Replies to This Discussion

Permalink Reply by Tni LeBlanc (805) 878-9879 on February 12, 2013 at 11:13am

I attended a webinar and an in person seminar with Freddie Mac recently.  

They both confirmed that requirement.  

Try writing this person:  [email protected]

She was very helpful and knowledgeable and may be able to point you to some written guidance.

Permalink Reply by Donna McClelland on February 12, 2013 at 11:16am

Oh, wow, thank you Tni!  I knew I could count on the Superstars to help me out!  I will contact her right away!

Permalink Reply by Kevin - Greenville, SC on February 12, 2013 at 11:32am

Freddie Mac has put that in writing. I will post a link later.

Permalink Reply by Donna McClelland on February 12, 2013 at 11:34am

FABULOUS KEVIN!!  

Permalink Reply by Kevin - Greenville, SC on February 12, 2013 at 12:29pm

Subordinate Lien Holders

17. Can I complete the short sale if a subordinate lien holder rejects payment from Freddie Mac but agrees to release its lien without waiving its right to seek a deficiency judgment against the borrower?

    In this case, you may still proceed with the short sale because a subordinate lien holder may choose to release its lien to allow the short sale to close but not extinguish the indebtedness. However, the subordinate lien holder cannot receive a payment from Freddie Mac or the borrower in connection with the short sale approval.

18. If the subordinate lien holder will not release its lien for $6,000 (or a lesser amount if there are other subordinate lien holders), can the borrower or another party contribute to the lien release payment?

    If the subordinate lien holder is accepting $6,000 (or a lesser amount if the $6,000 is being divided among more than one lien holder) in exchange for a release of its lien, it cannot require or accept additional funds from the borrower, real estate professional(s), buyer, or other party to the short sale transaction. When funds are offered from the short sale proceeds to satisfy a subordinate lien, the intent is to obtain a complete settlement of the lien and debt using those funds alone.

http://www.freddiemac.com/singlefamily/service/short_sales_FAQ.html

Permalink Reply by Donna McClelland on February 12, 2013 at 1:43pm

Thanks, Kevin!  I wish I would have posted here before I read through the exciting AllRegs Servicer Manual.

Permalink Reply by Donna McClelland on February 12, 2013 at 1:58pm

Hi Kevin,

I think I will use #18 with the negotiator and tell him their letter is not in compliance (as Smitty said).Thanks so much for your help!  I don't know how I missed this.

Permalink Reply by Smitty on February 12, 2013 at 1:38pm

If the servicer contracts with Freddie, I would make them aware they are not in compliance. That has worked for me twice in the past.

 

Does the second approval letter actually state they plan to pursue the deficiency post closing?

Permalink Reply by Donna McClelland on February 12, 2013 at 1:50pm

Hi Smitty,

It says "SunTrust retains the right to pursue all remaining rights and remedies available by law and under the terms of the loan to recover the outstanding original balance, less any amount noted above received in accordance with the terms of this agreement."

They wanted the sellers to sign the agreement within 7 days (but they could close as late as May 1).  They probably figured they could slip that language by us.  

 

Permalink Reply by Donna McClelland on February 13, 2013 at 4:16am

Thanks to Tni LeBlanc, Superstar, who referred me to a superstar at Freddie Mac, Robin Stout Migala, we have the offical written policy and answer to my question: 

B65.40:  Short sale transaction and processing
requirements (11/01/12)

(c)Payouts to subordinate lien holders
For each short sale completed in accordance with Sections B65.35-B65.41,
the Servicer may authorize the settlement agent closing the short sale
transaction to pay subordinate lien holders an aggregate amount of six thousand
dollars ($6,000.00) from sale proceeds at the same time that all other payments,
including the payoff to Freddie Mac, are disbursed by the settlement agent. The
subordinate lien holders may not receive any other payments, in cash, promissory
note or otherwise, from the Borrower in connection with approval of the short
sale.

If there are multiple subordinate
lien holders, the Servicer has the discretion to divide the subordinate lien
payment among them so as to maximize the chances that all subordinate lien
holders will approve the short sale.

Payment of any amount to subordinate lien holders is contingent
upon agreement by all lien holders to release their liens and, if they are
accepting a payment from Freddie Mac, extinguish the indebtedness secured by the
Mortgaged Premises. In addition, subordinate lien holders accepting payment from
Freddie Mac must agree in writing to waive all rights to seek a deficiency
judgment against the Borrower. If a subordinate lien holder releases its lien to
allow the short sale to close, but does not extinguish the indebtedness, the
lien holder will not receive a payment from Freddie Mac. Regardless of whether
payment is made to a subordinate lien holder, the Servicer must obtain written
commitment from the subordinate lien holder(s) to release the lien(s).


All payments made to subordinate lien holders
must be documented on the HUD-1 Settlement
Statement in accordance with applicable
law. The Servicer must have established written policies governing how
subordinate lien payments are paid and the Servicer must provide evidence to
Borrowers of their agreement.

Permalink Reply by Tni LeBlanc (805) 878-9879 on February 13, 2013 at 4:31am

Very cool!  Robin is a great resource, I'm glad she was able to help!