So what does that mean? In most short sales we work on in Massachusetts, we are working directly with the servicer of the loan. Servicers usually have delegated authority for an investor, and sometimes you can never find the investor. I have a short sale I’m working on in the Cape, in which the servicer has a very high value. Anyone in this business knows when a value is high, that pretty much dooms your sale, unless you can show the servicer why that property will not fetch that amount, e.g. a value dispute.
We did the value dispute on this property and it came back at the same amount we were quoted, so we knew something was wrong. They SENT us their reconciled value and low and behold, it was the amount the buyer was offering, so something is even more wrong. After MULTIPLE left messages for the Director of Loss Mitigation at Specialized Loan Servicing, and faxes, we felt we had to direct to the investor of the loan:
Good Morning James,
I’m writing today regarding the above property located in Massachusetts, which is a default property serviced by SLS.
Your company is listed as the investor on this loan, and before you tell me SLS has delegated authority, I just want to understand how a value reconciliation done on this property by SLS showing the value of $225,000, is denied and countered at an unrealistic value of $270,000. I have tried calling in several times to show them this error, and were are being told this is the number the investor wants.
This number will seal the homeowner’s fate to foreclosure, which he has been trying to avoid for some time now.
I am unsure what to do as I notified Darren Bronaugh several times via fax and email and still have yet to hear back. I also reached out and left voice mails for Christophoer Chavez (SLS loss mitigation supervisor) and emails, none of which were returned.
I would imagine that investors have some threshold for the authorization of a short sale. I can imagine if a property value came back at $400,000 and the offer was $300,000 it may make more financial sense to send that property to foreclosure, but I’m trying to understand how a property value of $225,000 with an offer of $225,000 is being denied and countered as too low.
I don’t often reach to an investor directly as there is no need because we can usually work smoothly with a servicer, but considering no one in management has addressed this issue even though I have reached out multiple times, I wanted to go to the investor.
Please let me know what I can do to help or assist and if there is anything that can be done on this property. Thank you.
Maryann Little, VP Short Sale Mitigation
Short Sale Mitigation, LLC
AA Premier Properties, LLC
500 West Cummings Park
Woburn, MA 01801
The information in this email is confidential and may be legally privileged. It is intended solely for the addressee(s). Access to this e-mail by anyone else is unauthorized. This email does not in any case constitute a binding offer, and any price or other contract term contained in this email is subject to written approval by the parties entering the contract. Short Sale Mitigation, LLC is a Massachusetts based loss mitigation company assisting homeowners and Realtors through the arduous Short Sale Process. Short Sale Mitigation, LLC is not associated with the government, and our service is not approved by the government or your lender. We are in no way affiliated with any government entity. We are an independent 3rd party negotiation services company. – Short Sale Mitigation, LLC is under the direction of AA Premier Properties, LLC in New Hampshire License # 066518
Today I’m patiently waiting for someone from SLS to respond, however am losing hope on this sale. Poor valuations PLAGUE the short sale market and unfortunately there is no oversight to this. How does the investor truly KNOW they will get more for the property if they foreclose? They are basing their decision on a valuation. Anyways, say a prayer for this homeowner as we patiently wait out and see what happens. I was told the investor was reaching to SLS and would ask SLS to respond to us.
Yes. Started the day with a HUGE complaint to the CFPB over a valuation from a company called MCS Valuations, that we believe tampered with one of our short sale valuations. My poor homeowner has been through enough. I’m going to advocate this one all the way up to a director at the CFPB if I have too. I’m thinking of putting a complaint into the Treasury too as the loan is Freddie backed….although I love my Freddie gang, this is blatant tampering by the valuations company and no one wants to actually LOOK at what happened. They all just say, “well that’s the value I see on the screen” – NUMBERS ARE INPUTTED WRONG all the time, and many homeowners lose their homes over it. Sorry, I’m not standing for this. My poor lady lost her husband on Christmas day!!!! http://shortsalemitigation.myproptrackr.com/
We are called quite frequently by Massachusetts Real Estate Investors looking to buy a short sale we may have listed, and asking what the best way to get them the property is. There is no magic ball for an investor to buy a short sale, but there certainly are things that will help the process when writing your offer. You want to make sure you are prepared with the following, when buying a short sale:
1) If you are an LLC, INC,. Trust or some other entity other than an individual, provide your “creation” documents, either articles of organization, trust docs etc. Sellers lenders will frequently request this to review information.
