I've posted on here before about a short sale I'm struggling with where the homeowner has a first w/BofA and a 2nd with PNC. I finally got short sale approval this week, but on the approval letter BofA didn't reference any additional funds going to the 2nd lienholder beyond the $3,000 they're allowing from the proceeds. In our last counter, the notes referenced $8500 total, going to PNC. Now PNC is insisting they must get $20,000 or they will deny the short sale and close the file. I've gone on a fund-raising mission and come up with it, a combination from the seller, the buyer, and agent commissions. The buyer's lender won't allow a contribution to the lienholder, but will allow him to pay commission to his agent, so the agent commission portion of the contribution is pretty sizeable. My plan is to send a revised estimated HUD-1 to BofA and ask them to please modify the approval letter to reflect the additional funds that will be going to PNC. However, I'm wondering if anyone has had any success with getting them to do that? (Both allow that additional contribution to a 2nd lienholder from other sources and modify a letter to reflect that they're allowing it.) We're OK with all the other terms in the short sale approval letter.

 

Thanks in advance for your help!

 

Shannon Jones

Views: 83

Replies to This Discussion

I would be very careful as any additional funds always goes to the first lienholder that is their right and they may come back and say no it belongs to them. Best of luck and am interested on how this pans out.
These are always tough and I have a similar situation. Sometimes you can get the 2nd lender to write an approval letter with funds required that match what is on the BOA first allowed to the 2nd. The remainder of the funds due to the 2nd are on a 2nd letter which is a promissory note to the borrower and is due at closing, therefore can be done outside of escrow (i'm not commenting on the legality or lack of on this method). May or may not work for you but can give you an idea of what can be done if the 2nd will be creative.
On the HUD, you will have to show a few differnt things. One, on line 505(?) below the net to the 1st show 3 K net to PNC from proceeds of the sale... on another line altogether, you will shave to show the remaining balance to PNC and the breakdown. typically, I see this as one lump sum and then on the last page of the HUD, show the breakdown of where all of the additional funds are coming from. Make sure BofA will allow additional funds to come in to allow the 2nd to be released. Your escrow ot attny should be able to put this together for you.
I just got BofA to allow more funds to go to the second in the form of cash contributions from the agents and buyer. They said they didn't care where the cash was coming from as long as it wasn't from the seller. (BofA is paying $1750 to the second and we have cash contributions of $2750...that's a long way from the $20k you are talking about though.)
Beware that when you come down to your final hud approval they may not allow the creativity on the huds. Just had one with this Prob with Bofa. Only in reverse They were the 2nd demanding more. 1st was Freddie mac and no way around 3K max to 2nd. Got it from the buyers but they (bofa) wanted it lumped in with the 3K from the 1st PERIOD. After 2 weeks of hell I finaly closed it but with a Prom due within 24 hours of closing to move it off the hud. Buyers brought funds in to BAC home loan servicing. Sellers signed Prom. Title sent the $ out at closing through title so it was never in "escrow". Best of luck.
BofA also allowed us to have more funds go to the second.. However, the buyer's lender wouldn't allow the buyer to contribute to the second lienholder. But the buyer is able to pay his agent commission, which means she's more comfortable contributing to the 2nd. So we have funds going to the 2nd from the seller and agent commissions. But once BofA saw what the seller was contributing to the 2nd, they wanted a bigger contribution.


Shari Posey said:
I just got BofA to allow more funds to go to the second in the form of cash contributions from the agents and buyer. They said they didn't care where the cash was coming from as long as it wasn't from the seller. (BofA is paying $1750 to the second and we have cash contributions of $2750...that's a long way from the $20k you are talking about though.)
I'm not comfortable doing anything that's not clearly stated on the HUD so this has been a challenge. The buyer's lender wouldn't allow him to contribute to the 2nd, but we are able to have him pay his agent commission and then both agents and the seller are contributing money to PNC. BofA has reviewed the HUD with all of the contributions to both lienholders and I've got an email from our closer acknowledging that she's aware of the contributions and is OK with them. So I think we're going to actually be able to close this one. Fingers crossed that the inspections and appraisal will go well after all of this negotiation!

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