Wells Fargo Fannie Mae Short Sales
I have a short sale that I am doing at this moment that Wells Fargo is the first, State Housing is the second, and Family Services is the third. This was a grant program designed for lower income people to get home ownership. Once the person has lived in the homne for 20 years the second is forgiven entirely but it is reduced for every year that you own it. The second is down to $9300 and the third is $3495. Wells Fargo is stating that it is their policy to only pay 1% of the sales price up to $6000 and the two liens can fight over who gets what. That is only going to be around $700. I have been doing short sales for almost 10 years now. I have never seen them give less than $3000 across the board just like BOA. It is just getting harder. I asked if I could just add to the pay offs of the two liens to the net. They said no. These are government programs so they will not allow for a short. Any advice from anyone who has had this experience with the same type of State Housing situation? Also, the house now has anissue with a pipe that has busted in the slab so we have even a bigger issue. The bank says too bad the owner should be maintaining the house as if she meant for that to happen. They will not even consider the condition of the home for a lower price. I have an investor who put a contract on it and since the verbage is that he is purchasing to repair and immediately flip they will not accept it not will they accept a new contract from the same buyer.
Thanks, Tracy Hatchell
Replies to This Discussion
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Permalink Reply by Mike Horton on
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Tracy, sounds like WF is working with the HAFA program (except that is 6% up to $6000 for all other liens). In any case they won't let you simply add to the purchase price to pay off the other liens since that would be more money to them. I do not have experience with these specific programs, but the city funded incentive programs I have worked with will also not allow a short payoff. In my case we negotiated a promissory note to release the lien and pay off the city program over time. I think that your seller is going to have to pony up to payoff the second and third. Promissory notes might be the best he can get. Maybe someone else has a different experience.
With regards to the water issue, I had the same experience. However the sellers insurance picked up the tab. If your seller has let their insurance lapse that could be a big problem. The mortgage company could come back to the seller for the "Waste" clause in the mortgage contract inaddition to what is owed on the mortgage. If they decide to get tough (in Arizona) they can elect to go through a judical foreclosure and seek a judgement plus the foreclosure. Many sellers allow the insurance to die, but I strongly urge my clients not to do that for the long term liability can be worse than the distressed sale. -
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Permalink Reply by Jennie Blackburn on
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We had one like this a while back with Litton. When we contacted the government agency that gave the sellers their $20,000 grant, we found out that their paperwork said that if the 1st mortgage was ever sold to a different company, the government agency would supercede the first lien. In other words, a government agency usually is first in line to get paid, but they agreed to take 2nd position and give the mortgage company 1st position, UNLESS that mortgage company changed anything about the deal (sold the note, new servicer, etc.). In that case, all bets were off and the 1st lender became the 2nd. Interesting, huh? Check the original paperwork from the housing agency. Fine print?
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