2) If you are using a HARD MONEY LENDER, you are NOT a CASH BUYER. If you check you are a cash buyer and your company is an LLC, the seller’s lender will want to see a copy of your bank statements. When a hard money lender issues you pre-approval, that’s exactly what it is, it’s a letter saying you are APPROVED to buy the sale, but your offer should be written as FINANCED without a contingency. If you are using hard money, just write in that it’s not contingent upon anything, like an appraisal (although I do know some hard money lenders want appraisals). The bottom line is you need a bank statement showing you can buy the property if you are a true cash buyer, so submit your offer accordingly AND your bank statement if you are a cash buyer.
3) Know your numbers. Selling banks are not going to consider a low ball number. If you are trying to buy the property for a certain price, have your back up ready. You should have repair estimates on hand, inspections, appraisals, comps, pictures of the property and any damage, and any other information pertaining to the sale that would affect the property value. Be prepared to support the value you are offering.
I was talking to an investor last week, and I told the person Zillow and Trulia were listing the property value at $110,000 and the investor’s offer was in the $40,000 range. Now I know Zillow and Trulia are NOT ACCURATE, but they ARE a gauge. Once the investor told me about the chemical plant across the street and the work needed on the property, it made a lot more sense to me on WHY they were offering such a low amount. If you do plan on submitting a low offer, be prepared to bullet point out WHY certain things affect the value so that we can submit it to the sellers lender.
4) UNDERSTAND WHAT SOLD AS IS MEANS! This means the seller has no money to fix things on the property, remove snow, winterize pipes, pay past due utility bills, get smoke certs or title V, or bring money to closing. 99% of short sale homeowners, do not have excess funds. If they did, then they’d be able to pay their mortgages. Many times an investor will need to assist paying off an execution, or other non-mortgage lien on title. The seller will NOT be cleaning the property at closing and you may have to take ownership of the property subject to the tenants still being there. Many times the bank has taken possession of the property so you will have to change the locks. These are all things to consider when submitting your offer.
5) Ask if the loan is backed by Ocwen or Nationstar and if so, back away quickly. Both servicers will take your offer, not respond, and then put the property up on Hubzu or Auction.com for other investors to bid on, even though you have an executed contract. I know, I know, it stinks, but any NON-GSE loan will end there and you don’t want to go through the work to lose the property to a higher bidder.
6) Just because it’s a foreclosure, does not mean it’s a SHORT SALE. I get one call a week from eager investors who see a property going into foreclosure and they call looking for short sale advice in Massachusetts. JUST because a property is being foreclosed upon does not mean it’s a short sale. The homeowner must have NEGATIVE EQUITY. If the homeowner has equity and is being foreclosed they can just list it online and get a traditional buyer and pay their loan off, so this goes back to knowing numbers.
That’s it for now, but as I think of more things, I’ll let you know.
We are trying to track short sale trends in Massachusetts per county. Feel free to visit our Essex County Statistic and Middlesex County statistics for January for an overview of numbers. So far the numbers in January are not surprising. As I have stated before January is one of the slowest months of the year for negative equity properties to sell in Massachusetts. Massachusetts short sales however are still strong in numbers overall. In 2014 we had one of our highest year for short sale negotiations in Massachusetts. Much of this is due in part to lenders working through the Massachusetts red tape and finally being able to foreclose on properties that were protected under Massachusetts law. Massachusetts does an EXCELLENT job of protecting defaulting homeowners, and does make every attempt to make sure that a homeowner has the option of a workout before foreclosure.
The Suffolk County short sale SOLD numbers for Massachusetts in January are unremarkable. There was not one single family property that sold short in Suffolk county in January 2015, however there were 3 multi families and one condo that made up the Suffolk sold market. The graph below represents those numbers. The DTO on the condo was zero, so it was likely a pre arranged buyer where the DOM for the condo was 73. The DTO was 3.67 for the multi family listings – and DOM was 135 – Muti Family listings don’t last long in Massachusetts. The market is strong for sellers of Multi families.
