I have receive an approval letter from CitiMortgage that states the purchase price ($45K)and buyer as well as a substantial smaller pay off amount that they will take to settle the debt ($6K). Similarly to what a second mortgage letter would say... but the catch is that this property only has one lien.
What do I do?
Any advice will help at this point LOL
Understanding a short sale approval letter is a critical skill for a real estate agent, homeowner selling on a short sale, investor buying on a short sale, and anyone affected by a particular short sale transaction.
Most banks approving short sales are national. This means they have loans in most states. However, they often have legal council for the states they have loans in. Because of this, often they will adjust their short sale approvals based on what works on the state were the property collateral to the loan is located.
This subject can get real technical. That would be outside the scope of this blog post. Lets focus on what the person selling on a short sale (homeowner) really want as first choice. That is to not owe after the short sale.
Just to not miss any components, there are three important concepts to understand. Here I am simplifying to the maximum.
Needless to say, all homeowners want a short sale. The question now is to know what is that the short sale letter actually means behind all that legalese wording.
How to Distinguish a Short Sale Approval Letter:
A short sale approval will always clearly state that the loan will be satisfied in full for less than the amount owed or very similar wording. See sample below.
How to Distinguish a Release of Lien:
A release of lien letter will always indicate that the lien will be released but the debt will not be satisfied in full. In addition, most likely, the homeowner will have to sign a promissory note at closing.
Oscar Morante
Ph: 971-222-3734
Fax: 866-844-7009
PDX Experts Real Estate, LLC
www.PDXExperts.com
534 SW 3rd Avenue
Suite 305
Portland, OR 97204
Real Estate Agent
Realtor
Hi Everyone. I am negotiating a short sale where the first is a Freddie Mac serviced by Nationstar and the second lien holder is Cenlar. Cenlar wanted a $43K payoff and I negotiated down to a bottom line of $12K. The Freddie Mac guideline is to pay no more than $6,000 to the second lien holder. The buyer had agreed to reduce the closing cost credit by $3,000 and both agents will be pitching in $1500.00 to come up with the other $6,000. I had a new HUD done and sent it to Nationstar. They are refusing to allow this to take place. Nationstar said that these are Freddie Mac's guidelines and that we will not be allowed to pay Cenlar any more than $6000 --period. No contributions will be allowed.
Has anyone been able to get around this situation? If so, how did you do it? Anyone have any creative ideas?
I have escalated this with Freddie Mac and should be talking with a case manager within the next few days, but the supervisor I talked with today for over an hour said that Freddie Mac will not bend these rules.
Thank you for any ideas!
Suzanne Martin
Too often, many homeowners doing a short sale read up on the internet and speak to friends, coworkers, relatives and anyone else whose done a short sale, about how they received $3000 relocation assistance by doing a HAFA short sale.
Sadly...this is NOT always the case. Simply going into the HAFA short sale program here in CA does NOT guarantee you will walk away with money.
Case in point.....First your realtor needs to determine if your servicer(the one you normally make or made your mortgage payments to for your 1st lien)participates in the HAFA program. Many servicers DO NOT!.
Also, even if your servicer(1st mortgage lienholder) participates in HAFA, the INVESTOR who is above your servicer and has final say so...may NOT be a HAFA participant.
Many 1st mortgage liens are SOLD to a private investor or group of investors that DO NOT belong to HAFA, nor do they have to abide by HAFA's guidelines and rules.
OK, so let's say your 1st lien holder and their investor DO participate in HAFA and allow you to do a HAFA short sale.
If you have a 2nd lien, you need to also find out if THEY participate in HAFA...for if they DON'T...then guess what may happen when you go to close? Your 2nd lien holder could see the $3000 monies awarded to the seller(YOU) by the 1st lienholder and decide to GRAB or TAKE any monies on the table. Thereby preventing YOU, the homeowner from getting ANY MONIES awarded to you. Don't say NO...because I've seen it done.
