Replies to This Discussion

Permalink Reply by Brigitte Powell on June 17, 2010 at 6:19am

I have the same thing on a second with a Mortgage Insurance Co. who wants 5,000 from the Seller LOL!!! Who has Zero money and barely a job. I was told by Bank of A. that they want me to counter with "the Seller has no money whatsoever and cannot provide any funds"

Permalink Reply by Ben Benita on June 17, 2010 at 6:25am

How much is owed to the second?
Who says the second can only get $2500, your negotiator, supervisor, is it in writing?
Do you know who the investor is on the first lien?

Let us know on the above and we can help make a game plan....on quick glance, seems like your "negotiator" is just doing his/her job....negotiating with you.....
:-)

Reember, they are called "negotiators" for a reason.....
You likely just need to push back, say, 'no", not good enough, and escalate the file to higher ups.....

Permalink Reply by Rachel Diedrich on June 17, 2010 at 6:56am

over $40k is owed on the second. They say this is part of the Hud PFS Program requirements. Litton says they will settle for $2500, but they just won't do the paperwork until there is a signed offer/HUD etc. They have sent me documentation of this in 0843-ML

Thank you!!

Ben Benita said:

How much is owed to the second?
Who says the second can only get $2500, your negotiator, supervisor, is it in writing?
Do you know who the investor is on the first lien?

Let us know on the above and we can help make a game plan....on quick glance, seems like your "negotiator" is just doing his/her job....negotiating with you.....
:-)

Reember, they are called "negotiators" for a reason.....
You likely just need to push back, say, 'no", not good enough, and escalate the file to higher ups.....

Permalink Reply by Bryant Tutas on June 17, 2010 at 6:57am

Hi Rachel, I just posted this over on the FHA site. Thought I'd post it here as well.

I'm dealing with WF right now on a PFS and this was NOT a requirement. In fact we can give the 2nd lien holder as much as we want. It's just WF can only give $2,500 because it's FHA.

Check it out: From WF

.....the seller will get up to $2,500.00 to be applied towards the lien. You must contact PNC Bank to see if they are willing to accept a short sale and ask them how much will they accept to release the 2nd lien.

From ME:

I asked before but didn't get a response. Can the seller bring cash to closing to contribute to the 2nd? They are adamant about wanting $6,500. The seller has no money but may be able to contribute $500 or so to the 2nd. Can he do that?

From WF:

Yes, the seller can bring money to the table, but it will have to be out of closing and
not included in the net proceeds. Where will the difference come from?

ME: What this means is the additional funds will be on the HUD as a POC item. No biggie.

Permalink Reply by Evelyn Broxterman on June 17, 2010 at 10:22am

I am in the same situation. Wells won't move forward without the approval from 2nd. VERY frustrating!

Permalink Reply by Michael Schneider on June 18, 2010 at 3:18am

This would seem to be Wells FHA/PFS practice, if not actually policy:
Written release of 2nd prior to admitting qualified borrowers/sellers into the Preforeclosure Sale Program (PFS).
This practice does not clearly violate HUD policies, it does however substantially restrict the PFS option for sellers with a 2nd mortgage.
So, to me, it is inconsistent with the intent of PFS. The escalation in Wells would be through Compliance, I think.
Here is the relevant quote from the definitive reference, Mortgagee Letter 2008-43, the PFS guidelines that generally must be followed verbatim. This is guidance from HUD/FHA to the Servicer, Wells in this case. And, remember, mortgagee = Servicer, mortgagor = borrowers:

All properties sold under the PFS Program must have marketable title. Prior to execution of Form HUD-90045 ( Approval to Participate) the mortgagee must obtain a title search or preliminary report verifying that the title is not impaired with un-resolvable title problems or with junior liens that cannot be discharged as permitted by HUD. If the mortgagee determines that these issues can be resolved, the mortgagor may be accepted into the PFS Program and resolution of said issues may be pursued while the property is being marketed.