Moving on to active Massachusetts short sale listings, there is a TON of activity, and most properties are either UAG, or CTG. Boston, leads with 19 Single Family Massachusetts Short Sale Listings, 18 Condo Massachusetts short sale listings and then 13 Massachusetts multi family short sale listings. This is followed by revere that has much smaller numbers. The DOM for Suffolk County Massachusetts active single family short sale listings is 174, where DTO is 78. The DOM for Active Suffolk County Short Sale Condo Listings is 252, and DTO 94, where the DOM for Active Massachusetts Suffolk County Short Sale condo listings is 170 and the DTO is 47. Again, Massachusetts short sale Multi families don’t last long.
I pulled the numbers of CTG/UAG and Actives for Active Condo listings and very few short sales do not go under contract. Out of the active short sale condo listings in January for Suffolk County Massachusetts only 6 were active out of 25. The rest were CTG or UAG.
Our firm works with underwater homeowners throughout the state. Feel free to visit our website at http://shortsalemitigation.net for more information or poke around on our blog site here to learn the MOST about short sales. Our firm has the most up to date current information on short sale guidelines and what you need to do to get your home SOLD if you are underwater. Please don’t forget you do need some sort of hardship or inability to pay.
Call Maryann today to find out more how we can help 978-384-0032
Massachusetts short sale statistics are in for January 2015 for Essex County. We have broken them out by the Northern and Southern registry. All statistics are derived from MLS Pin, but show a remarkably active Short Sale Market in Essex County Massachusetts. The actives report includes those short sale properties that are under agreement, active, contingent, and back on market. Unfortunately the solds report does not offer such an strong outlook. There is a huge discrepancy in actives vs. solds in Essex County Massachusetts.
From our own experience, short sales are marred with unrealistic value counter offers from lenders, in which value disputes must be performed. When this occurs, time is added to the sale. A sale that could typically take 60 days from submission of the full packet will have a minimum of 30 more days added on when there is a value discrepancy. For single family homes in Southern Essex county you can see an average DOM of 200, where condo DOM actually increases almost 20% to 239, and the shortest DOM for Southern Essex for the January was multi-families at a mere 137.
At Short Sale Mitigation (You Massachusetts Short Sale Negotiation Team) we took the liberty of graphing some of the trends in January for Northern and Southern Essex, Massachusetts to show the actives and solds in January.
This graph shows the active files in Northern Essex County which includes, North Andover, Lawrence, Andover and Methuen. These four cities show 7 single family homes, 2 condos and 2 multi-family homes as being active on the market in Northern Essex, County Massachusetts.
There are only 4 total sold homes in Northern Essex county. We can say from experience at Short Sale Mitigation, that most lenders like to clear their books at the end of the year and December tends to be one of our busiest months for closings and this sold graph for January would support our own personal findings.
We have trends within our firms with our homeowners and the largest months for closings and intakes is July and August, and the also December consistently proves to be one of the strongest closing months for our firm. It stands to reason that the only reason four homes (single family) sold in all of Northern Essex county may be because most lenders did clear their books for December, and there were a few properties that. Also the Mortgage Debt Forgiveness Act was extended through 2014, so I would imagine any savvy negotiator pushed to have their properties closed by end of year to take advantage of the tax benefit. I do believe this may be extended again, but at the time of this posting there is no way to tell.
When you move on to more positive short sale news in Massachusetts, you can see that Southern Essex County has extremely strong short sale numbers. The graph below highlights Lynn, as having the highest number of single family short sales on the market in Southern, Essex Massachusetts. Lynn is the number one city in Essex for active short sales.
Lynn also has a strong presence of active condos and multi families for sale, followed by Haverhill, Massachusetts short sales. I was actually surpriced to see the activity in Georgetown Massachusetts for short sales. Not that Georgetown presented with a ton of underwater property, but I feel their are strong values there so it took me a bit off guard. Saugus too had a higher than expected active market.
Last but not least are the solds for Southern Essex County. Lynn, Haverhill, and Amesbury Massachusetts led the way with solds, in sales of property, however from the report, we can still see the trend of a large December closing and the beginning of the year with a very low sold report in both Northern and Southern. Haverhill has strong Multi Family short sales that sold in January.
