USAA 2ND LIEN, DONT BOTHER, LET IT GO TO FORECLOSURE!
I am a very experienced short sale realtor/negotiator.
I have 20 listings in pipeline, close 4-5/month.
Florida listing
Chase 1st lien $445,000
USAA 2nd lien $50,000 (to date client made over $26,000 in payments)
seller unemployed, insolvent, and used personal retirement savings to make payments.
Chase was good to deal with, understood and was reasonable to offer a short sale approval at market value, with a HAFA $6k contribution to 2nd.
USAA took 60 days (after Chase approval) to have "committee" review offer of $6000, they countered with demand for 75% payoff of loan balance.
Responded that this was rediculous and a waste of realtor time, and countered at maximum of 20% ($8800) with contributions from buyer as well as realtors.
USAA took almost 60 days again submitting our counter offer to USAA "committee", they responded to demand a payoff of 50% ($41,000) of UPB.
Seller has now abandoned property, he tried very hard to "do the right thing".
REALTORS UNITE! BEFORE YOU ENGAGE ANY SHORT SALE WHETHER FOR BUYER OR SELLER, ASK WHETHER THE 2ND LIEN IS A USAA LIEN. USAA DOES NOT RESPECT REALTORS EFFORTS, LET ALL GO TO FORECLOSURE OR BANKRUPTCY.
DO NOT LIST OR BROKER PURCHASE OF ANY USAA 2ND LIEN SHORT SALE!
WHEN THIS GOES TO FORECLOSURE, I WILL COPY , ENLARGE AND SEND THIS TO THEIR "COMMITTEE"!
Replies to This Discussion
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Permalink Reply by Wendy Rulnick on
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USAA usually starts with a high demand, like you've mentioned. This can be negotiated down. Yes, they are typically "slow" to respond. Don't give up. Keep going back. Ask for a promissory note with delayed start date or lower payments for first year in combination with part cash instead of a cash-only settlement. If they can work it from a "payment" standpoint, for example, $100 per month starting in three months, maybe the seller will be re-employed by then.
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Permalink Reply by Steve Maxson on
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Can anyone advise me - has anyone experienced a deficiency judgement where the lender comes back after a short sales has been conmpleted and slaps a judgement on the borrower? I completed a short sale with Aurora last year and would like to think Ive seen the end of it. Responses and feedback are welcome
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Permalink Reply by Isabelle Javier on
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Hi Steve,
It depends what state your short sale took place. Take for example Nevada. They have 6 months to come after a deficiency once the short sale is completed providing they haven't waived their deficiency in writing. Hawaii is brutal, where I have seen Bank of Hawaii slap a $800,000 deficiency on an owner who let his property go to foreclosure. Search online to see if your State allows judgements to be filed after a short sale or foreclosure. If you are in California, and you are anything other than owner-occupied, the odds of a deficiecny judgement are pretty slim. Talk to an attorney for advice. Good luck.
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Permalink Reply by Graham Updegrove on
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Steve,
Continuing with what Isabelle stated, whether your lender can obtain a deficiency judgment against you depends on the state in which your property was sold. In California, Senate Bill 458 amended the code of civil procedure with language that prevents a short sale lender from going after a deficiency IF they approve the short sale on a 1-4 unit residential property regardless of whether its owner occupied, purchase money, etc. (http://www.leginfo.ca.gov/pub/11-12/bill/sen/sb_0451-0500/sb_458_bi...)
Each state is going to be different...check with a local attorney. Best of luck.
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The USAA is not difficult, and they are only trying to do their jobs, as they are told to collect a debt. I sometimes forget they are trying to collect and my job is to respect all sides, given we are an attorney’s office who handles short sales in bulks.
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Great detailed information. Thank you Graham.
I read Steve's prior posts after I commented, and I saw his property was in Florida. I also saw he had an attorney try to negotiate the deficiency to be waived in writing, but was told that Aurora never put that in writing. I think at this point, he's just curious to see if any of us have seen a client be pursued by Aurora for a deficiency, since Steve claimed his State had 5 years to pursue.
Steve, other agents responded saying that if you received a 1099-C, you should be off the hook. I'm assuming you havent received one yet, right? What date did you close escrow?
