018. Today, the basic way to stop a foreclosure during a short sale is to receive the approval letter. Although most banks are certainly free to postpone the trustee auction, there are rules and restrictions, and having an offer on the table is no guarantee of a postponement.
I’m seeing new seediness creep into the foreclosure market, stuff that I haven’t seen for about 10 years is now popping up, and it’s across the board. Bank of America has mostly shutdown its short sale operations and sold off its bad debt. It’s rare to work on a Bank of America short sale these days. If it starts out as a Bank of America short sale, typically it doesn’t end that way as the bank scurries to drop at least the servicing of its underwater loans, if not to sell the mortgage outright.
FHA short sales fall under HUD (Housing and Urban Development), and I’ve recently watched HUD sell the loan to a third-party investment company that handles conventional financing, right in the middle of the short sale, and after it issued the Approval to Participate. I guess it forgot the Approval to Puke-atate. The investment company sent a so-called appraiser to the seller’s home to determine whether it would make more money to evict the seller through a foreclosure action. The guy was part of an investment group that buys homes in bulk through lenders and on the courthouse steps as Sacramento foreclosures.
It should be criminal that banks can own mortgage insurance companies that slap on its policies to insure worthless paper on underwater homes. Doesn’t that boggle your mind? There is a market for bad paper, and the banks profit from it, even after the mortgage insurer rejects the short sale and opts for foreclosure, stripping a homeowner of the option to short sale and without the owner’s permission to allow mortgage insurance. In some instances, owners were guaranteed upfront that an 80 / 20 combo loan meant no mortgage insurance, and once hard times hit, the bank attaches its own MI policy. What? How is that not fraudulent? Why doesn’t Kamala Harris investigate this sort of scam?
Even our own quasi-government entity Fannie Mae is not immune. It routinely pads the appraisals to demand more money than a Fannie Mae short sale would provide — since a short sale generally involves buyer financing and buyer financing is based on a valid appraisal. Foreclosures are profitable for Fannie Mae and for institutional banks as well. They get paid to do foreclosures and there are sometimes so many monetary incentives for a foreclosure that it’s the more attractive alternative.
You may hear a lot of lip service about loan modifications and short sales, but bottom line, even our own government is telling us there are more financial rewards in foreclosures. That’s like telling an expectant mother she can’t use a public restroom and needs to go crap in a ditch.
For Those Who Have Shunned a Bourbon Whiskey
I have been drinking bourbon whiskey. That’s not an excuse for my behavior, btw, it’s simply a new thing in my life. How I got to be over 60 years of age and had never developed an affinity for bourbon is beyond me. Especially when I spent the last 8 years negotiating and selling short sales in Sacramento–because if short sales don’t push you over the edge, I don’t know what will. I became curious about bourbon whiskey after reading about bourbon in Mental Floss. Thought I’d give it a try to determine my reaction.
Back in the old days, and by old days, I mean in the early 1970s in Nederland, Colorado, my friends used to drink Jack Daniel off the bar, right after they snorted some Peppermint Schnapps off the bar. We didn’t give much thought to sanitary conditions in those days. Besides, the alcohol content killed all bacteria, we decided.
I have concluded that I should have given bourbon a chance all those years ago when I regularly stayed out late to party and now can’t stay up past 9 PM. My partying days now are a thing of the past. But no, I had turned up my nose at any type of whiskey. It choked. It burned. It stung. It was awful, was my deduction. I was such a kid. A neophyte.
Bourbon, in case you didn’t know, is made from corn, at least 51% corn in the ingredients. And it must be aged in a charred oak barrel. The best authentic place to get your bourbon from is Kentucky. You sip it slowly. I read that Allison Janey credited a crew hand for giving her a shot of bourbon before she shot those nude sex scenes with Beau Bridges in Masters of Sex. I can see how it would help.
Bourbon is creamy and smooth with just a little bit of bite. It changes intensity when ice cubes melt in the glass and morphs into a different drink. If you haven’t tried bourbon lately, I encourage you to try it. Open up your horizons. Especially if you’re in escrow to buy a home in Sacramento, because these are trying times we are forced to struggle with.
Or go to Ella Dining downtown Sacramento. Last month they celebrated bourbon and bacon — much as I love bacon, I’m not game for stuffing large quantities of bacon past my lips. But in August, they switched to lobster, and a girl can’t turn that down a chilled whole Maine lobster. Plus, you haven’t lived, trust me, until you sip a Manhattan at Ella: made with its own two-barrel blend of Kentucky bourbon, sweet vermouth and bitters. Then select one of the excellent bourbon flight offerings, small 1/2 ounce samples.
Make sure to bring along a designated driver and whatever happens, don’t end up like Sen. Ben Hueso.
Bad Times Ahead for HAMP Rate Resets on Loan Modifications
If you pay your mortgage through a HAMP loan modification originated in 2009, be prepared to be hit with a major rate reset beginning as early as October of 2014. As I read the Treasury FAQ about Hamp rate resets, it became crystal clear why so many of my Sacramento short sales lately involve homeowners who have been approved by the HAMP program. My business of selling Sacramento real estate and especially short sales does not lend itself to helping sellers do loan modifications because, contrary to popular belief, I am not a lawyer. I am a real estate agent and I sell homes. To that effect, loan modifications affect my business only in a peripheral sense.
However, I vividly recall when the Home Affordable Modification Program, HAMP, was initiated by the government in 2009 to help homeowners stay in their homes. When it first began, many homeowners were rejected for HAMP and, having no other course of action, they turned to short sales, which meant eventually moving out of their homes, and not the preferred alternative. But over the years, the government and the banks got their acts aligned together or maybe the banks just figured out how to extract more money from the Treasury, and a large number of distressed homeowners received loan modifications.
One of the key qualifiers for the program was to be employed, so that left a lot of Sacramento homeowners in the dust. For those who managed to hang on by hook or by crook to a job, they probably were qualified for a loan modification. Like the bandage it is, though, a HAMP loan modification is only a temporary solution.
I advised people back then that doing a loan modification might be similar to putting a gun to your head and just not pulling the trigger for a few years. When you’re desperate, you’ll grasp at anything that keeps you in your home. I understand that. People tend to hope for the best. The sad thing is life over the years did not get proportionately better for many people in Sacramento. My husband, for example, lost his job in journalism in 2008 and has yet to recover.
The flaw in the HAMP program, if you will, is the fact interest rates reset after 5 years and every year thereafter. So if you took out a loan modification in 2009, your rate could go up by 1% and your payments could jump by $200 this October. If you took out a loan modification in 2010, you’ll be hit next year. And the rate continues to reset year after year. It doesn’t get any better than you have it right now.
Which is why some sellers will find they can no longer afford to pay their mortgage nor stay in their home due to the HAMP rate reset, and they will turn to the best Sacramento short sale agent they can find, which will be me. I have sold more short sales in the Sacramento area than any other real estate agent since 2006. I know how the banks negotiate, how to get your short sale approved and, best of all, you’ll be done with it now and forever. There is no out-of-pocket cost to you, all fees are paid from proceeds at closing. You can call the #1 short sale agent in Sacramento: Elizabeth Weintraub at 916.233.6759, at Lyon Real Estate.
The good thing — if there is such a thing as a good thing when it comes to short sales — is the fact that if you were approved for a HAMP loan modification, you are practically guaranteed to be approved for a short sale.