Only time will tell if underwater property sales will be stronger throughout the rest of January.
Short Sale Mitigation, LLC is assisting hundreds of homeowners achieve the sale of their underwater property. Feel free to call us today to see what programs you may qualify for.
Some short sale programs offer up to $10,000 for a moving incentive, through Non-GSE loans.
We can help you wade through the tough short sale waters. Call us today for assistance
978-384-0032 and ask for Maryann
We have been getting increasing calls in the last few months from homeowners who have received an order notice. The notice at the top reads like this:
TO: homeowner name
and to all persons entitle to the benefit of the Servicemembers Civil Relief Act; 50 U. S. C. App…
claiming to have an interest in a mortgage covering real property in YOUR TOWN/CITY ..given by
You can see and read it here, but this is just one step your lender is taking to properly foreclose on your property in Massachusetts. Don’t get nervous. Not yet anyways, but you should make an action plan as to what you are going to do with your property. Can you work with your lender for a forbearance, modification of your mortgage, refinance, can you pay all missed payments and arrears? You may be at a point that none of those options will work. Maybe you have filed bankruptcy, and your house sits in limbo with no equity, while you still have to maintain and upkeep it. Anyways, one of your last stops may be a short sale, which is where we have assisted HUNDREDS of homeowners in the state of Massachusetts. We are quite familiar with the increased rate of order notices we’ve seen. We’ve seen a rise in short sales over the last few months and are here to answer your questions about the short sale process. Even if you want a modification, we can direct you to a wonderful firm ready to assist. There is NO CHARGE to a borrower of a loan for our services, and if you are interested in a short sale, we are one of the most experienced short sale negotiation firms in the state of Massachusetts.
Call us today at 978-384-0032 to find out your SHORT SALE OPTIONS! – We do TONS of post bankruptcy sales too.
Why is it When We Remove Payments off the HUD it’s Short Sale Fraud, but when a Lender Forces it, it’s OK?
So this got me thinking. Nick and I have always worked to make sure any payments to anyone involved in the short sale transaction are ON THE HUD. We feel squeamish otherwise. I do realize there are cases where there are POC’s (paid outside of closing) and other circumstances where a payment is made in relation to a short sale closing in Massachusetts, but we’ve always been taught that when you are making payments to parties related to the short sale transaction, it MUST BE on the HUD or it could be interpreted as fraud. Or IS IT?
Here is where I’m having trouble. Many short sales have an arms length transaction form or affidavit that a seller and buyer must sign. The common language in these forms looks something like this:
“All amounts to be paid to any party, including holders of other liens on the Property, in connection with the short sale payoff transaction have been disclosed and approved by the Lender/and or Servicer and will be reflected on the HUD-1 Settlement Statement”
Keep in mind seller’s lenders are in charge of the SELLERS side of the HUD, not the buyer’s side. I once had an Ocwen rep tell me to take the buyer’s DEPOSIT of the buyer’s side of the HUD. Ocwen in a short sale is not in charge of the buyer’s side of the HUD. Thankfully we escalated to Freddie Mac and they literally put in writing they could care less what is on the buyer’s side of the HUD.
This is my problem. This JUST happened to me. Lender A (The primary lender and priority position on title) issues approval and stipulates Lender B, MAY RECEIVE $500 out of the proceeds on the HUD for payment. Lender B, stipulates they want $6000 for the release of their lien. In reality, this amount is not off base because Lender B’s full owed amount is $60,000 and most people know in short sale transactions that the inferior lien holders get much less of a payoff. If you are in second position on title you typically receive 10% of your loan balance which in this case was $60,000.
NO WHERE on Lender A’s approval did it stipulate that Lender B could not be paid MORE than the $500 from other parties in the transaction. So, with approval from the buyer’s attorney we were going to close the transaction with the buyer paying $5500 towards the second lien and $500 granted by the first lien holder. The language above was NOT IN MY approval letter. Lender A did not even require a final HUD approval and I would say 85% of lenders do require this, but in this particular case lender A did not need a final HUD, so we were ready to close…….UNTIL:
Lender A wanted to see Lender B’s approval, and this is the exact transcript of what transpired next:
Short Sale Mitigation, Massachusetts
Hi Lender A,
Here is Lender B Lien release.
