Provident 1st, 3rd Federal 2nd. Freddie Mac is investor on 1st. Freddie Mac wants cash from seller @ closing, which seller is fine with. In the middle of negotiating the amount, I mention that the 2nd is also requiring cash $1,000 at closing. Here is what negotiator says:
"The second is only allowed $3,000, is the second requesting $4,000? If that is the case then no, we cannot approve that. The investor won't allow more than $3,000."
I had this once with a Fannie Mae deal and, through our local real estate board, was able to go directly to FM and make this issue go away. Do I go over negotiator's head within Provident or go straight to Freddie Mac? Any contact info or suggestions?
Thank you for your help!!
I finally got in touch with a real human being at Freddie Mac. I sent her an email asking for help:
"...I'm in a Catch-22 situation that could mess up this short sale and create a lose-lose outcome for all parties. The 2nd lender is asking the seller to make a $1,000 contribution, but Provident Funding is telling me they will not allow that. They say only $3k can go to the 2nd, regardless of who is paying it. I understand they are working within certain guidelines, but I doubt that Freddie Mac's intent when setting those guidelines was to prevent short sales. Can you please authorize an exemption in this case?
p.s. I have experienced this in the past and here's what happened: IndyMac serviced the 1st, Greentree serviced the 2nd and the loan was owned by Fannie Mae. In order to facilitate the short sale, Fannie Mae allowed the $1,000 payment to the 2nd and the short sale was completed. Had Fannie Mae not made that small allowance, the property would have gone to foreclosure.
I really, really would appreciate your help!"
What else can I do?
I have the same issue.
Freddie 1st, with a Wells 2nd, both serviced by Wells. This is not HAFA.
Wells will release the lien on the 2nd for the consideration from Freddie.
But, my client wants full-settlement at time of closing, negotiated with the transaction.
Wells is stating that Freddie policy prohibits Wells for having this discussion prior to closing. Rather, the discussion must take place one week after closing, as a settlement of the deficiency.
I haven't run into this problem in a long time (1st prohibits 2nd from additional payment on HUD).
Is this really Freddie policy? Or a Wells interpretation of Freddie policy? Or not policy at all?
Any help greatly appreciated.
Paul - They actually made an exception and notified the servicer (Provident Funding). Provident and 3rd Federal revised their approval letters. Instead of the seller paying $1k to 3rd Federal, he paid it to Provident and Provident paid 3rd Federal $4k (3k from Freddie and 1k from seller). My client had to come to the table with $3,500 for Freddie and $1,000 for 3rd Federal, which he was happy to do in exchange for waiving the remainder of $373,000.
According to a recent call I had with the Fannie Mae Resource Center this is now their 'policy' too (unpublished in their Servicing Guides). No additional money to 2nd's no matter where the money comes from. By what other means do we have to get these done when the 1st and 2nd's can't cooperate?
I think it's part of the alignment with the FHFA.
What was the rep's email address?