I just had a negotiator from Suntrust contact me with a request for seller contribution on a 2nd lien of $15k. 1st w/ Seterus owned by Freddie Mac, and the negotiator tells me the following:
"we can send the approval letter to you, however we will be asking for a cash contribution from Seller. 1st lien will not allow us to receive more than $6k allotted. So we will need you to have your client wire $15k to us prior to sending the 2nd lien approval to the 1st, at which time we will then send a 2nd approval letter approving the short sale for $6k and be ready to close. In essence we will receive $21k from the sale"
1st time I've experienced this from a 2nd. She said they would NOT provide a release of lien in order to close, and then contact the borrower from their recovery dept as they do not do that.
2nd lien has UPB of $200,000.
Has anyone experienced a similar situation with Suntrust on a short 2nd?
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Sounds like they are trying to walk all over you. The 2nd lien holders are desperate and they'll push the envelope to get YOU to break the law to get THEM more money.
- 1st lien holder will ONLY ALLOW $6,000 period. (Tell the 1st that you have $15k that you are paying to the 2nd outside of closing and see what happens. Better yet, DONT! .. because its not allowed and in most cases not legal)
- You need an approval letter with full waiver of deficiency.
If they demand $21k, then you go to the 1st lien and tell them you need $21k to the 2nd. Then they say no and you tell the 2nd that $6,000 is the highest and best .. bottom line.
Keep in mind that you should always talk to the borrower and see what he/she wants to do. Ultimately it is their decision.
wait, 15K to settle a 200K second? And the problem is what? Here is your real issue: You should have known from the very start that a balance this big to a lender like SunTrust would require cash contribution. Moreover, 15K is very light, because they could have easily held out for 20%-30%. This should have been structured from the beginning with the notion that someone, be it buyer or seller, would have to bring cash.
There is a strategy with short sales, you need to anticipate what banks will do or require, not simply react to them.
www.josephalfe.com
www.ssprocessors.com
Just an update. Pleased to say that we got the short sale approved with SunTrust and the deficiency was waived.
It pays to fight on!
Update on this post. I resent my clients financials and hardship letter with a cover stating why they needed to recondiser the demand. Safe to say, I've since been told that after review, the 2nd lien has been approved and I should be receiving the appproval any day.
Definitely reiterating the financial situation from the borrower and providing further docs to back up the position helped this to move forward. Let's now see what the 2nd lien approval states and if we have to continue the fight!
When lenders pull this, I like to run this on them..." Mr. Negotiator, you stated at the beginning of this conversation that this may be recorded, right? I just want to make sure, because I want you to explain to me again how you are instructing me to commit a RESPA violation. In fact, please get your manager, and I will get the sellers attorney on the line, and they can work out how this RESPA violation will affect this sale" Usually at that point I either get the manager or suddenly, the negotiator can find another solution.
Thanks Joseph, duly noted!
I was pretty shocked that she would even ask for it to be paid up front. #1 my client doesn't have it. #2 there are no guarantees that that solidfies the deal with approval and then waiver of deficiency. I think she thinks we were behind the door when brains were passed out.
Seems a little on the shady side too..."1st, doesn't/won't know about it...then we'll reissue a new approval with their proper amount."
I'm going to have to go above her to a higher mgmt w/in Suntrust to work this out.
I'd try to get her to put it in writing. THEN go above her head.
WOW.
Tell her you need it in writing in them. Who is to say the client doesn't wire the money and they reneg on the deal. Does your client even HAVE that kind of money? It seems shady but I think it's legal.
Why would you even agree to any of this if they won't release the lien? What's the point? Can't close if they don't. Maybe I'm not understanding this.