HAFA short sale – Chase continues to amaze, NOT!

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I have written before about short sales and probably about Chase.  This company is one of the slowest I have had to deal with.

HAFA sales are supposed to be streamlined and go through a lot quicker.

We waited 2 months to get an approval to be a HAFA approved short sale listing. We got the approved price that was needed to be marketable. We put the home on the market. It was sold in 10 days. The contract went to CHASE where I was told it would take 10-14 business days for the final approval of the offer. It took 6 weeks to get that approval verbally!  After a week of getting a verbal okay we got the approval letter which stated that property needs to close in 18 days from now. ARE YOU KIDDING ME?? Chase adds more work for itself. We now need to straighten out the timing to something realistic.  I sometimes wonder about the IQ of the persons making the decisions for Chase.

I think some of us should go into Chase and straighten up the process!!

By the way,  I did a HAFA approved sale through Wells Fargo in days after the contract was received by the negotiator.

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New Trend in Short Sales?

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What is this trend?  Asking a buyer to pay money toward the seller’s 2nd loan. I am seeing more and more in the private remarks on the MLS “buyer to contribute $**K toward the 2nd loan”.  I saw one last week that asked the buyer to pay $26K to the seller’s 2nd loan.  I confirmed with the listing agent that is what they meant to say.  It was! Continue reading

HAFA short sale approvals are not created equal

I had the experience recently on a property with a HAFA short sale approval in place. My client put in his offer and within 72 hours we had the short sale lender approval! FAST. The seller’s loan, by the way, was through Wells Fargo. Continue reading

Short sellers don’t get it in San Jose

Short sellers in San Jose are somehow missing the boat. 

My client wanted to see 16 short sales properties.  As someone that knows the pitfalls of short sales, I took to doing some research.

I began by emailing the listing agents on all my usual short sale questions – It has gotten to be quite a list – Checking out the seller’s hardship, the lenders involved, the deficiency involve, experience of the agent and motivation of the seller beyond the hardship, etc.

After I weeded out the improbable ones to close, most were shown “By Appointment Only”.  First a comment about the weeding out the improbably ones, in Santa Clara County right now only 22-25% of the short sales complete with a successful sale.  That means 75%+ don’t complete.  Why waste a buyer’s time when most short sales have a 3 out of 4 chance of FAILING!  Continue reading

Pitfalls for the Sellers of Short Sales

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You need to sell short sale. You are about to interview agents but how do you know who is right for the job?

I would submit the following things to look for –
1. You want a Realtor that is honest with what it takes to get through the process.
2. A Realtor that can do good pricing – pricing that will bring in the offers yet will also be in the ball park for the short sale lender. Have you ever seen an agent price a home way below the market – obscenely low? Those sales do not complete. They lose the buyer when the short sale lender objects to the offer price and counters it way higher. That agent is leading the seller toward the 78% of failed short sales in Santa Clara County.
3. Is the Realtor good with paperwork and have systems in place to get all that is needed and submit it in a good readable format to the lender?
4. Does the Realtor coach you into the best presentation of the home? Sure you don’t have extra funds to repair the property but you can make the home marketable – You still need to compete with other homes on the market and want a thoroughly committed buyer that will continue to want the home over the many months that they need to wait patiently.

You’ve gone through the grueling ordeal of getting a Realtor, getting the home prepped and on the market now the offer(s) arrive. Next to consider –
1. Who is the buyer?
2. Is he truly lender qualified?
3. Is he running all over the place writing offers on other homes?
4. Is he experienced enough to know things come up that need overcoming? Will he just bolt at the first hurdle or the 2nd or 3rd?
5. Has the buyer been counseled on the time it takes to complete a short sale? Can he be patient?

I cannot emphasize enough that you want a knowledgeable Realtor that will help guide you through this challenging process and look forward to try to avoid the pitfalls and land mines that present themselves along the ways.

Care to comment?

Pat Chadwell
Broker, Certified Distressed Property Expert

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Short sale – A panacea or a black hole for a buyer?

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What do buyers need to know before considering pursuing a short sale property?  Is it a panacea or a black hole?

1. What are the possible consequences for the seller that would ultimately NOT make him take any approval given by his lender? Here are just a few questions-
a. Will there be a large potential deficiency on any loans, especially a 2nd loan?
b. Will the seller, with some reserves at his disposal, be unwilling to contribute any funds to see the home sale complete?
c. Is the seller actually trying to get a loan modification while the home is on the market?

2. How soon is the auction sale date? Often the lender will not postpone any auction date beyond one 30-day extension. Wells Fargo has policy on this point.

