Replies to This Discussion

Permalink Reply by Cody Lampariello on August 5, 2011 at 8:32am

Hi Brenda, the problem is there is no ruling as far as I know regarding what Fannie Mae will pay for Home Owners Association Debt. From our experience though they usually don't through out a number like 6%. It is usually a time frame like 12 months. Maybe your negotiator with the bank is considering it a second mortgage instead of HOA debt.

 

I have closed many short sales with FNMA and 6% is what they pay for second mortgages on HOA most of the time we get at least 12 months but I have had the entire debt paid on FNMA files before.

Permalink Reply by Brenda L Wood on August 5, 2011 at 8:40am

Cody, thanks for your response. I understand that nonpayments for HOA are considered a lien and therefore could be 6% of total allowed (and in this case my homeowner is thankfully not behind on the HOA payments); however the negotiator discounted the amount allowed to be paid for the HOA Disclosure Package to 6% when the package cost is really not a lien, but a standard closing cost.  I have never had a short sale close where there has been outstanding HOA dues and it not paid 100% by the lender or the cost of the resale package.   I am going to just counter, trusting my intuition and see what happens.  Thanks again for your helpful feedback.

Cody Lampariello said:

Hi Brenda, the problem is there is no ruling as far as I know regarding what Fannie Mae will pay for Home Owners Association Debt. From our experience though they usually don't through out a number like 6%. It is usually a time frame like 12 months. Maybe your negotiator with the bank is considering it a second mortgage instead of HOA debt.

 

I have closed many short sales with FNMA and 6% is what they pay for second mortgages on HOA most of the time we get at least 12 months but I have had the entire debt paid on FNMA files before.

Permalink Reply by joe beauchamp on August 5, 2011 at 11:13am

I just had a discussion with someone in my office about WF - when I worked with them in the past, they were very good.  Well, that has changed since they took on Wachovia short sales.  I heard him discussing with them the insanity of insisting upon a release of debt document for a $50 lien.  That has gone on for weeks with WF, at least 2 levels of management, sending in more updated documents.  He even got a response of, "well, what if they don't release the lien after it is paid?"  Geesh.  So, WF has apparently been zapped with the BOA dumb ray, too..??

 

Except for bad negotiators at BOA (where I am stuck with most of my SS's), negotiators understand that if they foreclose, they WILL be paying those HOA fees in full.  Depending upon the net of the deal (again, unless we have a brain dead negotiator), we can have a good chunk or all of the HOA fees paid on the HUD.

 

The bank can appreciate that we can sometimes work on the HOA to pay less than the full amount, and they can appreciate that they will be paying it in full if they foreclose.

 

This falls apart when the net just isn't there.  I haven't hit any x% rule spouted about FNMA, and the majority of mine are BOA/FNMA (yes, I could use help from whatever gods you prey to!).  You are being handed a line.  That line is because the negotiator is trying to gouge money out of the deal or it is because the deal isn't good enough to fit the guideline from the investor - and either the negotiator doesn't want to get blowback from forcing the investor to make the decision or the numbers are far enough off that FNMA will kill it.

 

You might try a number less than the full amount due to the HOA.  This gives the negotiator a toehold to say that he is saving the investor money over a foreclosure if he approves the deal.  Then you either have to come up with the diff or talk the HOA down - which is a lot easier than talking to those debt collectors when they have a 2nd lien, etc., usually.

Permalink Reply by Brenda L Wood on August 24, 2011 at 5:11am

The final outcome is that Wells Fargo insists that the investor (FNMA) only pay 6% of any outstanding HOA dues and 6% of the cost of the HOA Resale Disclosure Package.  The Seller will have to pay that cost - thankfully she was not behind on her HOA so I don't have to negotiate with them.  We have final approval with the deficiency waived!!  We close 8/31.

One final problem is that WF was the mortgage holder for the previous owner and a HELOC was not closed immediately upon payoff and the old homeowner was able to get some more money from the HELOC before it was closed so there is now an unreleased deed of trust.  The buyer is able to get insured without exception (and the seller holds title insurance). The attorney for the previous transaction is sending a demand letter to Wells Fargo for the release to be recorded as it's their position that Wells should have closed the account upon receipt of the payoff.   Does anyone see a reason not to move forward with the transaction?

Dawn Maloney said:

Brenda, what has your response been? I have the same problem on a WF HAFA short sale and would love to know what you discovered. Thanks!

Dawn