Please let me know if you need anything clarified or additional information.
Please counter the second lien @ $1,000.00. I don’t believe that management will approve much more than that amount. The asset is bank-owned and the sale will take place 01-21-15, if his client cannot be made to see reason. I am equally sure that they will not be appearing or sending their para-legal to bid at that sale in his client’s interest. The only way that all of us walk away happy is for the 2nd lien to accept our offer @ $1K to release and so this can close quickly.
Short Sale Mitigation, Massachusetts
We plan on closing as is. I’m not sure what approval process there is. We are utilizing the approval letter you sent already. It has been sent to the buyer’s attorney who is now scheduling closing. Please let us know what else we can do to help. We appreciate all your effort on this.
Why would you want to do this when you have no release from the 2nd lien? I cannot allow this unless we have a clearly negotiated release for the 2nd lien on the property. Part of the closing instruction is that we need to approve the final HUD. We will not approve the final HUD when you send it if it is not accompanied by the 2nd lien’s release letter for the agreed/negotiated amount.
The HUD sent with the review docs showed $500 going to the 2nd lien. I was surprised that with the foreclosure sale in place for 01-21-14, that this was not the pre-negotiated release amount. We already postponed the sale once to allow you to get the documents together. I would have expected that the 2nd lien would have been handled long ago. Please send 2nd lien acceptance at $1,000 for their release or their counter. I need the closing agent’s contact information immediately. I want to make sure there are no misunderstandings about how this will close.
Short Sale Mitigation, Massachusetts
There seems to be an inconsistency. The second lien IS releasing their lien. Also you only gave a lien release. The seller is NOT HAPPY at all that the deficiency is not released, but she has been advised as to what this means on both liens. I have had two attorneys review the approval letter and there are 6 conditions we must meet to close which the closing attorney said she could meet. The last line of the approval asks for proceeds, final HUD, and the approval sent to you, which we intend to do. There was no stipulation to receive a final HUD in the approval letter.
We are planning on closing on the 16th.
Short Sale Mitigation, Massachusetts
Lender A’s Boss email
We are closing this property this Friday and I believe there is some confusion with your negotiator.
This morning she said she could not allow closing because the second lien didn’t release their lien, but they are giving a lien release to close. It’s a bit confusing because you aren’t releasing you deficiency and maybe that’s what she is confused about. She then told me to offer the second lien holder double what she originally offered (Which was $500) – Anyways, that reduces your net, $500. She wanted us to offer $1000 for the lien to be released. It’s already being released. We have approval. We don’t need another one with a $1000 payout to the second. I asked to speak to you because we are going in circles, but she did not respond. Anyways, we plan on closing this on Friday. I’ve got two attorneys working on this and closing it as we are an attorney state and they have both given an ok to close. We are just waiting for the buyer to put the funds in escrow.
Lender A’s Boss
I think the confusion comes in here as she is needing the 2nd mortgage approval letter. Also, she indicated to me that she sent over closing instructions on her 1-7-15 email to your person and that we need to see a copy of the HUD1 48 hours prior to closing. Here is the updated letter for your records. Let me know if you have any questions.
Also, please forward me the second mortgage approval letter as she has not received this as of today.
Hope this clear things up for everyone
Here is where they get very tricky AND SNEAKY. The first approval letter stipulated no restrictions on the $500 payout to Lender B. Suddenly when they got a hold of the approval letter from Lender B they CHANGED their original approval. NOW they throw in two additional terms – 1) which was the requirement of a HUD-1 and 2) that $500 is the MAX the second lien holder can receive from the short sale transaction.
Short Sale Mitigation, Massachusetts
We provided the approval for the second. We sent it on the 9th. Then we were asked to counter the lien holder. That makes no sense. We have approval from you. We are following the terms, getting your net. Why would we counter them higher? You will then get $500 less in your net. We were then told it was because the second isn’t releasing their lien??? They are releasing their lien and I’m not sure why this is of a concern at all to you. That would be my or the seller or buyer’s problem if they don’t. You’ve provided approval already.
