Denial based on WHAT?
Looking for feedback please.... Received Short Sale Denial through Equator. WF indicates what the Investor needs to NET from proceeds of sale. Cash Buyer. Net to Investor (Freddie) is $2K in excess of required minimum. 2nd Lienholder is a Municipality Rehab loan, with a payoff of less than $1500. The reason our file was declined: Investor will NOT pay any LESS than $6,000 to satisfy 2nd LienHolder. Since the town rehab program refused to accept an EXTRA $4500.00, Sale declined, and file removed from Equator. Escalated to Supervisors, and opened file with Freddie directly- However, our case 'Manager' wants 12-15 business days to open a file. Buyer will walk.
Feedback, advice, insight welcomed!!!!
Replies to This Discussion
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Permalink Reply by Alexis Adams on
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My experience with Freddie Mac and subordinate liens is that they will either pay $0 or $6000.00. I know. Absurd. Anyhow, If you tell WF that the $1500 will be taken care of prior to closing by the buyer or seller, they will move forward and issue approval. Perhaps the buyer can come down the 2k that you were exceeding in the net and pay the $1500 out of pocket?
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Permalink Reply by Ann Regnier on
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HI Alexis..... Thanks for your insight. That was our first call.... Buyer is unwilling to clear lien until he has some assurance that the Approval will issue.... valid concern. Seller is unable to clear lien... Customer Care at Freddie confirmed for me that the $6K is customary, but not required.... They say its a Servicer decision. Servicer says its an Investor Guideline. No resolution in sight.....
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Buyer's concern is extremely reasonable: I have found a resolution to a similar issue by telling WF that the subordinate lien will be taken care of prior to or at closing by the buyer (they might ask for a signed statement from buyer stating that they will pay these funds at closing). Some title companies/paralegals might have an issue with this but usually not.
Then, on the day of closing, the title company should be able to coordinate the lien release and get the funds to the necessary person to release that lien in order to close. You could also get a letter from whoever is handling that account stating "we will release our lien upon receipt of $1500.00" to provide to the title company. That way, everything is set and stone and the buyer has the peace of mind knowing he doesn't have to foot any funds until everything is set in stone and closing.
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Permalink Reply by Short Sale Superstars LLC on
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Open up a case with the Executive Office at Wells Fargo. Also, Is your approval letter still valid? you may be able to have this worked outside of equator as there is likely a solution for this without having to have to rework the entire transaction. If the 2nd is getting paid in full, it makes little sense that Freddie would decline the file, have you provided a payoff to them?
If you need anything at all feel free to reach out to me as my door is always open.
310-564-6389
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Good Morning Brett!
Never got to the Approval Stage. So no Approval letter ever issued. Yes, that is a Payoff for the second.... not a settlement. And I have uploaded the final payoff statement as well as the HUD showing the final payment to the 2nd..... each showing $1397. I am told that the second lien holder is required to take either $6,000 OR ZERO. Nothing in between. Since Municipality would essentially be committing some level of Mortgage fraud by accepting an overage of balance due, they turned down the $6K offered by Wells.... End result as a short sale denial, file closed and removed from Equator.
So far, we have contacted our state representatives, Attorney General, the CEO of Wells Fargo, John Stumpf, and the Board of Directors. Thanks for your input! Will keep you posted!
~Ann
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