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Isabelle: The answer to Steve’s question at this time is almost impossible to answer, given most short sales haven’t aged 5 years yet. The lenders are legally obligated to send a copy of the 1099, but doesn’t mean they are actually 1099 the borrower. This would create an argument given most short sales are protected by HAFA now, and then the lender’s can’t seek deficiency amounts. If you sign a Prom Note, they will pursue. If the state laws in FL won’t protect the borrower from lenders and their investors from seeking remainder of balance owed on mortgage (1st) (REO + short sale there is a balance left over after sale or auction), then you take your chances. If the attorney who helped him tried to negotiate the waiver in writing - chances are he was dealing with the regular loss mitigation departments, and not the actual legal department. FYI, never will a lender waive their rights to collecting a debt, why? Selling and purchasing mortgage securities are based on the borrowers state, type of mortgage, amount they are delinquent, and negative equity; so if they choose to sell the bad mortgage Deed/Note to a collection company to collect on their behalf or sell the delegating rights as the investor and/or servicer, this leaves you wondering if they will collect later on (1-5 years), right? Mortgage stocks are still being transferred and sold on a daily basis. They have no interest in holding a bad investment for 3-4-5 years and hope to collect a bad debt down the line. It’s more costly for lender to hold on to a bad mortgage, knowing its inevitable to Foreclosure, making the Note worth much less. When a year goes by and you are don’t receive a 1099-C, the most likely they won’t come after you. Also, the banks will never issue a specific letter waiving their rights, when the loan might be delegated by the investor, who would decide to seek deficiency amounts down the line. My experience with Aurora has been a breeze, and all their approval letters are generic and not specific to any state, ie: CA laws where deficiency rights are waived, but they will never put this writing. In the next few years we will have answers to borrower’s just like Steve’s question, based on borrowers who closed their short sales 5 years prior.
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Kim, I think you just gave hope to Steve. Good job!
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Thanks! I hope he understands all this short sale talk. I personally believe we won’t see lenders bothering with bad debt, in years to come. After all, everyone is to blame for this mess and we should all take a small hit, right?
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Right Harry, We should all give-up now with any 2nd USAA Lien. This was based on ONE VP, out of how many departments within the liquidation and Loss Mitigation departments? This is for all those people who are trying to close a short sale with USAA - Harry believes there is no hope left and all these 2nd mortgages are all generated by one VP, who makes ALL the decisions - join the fight to give-up. I think you are out negotiated and whomever you spoke to, couldn’t have stated a more unethical & unprofessional personal opinion to one agent.
FYI, HARRY - I settled a USAA 1st with a TS sale scheduled in less then 2 weeks that also has USAA 2nd mortgage loan that was with a collection agency, and I settled for 6K. This was an investment property ----- so please stop posting false hope on this “Short Sale Superstars” website because you decided to believe this internal employee who had a power trip over your files. He sees your files, and knows your not a threat to his position, unless you don’t give-up and find out who he reports to. This would be a better way to go.....
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You actually stated “I" had no personal experience with USAA 2nd’s, which is far from the truth - and another personal opinion by HARRY, which was inaccurate.
I am not the only one who stated not to give-up, and what you posted is only your personal experience, and doesn’t mean we should give-up and expect “ALL” USAA 2nd liens will have legal ramifications, once the short sale closes.
I try always think of the borrowers who are not in there fighting, and your comment might scare them from seeking a possible short sale in the future - resulting from Harry and his opinions. Your comments to “Take a Hike” is classic and well thought out. Maybe, just maybe, this is why you are not getting your short sales through. I would take the advise and not assume I am attaching you, but trying to prove you are posting invalid information about the 2nd liens with USAA, which makes an argument if you have a negative outlook, based on your experience, or negotiating skills?
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Permalink Reply by Tni LeBlanc (805) 878-9879 on
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I have to chime in here and say that I very much disagree. If they were so charitable they would be routinely waiving deficiency rights on these short sales. Point of fact -- borrowers are being sued and pursued -- especially on 2nd loans. This is yet another reason why borrowers should always receive legal advice prior to a short sale.
As a short sale agent and attorney, it is frustrating to see one file taking up the time that 10 files would take and with an uncertain result to boot. The lenders dug their own holes on these loans. So, when you run up against an entity that consistently makes the process difficult... you can't help but chafe.
Certain servicers are routine offenders and it is helpful to know what you are up against at the outset -- whether it is going to be a reasonable negotiation or a ridiculous process. While I appreciate the cheerleading aspect of the site (never give up!), I also very much benefit from hearing the real experiences of short sale agents dealing with specific lenders.
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