This is my first with Green Tree and while I have done a lot of short sales, this one has me wondering which direction to take. I appreciate all of your advise and recommendations!
My clients were told they did not need to be delinquent to get a short sale approved. Yea, right. I know. So they stayed current, and no shock, the file was declined yesterday. They had wanted to stay current and downsize into a more affordable payment with a VA loan. Long story short, since the lender won't work with them, they have stopped making their payments and would now like to go the HAFA route. Their monthly mortgage payment is $2036, though this is not paying any principal. With principal, the payments would be $2500. Gross income is $7660. Hardship is increased medical expenses. Their monthly payment without principal falls below the 31% required for HAFA qualifications. With principal, the payment is more than 31%. Which figure will they use?
They only owe $390K on the house. According to the negotiator, investor wants to NET $310K. THe property wouldn't even appraise above $300K. Current market value is around $285K, though we could probably get an offer arounf $300K simply due to lack of inventory.
How would you advise your clients to proceed in this situation?
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I too was confused about the ratio and the type of loan that your client has. You absolutely need to know who the investor is. It will be a very difficult road if the value is not there for what the investor wants to net. Its likely Fannie Mae and Freddie Mac and they are overpricing their properties and short sales by 20% to 30% in hopes of getting next year's price.. As for the value dispute, you're only chance is to have a desk appraisal (less expensive) done rather than your CMA. Your CMA carries less weight than the BPO they already had done and if the home fell into the overpricing scenario above, you will stand no chance with a CMA. I have had a limited amount of luck with sending in an actual appraisal with the value dispute. Since its Greentree, make sure that this value dispute actually makes it to the investor. There are many cases, where GT just makes the decision themselves and its never seen by the investor. (this comes from an GT negotiator who will remain nameless) Finally, if your client mentioned their intentions to GT (hardship letter) regarding buying another house; I wouldn't have approved the short sale either. This strategy immediately places the situation into a strategic default and those approvals are virtually impossible to come by and may be considered loan fraud. I'd make sure they check this strategy out with an attorney before pursuing it.
I think first I would have your client speak with a VA Loan expert [a HLC that specializes in VA loans only]. The short sale will more than likely be treated as having a foreclosure and require the two year waiting period. That being the case, their plan of buying another property is not feasible.
You did not state who actually owns the loan. for the most part GreenTree is a servicer, I would find out who the investor is, sounds like a Freddie Mac. For $310k net you would have to get $338k. I would submit CMAs backing up that current market value is around $285K and request to list at about 15% of current market value so around $245k to make the short sale process worth the wait for the Buyer. That would net the investor around $225k. Youn submit the following:
1. Provide a brief, but specific reason for the value dispute.
2. Provide your short sale offer amount or reccomended list price in the message and attach either an Independent Appraisal or a Full Agent MLS sheet and three recent (within the last 60 days) comparable sales (providing all characteristics) and if relevant to the dispute, three comparable actives. Comps must be better indicators of subject value than the comps that were used on the original valuation. They must also be similar in characteristic to the subject property, proximate and they must be recent. The MLS sheet must accompany CMA type reports.
If investor will not agree to listing below current market value I would advise your client to do a deed in lieu after speaking with a real estate lawyer and a tax consultant as to the mortgage relief act that is due to expire December 31st.
Good luck!
R/Ron
Joanie,
Who is the investor on the loan? The first thing we would do is try to have a value dispute placed with the investor. If that didn't work there is the option of potentially having an appraisal completed.
If you have any questions please feel free to reach out to me.
Brett@ishortsalenow.com
www.ishortsalenow.com
310-564-6389
I agree - find out who the investor is. Remember, both Fannie and Freddie original HAFA programs expire 12/31/12. The Treasury HAFA has been extended, with many enhancements, to 12/31/13 AND, I beleive the Treasury HAFA no longer has the 31% requirement.