I have been working on a short sale with wells for the last 7 months. At first the BPO came in for almost 500k and our contract is for 455k. I successfully challenged the BPO based on realistic values and the property being in a distressed market area, the east new york section of brooklyn which has the highest foreclosure rate in nyc. However, wells is insisting that freddie mac is requesting either 50k at closing or a 100k note from borrower. The borrower lost everything, this is a 3 unit property and from day one he had problem tenants and several evictions already which in nyc can take up to 6 months to remove a tenant. This was a new development of 6 houses and wells has the mortgages on all the properties and each one of them is in foreclosure.
The borrower went from making over 100k when he bought the home to making 16k a year which is basically the poverty level. Despite this fact they are insisting on the borrower participating in the loss. I went as far as contacting freddie mac directly only to be told that wells is delegated in this matter, however wells is insisting its the investor requiring this.
Has anyone had success eliminating the request for a note? This is truly a hardship case and they dont seem willing to work this out. We even offered them a 10k cash contribution at closing which the seller would have borrowed from family members but that was rejected as well. The seller cant afford to pay over 800 a month, he barely makes that and doesnt want to just sign a note that he will never be able to make good on. Any advice is well appreciated.
**********************************
like buttons
Replies
Sometime when I get a negotiator that is being unreasonable, I cancel the shortsale, waited a week or so and reinitiate the short sale again.
Yes you would need to start all overagain but you have nothing to lose at this point.
I did this a couple of times once when the lender wanted the seller to participate towards closing costs and once when the values came in crazy. In both files the negotiators were unresonable, not willing to negotiate any further and kept telling me the investor on the note is the one who is making the decisions they are just the servicer.
It took more time but it was well worth it. In both cases, I was able to get a better negotiator and we were able to close the transactions without the seller contributing and within a reasonable value.
Unfortunately, some servicers are hiring people who have no clue not do they care, that it would be in the best interest of all parties to get these transactions close. There is no sense of urgency with some of the employees of these servicers and lenders because they are getting paid hourly and that's really all they care about.
But I'm sure if the servicers and lenders realize that some of the people that are put in the positions of making decisions for them are not making the right decisions, they would take some sort of action. Or at least I would hope they would.
I think this might be the best option on this deal. I am going to re-submit the deal in about a week and hopefully get a better negotiator.
This is a great "Last measure" tactic. Sometimes to take two steps forward, you need to take one step back.
You cannot avoid Federal Tax in a BK. Consult
a BK attorney of the downside risk.
Scott,
I don't mean to be offensive but you could not be more wrong. This seller needs to be getting this advice from legal counsel. NO Real Estate Agent or third party negotiator should be advising a distressed homeowner to take on a debt obligation without an analysis of their current liabilities. This person makes $15K a year and you want them to take on a $100K debt?!?!?
Next, if it is your CPA that is telling you that you cannot discharge Federal Tax in a BK, stop using that CPA. Cancellation of Debt tax liability IS dischargeable in BK, that is why you MUST be in front of proper legal counsel on this issue prior to and during negotiation of the Short Sale.
If an Agent recommends a seller to accept a prom note or cash contribution just to close a transaction and earn a commission, they are looking for a lawsuit later. If that client came into our office and demonstrated that they would have been better off letting the home go to foreclosure and was induced to accept the short sale by the Agent, WE are going to own that agents license by the time it is over.
I am tired of seeing clients in our office, now seeking BK etc, because an agent talked a seller into closing a Short Sale just to get paid.
Excellent advice!! We can never make or help our sellers make these decisions. It's their money and their financial future.
Hi Kevin - great advice. Are you a practicing attorney in California? I need both an attorney and CPA who work in the Thousand Oaks area, who SPECIALIZE in advising distressed sellers as to the legal and tax consequences of her options. My sister is about to do a short sale after 3 years of trying to modify her loan. She NEEDS the names of two top-notch professionals. She just signed a Short Sale Contract to sell her condo. I'm in Realtor in Arizona and absolutely know the pitfalls of not having proper consultation by both. Thanks. I'll be reading this column all weekend for your response.
No, we are in AZ.
-
1
-
2
-
3
of 3 Next