Please call me to discuss. I need to know what the problem here is. We are following the terms of the original approval letter, but I will ask the attorney to forward you a final HUD. I don’t see any issue in that. Why are you amending approval letters? I need someone to call me and discuss what the issue is.
There is no confusion here then. The negotiator has advised we would allow $500 and not the $6,000 as the letter you sent indicates. She countered at $1,000 to the 2nd. I am not sure what the confusion is here? So I updated the letter to make this more clear for everyone.
Short Sale Mitigation, Massachusetts
I have received three approvals now on the same property in less than one week. We were all set to close Friday, but your bank is now changing the terms of the approval which could prevent the closing and this will go to auction on 1/21. I have never seen any lender do anything like this.
I will confer with the borrower and see where to go from here.
I am not sure what the confusion is since we have been telling you what is allowed to the 2nd mortgage which started at $500 and no $1,000. **NOTE FROM MARYANN** [They are only allowed to dictate their side of the HUD, not the BUYERS SIDE – They offered $500 out of the proceeds and we could work with it] The only letter has for the second is for $6,000 and I am under the impression that you guys are allowing the $6,000 with a cash contribution with the borrower or somewhere else. It was made clear by her what was allowed. Also, she stated in the email that she needed HUD prior to closing and you are disputing sending that now. If you want to call and discuss I am in all day.
Short Sale Mitigation, Massachusetts
At this point, it will be out of my hands. I spoke to the borrower, who by the way is on social security and has a severely reduced income, and was denied a modification. Last night she asked me to contact the Attorney General, Consumer Protection Finance Bureau, and OCC, which I don’t want to do because that will likely muck this sale up and the closing attorney now wants to close Thursday.
The chain of events is clear. You emailed your required NET for the sale on 11/10. We countered and got that NET from the buyer. At that point we could close. You said you would “allow $500 to the second lien” out of your proceeds for a payment to the second lien. You issued approval on 1/7 and I gave everything to the closing attorney except the second lien approval because we didn’t have it yet. On 1/9 we got the second lien to agree to a release and submitted it to you as requested. The closing attorney scheduled closing.
On 1/9 we were asked to give the second lien MORE than $500, which reduces Guaranty’s net, which makes no sense. YOU ISSUED AN APPROVAL we could close with. When I pointed that out I was given all kinds of conflicting information from you and conflicting approvals. On 1/12 you then said that the second lien wasn’t releasing their lien so you wouldn’t allow it. I’m not sure what you won’t allow, when you’ve already issued approval.
Then, AFTER you went back through the review of the approval I was then issued a second letter with completely different verbiage. On 1/12 we at 4:12pm we received a different approval with 8 different requirements to close and one letter at 4:13 with 7 different items to close.
Anyways, what it boils down to is we are able to close this on Thursday 1/15 and you will not have a complete loss. You will NET the $55,000. Once I get the office above involved it will likely go to FC and you will get nothing, so I’m not sure how that helps the investors who invest in your bank at all. You will then likely incur MORE costs, chasing the borrower in court, for the balance and not be able to get it because she has nothing, preserving the property, paying another agent to list and sell it, paying more in taxes and all the utilities will then become your banks issue, as MA is a superlien state.
What I see was a lot of last minute changing of information that possibly prohibits this sale, when last week when we got approval, we were all set to schedule closing.
I don’t think there is much more to discuss at this time. It’s extremely disappointing. I’ve done well over 300 short sales and never had a lender pull a last minute flip flop on their approval. I make one last plea to allow us to close with the original letter from last week. I don’t see how it’s a good business decision otherwise, but let me know.
All our notes on system indicate that she was negating the release of the second mortgage and not allowing the $6,000 to the second as their approval indicates. Notes clearly state that we allowed $500 and went back when that was denied to you to offer them $1,000. Because you stated to me that things are being misunderstood by us, I put everything that was discussed in the final letter to make it clear. Now you don’t like the letter because you are allowing the first to get $6,000 which you clearly know we were not allowing the $6,000 and because a letter that was sent didn’t clearly state this and now it does?
Here is the only HUD we have received from your office and we approved it based off of this. This is what we were lead to believe.
Short Sale Mitigation, Massachusetts
Your bank cannot negate someone else’s release. If the borrower paid them $6000 today, they can issue release, and that has nothing to do with your bank, but the borrower has nothing so that won’t happen.
