Fannie Mae 1st & Private Investor-2nd lien-Fannie Mae will pay 6% of upb to 2nd lien & 2nd lien wants more!!
We have an approved short sale letter from BofA , which is a Fannie Mae loan, and they will only pay the 2nd lien 6% of the unpaid principal balance. Per BofA this is Fannie Mae's rules and they will not budge from that rule for 2nd lien's and Fannie Mae will only pay 6% of the upb. The 2nd lien is private investor and a HELOC and they want 20% of the balance to release the lien. The seller's and even the buyer's are willing to pay the difference, but I am told by the BofA Negotiator that Fannie Mae will only allow the 2nd lien holder to get only 6% of the balance and nothing else. And Fannie Mae will not allow the seller, buyer, buyer lender, or real estate agents to pay or contributie to the 2nd lien holder.
Has anyone been in this situation and what did you do to get this resolved (aside from letting it go into foreclosure)?
Thank you.
Replies to This Discussion
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Permalink Reply by Kevin - Greenville, SC on
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BOA is correct on the UPD of 6% even on a non HAFA Short Sale with no buyer/seller contributions allowed with rare exception.. Get authorization from your client for BOA/Fannie to be able to speak with the HELOC.
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They are pretty much sticking to the HAFA rule on this one - Fannie Mae will allow payments from sales proceeds to subordinate lienholders, to not exceed $6,000 in aggregate. Each lienholder in order of priority may be paid 6% of the unpaid principal balance of its loan, until the $6,000 cap is reached.
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Permalink Reply by joe beauchamp on
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Kevin, notice with HAFA, there is the "loophole" of "from sales proceeds". I do not know if 1) you'll ever see FNMA rules in writing; 2) they have a similar statement. I ask why is that phrase there? Only to make it specific that those are the funds restricted and not any POC funds - like from buyer or seller or anyone else - they just cannot come from the funds that started with the sales price..
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Permalink Reply by Elise Fay on
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I am experiencing the same thing. Fannie is the first thru GMAC and the 2nd is another servicer. GMAC got authorization from my sellers so Fannie could contact the 2nd directly and resolve it. You can also contact the Fannie Mae help desk. Why would Fannie want to work this out? I asked the same question. Well Fannie buys or sells loans to other servicers and if they the 2nds are not willing to cooperate then that puts a blemish on them in the eyes of Fannie.
Fannie just called me directly and gave me persmission to allow the seller to make an additional cash contribution. I sent them the new HUD and they are contacting the 2nd directly to work out an agreement. Fannie told me this happens often and they have worked with my 2nd before. I do not have a resolution yet..but I believe I will have one soon. Fannie Mae is a great resource...use them.
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BOA doesn't care about what is on the left side of the HUD-1 (from the buyer), the buyer's mortgage company will, normally.
You need a POC and you need to get it on the HUD-1 in the form that is acceptable to the negotiator - which may mean to the investor. The POC (Paid Outside of Closing) has a $0 on the HUD-1. You will want to have an agreement with the 2nd - something like escrowing the extra money to be paid to the 2nd upon closing.
I have not looked into this with FNMA - between them and BOA, they keep facts so slippery and not in writing that this type of problem isn't worth trying to find how the wording was misconstrued by BOA or the negotiator. Just go for the POC and make sure that the wording and location is right where the negotiator/investor want it. Yes, stupid little things that you think would be written down can take a long time to get right with BOA.
[Geez, on a webinar while typing and by the time I finished, 3 replies ahead of mine? HA!]
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Kevin is correct. Fannie will initially allow 6% OR $6000 whichever is less. When Fannie contacted me, they increased their allowance to the 2nd to total $6000 (from $4500). Although they will not give the additional funds, they did allow the seller to contribute the difference.
Personally I would never begin my negotiations with a POC. You are walking a fine line there with items not really documented on the HUD..bordering on illegal, number 1. Number 2, the buyers lender, depending upon the ratios and the appraisal. If you are working with a mortgage broker that sells the notes, they will scrutinze that HUD even more so it can be sold. You definitely have a lot of other options before considering a POC. Be positive...you'll get it done!
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Permalink Reply by Myra McCaskill on
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Thank you Joe, Kevin and Elise for you great feedback!
Yes, I will contact Fannie Mae directly as the 2nd lien holder is demanding the 20% payoff to be on the HUD and not off the HUD-1 or paid outside of closing. They want to see their total payoff on the HUD-1.
@Elise - what is the number you use for Fannie Mae - do you use 800-732-6643. I asked the BofA negotiator if I get authorization from the seller to speak with the 2nd lien holder and they refused to do this. I think going the Fannie Mae route may work, since it seems you will have success.
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Myra--yes that is the correct number. On AZ MLS we have a link to start a Fannie Mae Case. Here is the link. I have had success in calling the number. They should send you to the escalation dept where someone will call you back if you leave a message. You can also work thru this link, but I would call first. http://ssad.car.org/ssadMain.do?enmls=u5OH9u5Tqqc=&siteid=1
Elise
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You've had success with FNMA? Please tell. I've only tried a few times, but with answers like "its the banks money" and I have to tell them that they are the investor, and "no, I won't look at the file", I decided that they are quite happy with their sweet gov't "jobs" and 0 responsibility to anyone.
So, I seriously would like to hear about things that they actually did.
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Sorry, Elise, if you think a POC right there on the HUD-1 is close to illegal, you probably think a short sale is close to illegal. Do you really think that you have discussions with someone like BOA on how they want it displayed on the HUD-1 if it were remotely illegal? I had as much trouble getting them to tell me how they wanted the HAFA $3K and on what line - it isn't illegal either.
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Joe...do you know why I don't participate much in these discussions anymore???...it is because of you. I am so tired of your pompass sarcasm and negative tone!
I do not conduct myself like that and as a result I am a highly successful short sale agent who is actually way too busy to sit and listen to your bad attitude....obviously you have plenty of time on your hands. I was always taught to stay away from bullies... -
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Permalink Reply by Jeff Payne on
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Let's be civil to each other. Short sales are stressful enough:)
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