Also...here's the kicker....and even better than the above. Let's say..Mr and Mrs Seller had a 1st and a 2nd on their home, and the 1st even agrees to a HAFA short sale, and so does their investor.And let's say your 2nd lien servicer WAS a participant in HAFA and agreed to participate. * If your 2nd in this process gets SOLD OFF or CHARGED OFF during this process to a collection co. for x amount of months of NON PAYMENT on your part, then that COLLECTION co is NOT HELD to HAFA's rules and can collect the relocation monies at funding. The collection companies ARE NOT SERVICERS...and therefore they DO NOT belong or partipate in HAFA's rules or programs...so since they are a collection company..they can TAKE the monies left on the table. Remember people...they are a COLLECTION company...they don't call them a collection company for nothing!!!!
Remember the 2nd lien holder, whether it be a servicer or now a collection co...has begrudgingly accepted what the 1st will give them, and they are NOT happy.
Please make sure when doing a short sale that you interview an agent who has done them extensively and has much experience in negotiating short sales. Please don't assume EVER that because an agent has these CDPE or SFR designations...that they KNOW or are VERSED in NEGOTIATING short sales. These companies handing out designations are PRIVATE COMPANIES charging realtors a $500 or more fee to take a 1 day or sometimes just a several hour course in short sales. THIS DOES NOT mean your realtor knows in the slightest how to navigate and negotiate the slippery slope of short sales. Many of these realtors who have gotten their licenses not that long ago or get these designations because they know that 50% of the market is upside down and if they want ANY business, they better get with the program and start handling short sales.
I am not knocking these designations....there are agents who have them and legally have experience and know how to handle short sales... the main thing is to check for experience in how many short sales they have done...and if they have DONE it themselves. Farming it out to 3rd party negotiators or attorneys, does NOT guarantee success.
Please ask many questions about the short sale process and scenarios. There is no magic wand that anyone can wave to make sure your short sale goes smoothly, for many things occur as roadblocks to navigate along the way. But with a strong negotiating agent who is familiar with all the ins and outs and possible scenarios that the banks, lenders, servicers, investors,and collection agencies throw our way....hopefully having this extensive knowledge and experience can help you obtain a successful outcome.
No one ever saw it coming!
The Sellers were moot until Escrow/Title discovered a NEW LIEN!!!
"Picture it" Sophia Petrillo, a Golden Girl would say,
except instead of Sicily 1922 - it was San Francisco 2012
- There was pepperoni all over the place! -
https://www.youtube.com/watch?v=9lH9_rbDQF0
You wouldn't have believed it!
The preliminary title report showed three liens and we jumped over all three hurdles - only to trip a few paces before finishing and closing our latest San Francisco North Panhandle Multi-Unit Short Sale listing this year... (Ask and we'll give you the address - multiple offers no less!)
Like a mine under water, this lien NEVER appeared on the preliminary title or the subsequent preliminary title report issued for the buyer - but lo and behold - the SELLERS went into the title/escrow company to sign final documents and after running their Social Security Number it came up!!! I am always polite to my escrow officers, but even this one taxed little old me!
It was scramble time as the lien for $4,200 came up, the attorney whose name it was filed under was difficult to find and the entire bill had to either be negotiated or paid before closing in 3 days. Thank goodness we had cooperative sellers who could find some cash! - Guido - I don't know where it came from, on with the story!
Another 11th hour and 55th minute story which gave yours truly a few more grey hairs.
In the end, we received a wonderful commendation from our SELLERS For our professionalism and attentiveness to detail... All I can say is; Thank goodness it's DONE!
Lately it's been raining cats and pepperoni in San Francisco these days, but then it's not Sicily, 1922.
Michael Ackerman and Oliver Burgelman - Zephyr Real Estate
www.PriceSquares.com www.BuildingTrust4Life.com
415-307-5850 - 415-244-5846
Oliver and Mike are your home grown San Francisco Short Sale 'Busters' -
We can get it DONE! With or without the pepperoni - We deliver - Just call!
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