Frequently, it is in the interest of all parties to facilitate the discharge of secondary liens in order to clear title. In some cases, junior lien holders will release a lien for a partial cash payment or a promissory note from the mortgagor. Mortgagors who have the financial ability to do so must be required to satisfy or obtain release of liens. Additionally, any incentive consideration payable to the mortgagor ($750 to $1,000) may be applied toward discharging liens.

Note that is also seems to allow the additional payment to the 2nd, either from Seller or Buyer. I have two file in process, under FHA/PFS, with additional payments, one from the Seller one from the Buyer. Each Mortgagee seems to be fine with this, not final however.

Permalink Reply by Rachel Diedrich on June 18, 2010 at 3:58am

THANK YOU! Anyone have contact info for Well's Compliance department?

Michael Schneider said:

This would seem to be Wells FHA/PFS practice, if not actually policy:
Written release of 2nd prior to admitting qualified borrowers/sellers into the Preforeclosure Sale Program (PFS).
This practice does not clearly violate HUD policies, it does however substantially restrict the PFS option for sellers with a 2nd mortgage.
So, to me, it is inconsistent with the intent of PFS. The escalation in Wells would be through Compliance, I think.
Here is the relevant quote from the definitive reference, Mortgagee Letter 2008-43, the PFS guidelines that generally must be followed verbatim. This is guidance from HUD/FHA to the Servicer, Wells in this case. And, remember, mortgagee = Servicer, mortgagor = borrowers:

All properties sold under the PFS Program must have marketable title. Prior to execution of Form HUD-90045 ( Approval to Participate) the mortgagee must obtain a title search or preliminary report verifying that the title is not impaired with un-resolvable title problems or with junior liens that cannot be discharged as permitted by HUD. If the mortgagee determines that these issues can be resolved, the mortgagor may be accepted into the PFS Program and resolution of said issues may be pursued while the property is being marketed.

Frequently, it is in the interest of all parties to facilitate the discharge of secondary liens in order to clear title. In some cases, junior lien holders will release a lien for a partial cash payment or a promissory note from the mortgagor. Mortgagors who have the financial ability to do so must be required to satisfy or obtain release of liens. Additionally, any incentive consideration payable to the mortgagor ($750 to $1,000) may be applied toward discharging liens.

Note that is also seems to allow the additional payment to the 2nd, either from Seller or Buyer. I have two file in process, under FHA/PFS, with additional payments, one from the Seller one from the Buyer. Each Mortgagee seems to be fine with this, not final however.

Permalink Reply by Cathy Baumbusch on June 18, 2010 at 7:45am

It is Wells Policy that they won't issue approval letter until they get an approval from the 2nd lienholder first. This is fairly new.

I had a Wells 1st lien approval but the 2nd lien (also Wells) wouldn't agree to getting just $3000, they wanted $6800 (10%).

While trying to reason with Wells 2nd lienholder, the 1st lien approval letter expired.

Since Wells 2nd lienholder stuck to their "approval" terms, Wells 1st lienholder closed the file.

From Wells:
As explained previously, Wells Fargo as the first lien only services the loan for the investor, Freddie Mac. You have spoken to the person at Freddie Mac who has made the final decision on this file. Freddie Mac would only entertain allowing the second lien more funds on a case by case basis. The second would have to split the payment they obtained from the seller that was above the $3000 we were already alotting them. In this case the second wanted $6800, so they negotiated $3800 to them and $3800 to the first. However this has always been up to the investor to approve and never guaranteed. They did not allow it in all situations, as in this situation. I am sorry, but if all parties do not agree to the sale, then the short sale is not feasible at this time. Yes, we had approved the short sale, however the second lien is not willing to take what we are offering them. Because of that, we cannot close the sale. There is no reason to keep the file approved and open if the short sale cannot be completed. At this time the file is declined and closed. Should the second lien wish to accept our offer of $3000, we can have the file re opened at that time. Otherwise, the loss mitigation file will remain closed and default efforts will continue.