Preliminary Seller's Disclosure Form Rejection: Bad Math or A Bank Negotiating Tactic

Hello all,

I am doing my first short sale in Brooklyn through SPServicing. It’s been going smoothly thus far with submitting the paperwork. However, the servicer has not accepted our preliminary sellers disclosure twice now. Both comments are “The net amount can’t be more than the offer amount”.

On the Preliminary Disclosure (Line 520 on HUD1) the total reduction amount due to seller is $638,800 (1st and 2nd Mortgages with closing costs). The offer price is $450,000. Also, the BPO came in at $620,000 and the Payoff Letter says $850,000 is the total owed on the loan with arrears.

The customer service representative says we are still in the underwriting phase and it hasn’t been brought to the investors for final approval and this is the last thing holding it up. By them saying “The net amount can’t be more than the offer amount”, are they hinting that our offer is too low and we need to come up a bit? Or is my math just off. 

Any advice or assistance would be great.

Thanks so much. Julian

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Imagine you are getting a paycheck. The offer amount is the Gross Income and the NET income is after deductions ( closing costs for real estate ). Now Imagine if your NET income was higher than your Gross Income for that paycheck. It's wrong. Without seeing your settlement statement I can't be sure but it appears based on BOA's statement whoever drew that up for you did it incorrectly. It is relatively common for non short sale experienced title, escrow, or closing attorney's to make mistakes on settlement statements.

I recommend you go to whoever drew that up for you to re review it.

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If the offer price is $450,000 then the NET to the first and second lien would be less.  So you may have a payoff to the second lien for 10K, and then first lien payoff may be $410,000.  So basically $30K in settlement costs (commission, title work, attorney fee, taxes etc)



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