You can either offer the $500, the $1000 or nothing to the second lien. That’s up to you, but at this point if you cannot honor the terms of the original approval, I must take all of this information, including the three different approval letters, and contact the AG’s office, Office of Comptroller, and Consumer Protection Finance Bureau as the seller requested. I want to make it perfectly clear I do NOT want to do that because we can close this on THURSDAY with the original approval letter.
Here is where he completely does NOT understand a lien release and dictating terms of an approval letter
Yes, the first does dictate what the second is allowed in a closing inside the HUD1. ***note from Maryann*** [This is partially true. If the lender allows $500, without restrictions, then anyone can pay MORE to the second lien to finalize the sale. Lender A had NO RESTRICTIONS in their original approval letter]If they (buyer, seller, agents) agree to pay something outside of the HUD to meet the 2nd mortgage request, I am fine with that. You asked me for clarification on the short sale and I added more details [NO HE CHANGED APPROVAL LETTERS]to the short sale letter in hopes to put all information in our system notes and emails I was forwarded from both you and Nancy.
Please make sure you include all the emails and correspondence in regards to the short sale so they have a clear understanding both sides.
Short Sale Mitigation, LLC
Ok thank you.
I will forward to the closing attorney to see her thoughts and if we are allowed to use the first approval letter, I will request a final HUD for your review. Does that work for you?
That would be fine with me. But again to be clear we are allowing the second $6,00 in the HUD. If the buyer/seller pay the second prior to sale the $5,500 and they reissue a letter for $500 to release lien or settle (can’t believe we are being questioned here about only releasing our lien only and the second is doing the same) that is fine with me. At this point if this doesn’t make sense I think it is best just to give me a call.
The last email is the best. Here he writes, we are ALLOWING the second $6000 on the HUD. Then says if we want to pay it PRIOR TO THE SALE we should get a second approval letter – This is the funniest thing I’ve ever seen. This is A VP at a bank. I have NEVER EVER had this back and forth before. Either you want to close your transaction or not.
The beauty is this whole sale just unraveled not because of the above, but because of a major title issue (currently being fixed) we DID however get them to cancel the foreclosure sale and they SAID they were issuing a NEW approval which is hysterical. I’m sure it will be different the 5th time around.
So I ask you, is it FRAUD when a lender asks you to take something off the HUD you previously disclosed? If I disclose to this lender that the buyer is making a $5500 payment and they ask me to remove it from the HUD is it fraudulent? Why is this ok? We are CLEARLY trying to disclose that we are making a payment to the second lien holder and had we closed with the original approval, we could have had the $5500 on the buyer’s side of the HUD. Should a SELLER’s LENDER be allowed to dictate the BUYER’S side of the HUD? Absolutely not. Why then we would end up with the seller’s lender dictating points, fees, appraisal amounts, attorney fees, which has nothing to do with them. Why is it ok for a lender to tell you to remove a fee from the HUD on the buyer’s side? That makes no sense. Why is it ok at all? Do you know how many times we’ve been $200-$300 short for utilities in Massachusetts that someone ponied up, and we HAD it on the HUD and were asked to remove it? It has to get paid. Why is it ok for the lender to ask us to remove it and then cry fraud if something isn’t there. It’s a double standard and not even remotely regulated, which is so sad.
This is big change to the HAFA program itself in case you didn’t hear about it yet. These two very important changes will affect all NON-GSE mortgages (not Freddie, Fannie, FHA, or government backed programs). Massachusetts short sale negotiators may be rejoicing everywhere.
The first change is related to the seller incentive. The current incentive is $3000. A seller MOVING incentive is an incentive to a borrower who still occupies the property. It also extends to tenants. If the property is STILL occupied this amount will be going up to $10,000. That’s a pretty big leap.
The second change is related to the subordinate liens being paid off. As it stands, subordinate liens are allowed up to $8,500 to release their lien against the property. The current changes allow subordinate liens to be paid up to $12,000. This could all be for one lien or several.
These changes are being implemented starting for any file closed after February 1, 2015.
What does this mean for HAFA short sales? My gut says higher priced short sales to meet the required NET for the servicers, but only time will tell.