Chase/Saxon short sale scenario = Catch 22!

I am looking for ideas!

 

I have a very strong cash offer on a short sale with approval from Chase (first lien holder) granting Saxon $1400 less than Saxon requires for their approval.  Chase will not allow Saxon to receive this in any form (buyer, seller or Realtor contribution).  They feel if there is extra money on the HUD, as the first lien holder, they are entitled to it.  Saxon suggested (OMG!) that a separate HUD be issued to them showing showing they receive a total of $4000 (Chase approval + Realtor contribution). This is a clear violation of RESPA, so we will not be going that route, however, the seller is facing foreclosure unless we can get these two banks to agree! 

 

Oh yea, Saxon feels they will gain more if they write the loss off (house forecloses and they get nothing) than accept less than $4000. Any suggestions?? 

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Permalink Reply by Bryant Tutas on February 14, 2011 at 8:47am

Bridget. Have the buyer pay $1,400 as a POC item or as an expense to Saxon. The buyer can get a credit back on the HUD from the agents (assuming your state allows rebates or credits). Chase, no matter what they say, cannot control the buyer side of the HUD.

 

I have attached a HUD from a closing in December. The 2nd (Chase) wanted $6,900. the 1st LBPS would only allow $4,000 and change. The buyer paid the difference as an expense and was credited back from me. The selling agent's commission was lowered and mine was increased do the contribution worked out. The HUD was approved and all was well.

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Permalink Reply by Bryant Tutas on February 14, 2011 at 8:50am
Bridget. I also so wanted to add that Saxon may very well make more by foreclosing. They may have a loss share agreement and/or mortgage insurance. Plus the promissory note will probably survive the foreclosure. They can sell this or maybe get a deficiency judgment against the borrower. "Get nothing" is rarely true.
Permalink Reply by Bridget Hazen, CRS, CDPE on February 14, 2011 at 10:07am
You could very well be a hero.  I had my title company put the HUD together like you suggest. Two more hurdles: Saxon writes the letter to Chase's satisfaction and Chase doesn't say boo about the buyer's side of the HUD.  You're awesome, so glad I posted!
Permalink Reply by Bryant Tutas on February 14, 2011 at 10:52am
Let me know how it works out Bridget. I have found that lenders really only care about funds that are coming from the sale. That's why POC is the best thing since sliced bread!! And of course the buyer can pay whatever they want as long as their lender doesn't have an issue with it.
Permalink Reply by Smitty on February 15, 2011 at 1:23pm
Bryant, FABULOUS advice.  I just bookmarked this thread. 

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