3. Who is the lender? How many loans are on the property?  Some lenders are way more responsive than others. Bank of America, who took over Countrywide, has some 500 potential investors behind the scenes. Each investor has their own policy on dealing with short sales. Some are reasonable, some want 10% to consider taking a shorts sale, some want a promissory note signed by the seller to repay some of the debt, etc. Additionally when you are dealing with bank employees some are not properly trained which can lead to arbitrary answers.

4. What other liens exist on the property or against the seller?  An HOA lien, child support, IRS liens are quite common. Some can be taken care of through time but you need time to work through it. I recently heard that some credit card companies are getting judgments against a seller and then recording a lien against the seller which shows up when the escrow company does its job to look for recorded liens.  The credit card companies want to get a piece of the pie and can delay closing.  Any liens can prevent closing altogether.

5. You must remember you are buying a home as-is. Usually with no upfront inspections.  When the short sale lender approval is given the actual sale starts and you are under the gun to get your inspections. What happens if you find out about unknown issues – like a broken fireplace chimney or furnace that does not work?

6. What is the listing agent’s ability to get the job done? Is she submitting all the forms in a completed package? Is she responsive to all parties? Also is she proactive by giving comparable sales to any agents doing a BPO (broker’s price opinion)?

7. What about timing? A few lenders respond in a couple of weeks and most others take months. Do you need to have some predict on your moving date? Is your lease ending on your apartment? Baby on the way?

I do represent sellers with a high motivation after I look at the potential to close the transaction.

Regarding representing a buyer in a short sale, I will look at the above and determine the potential to actually close the sale. If anyone, especially the seller or listing agent is less than forthcoming to my questions, I skip the property. After all only 22% of the short sales are completing right now in the Santa Clara County. There are LOTS of pitfalls.

Who wants to put their client through 6 months of waiting to find out they will not get the home?  At the same time while the buyer is waiting for an answer to the short sale interest rates may be going up so the buyer’s buying power was reduced in the meantime.  That is my viewpoint on how I need to represent my clients fully.

What do you think?

Pat Chadwell
Broker, Certified Distressed Property Expert

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Successful Short Sale right before auction

My client was told in July they were going to foreclosure auction in days. They moved out of the house. The home did not go to auction and they called me in October about doing a short sale. We got into contact in 5 days and had 3 offers – the highest was $20K above list. There were 2 Wells Fargo loans. After losing over a month going the HAFA route and being denied we were up against the wall time wise.

The foreclosure sale date was set for Jan. 2nd. Over the holidays we finally got 30 days to close and the foreclosure was stalled to Feb 2 (with no more extensions allowed).  Wells Fargo was truly better than any other lender on a short sale that I have worked with.  When it looked like we needed 1 more day on the 2nd approval (just in case) we did not close Wells Fargo Home Equity gave us another month.

The buyer on the other hand was out of control. Asking for $30K repairs, switching lenders mid-stream (and buyers agent chose not to tell me) and taking their time with new lender disclosure requirements. I can’t stress enough how the buyer needs to be willing to take coaching from advisors – namely the Realtors and not from “friends”.

We were lucky to have a title company (Old Republic) that did everything to pull off a miracle. Also the lender the buyers went to thanks goodness knew his job and helped too.  He got the funder to suggest the loan package be deliver on the weekend to her house so we could fund Monday AM and record in the later afternoon. Even though all deadlines were off we still closed on Monday January 31.  Today, February 2nd would have been the auction date.

Seller now only has a short sale on his credit but not a foreclosure. YAHOO!!!

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New California Law would eliminate the 1st lenders right for a deficiency judgment

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California Senate Bill 931 is good news for many homeowners trying to do a short sale.

Here is the exact text of the bill – http://www.leginfo.ca.gov/pub/09-10/bill/sen/sb_0901-0950/sb_931_bill_20100930_chaptered.html

It will not protect the seller from a claim of fraud or waste.  But most sellers will have this protection of no deficiency if they do a short sale on the 1st loan only.  NOTE: This law does not go into effect until January 1, 2011.

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Short sale completions a drop in the bucket!

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Hot off the press from Mortgage Servicing News * (7/10 issue),  Fannie Mae closed 17,000 short sales in the 1st quarter of 2010 and Freddie Mac closed 9,600.  With approximately 1/3 of a MILLION homes in some stage of foreclosure that means only 8% were closed by these two entities.   Some areas the amount of short sales is well over 30% which is a huge disparity from the 8% stated as closing successfully and the 30% that are attempting to close.

One change that might improve things is the two entities are expected to have the Home Affordable Foreclosure Alternative (HAFA) program up and running by August 1. 

I, for one, will be happy if the short sale process actually speeds up.  The battles that ensue with short sales have left a lot of bloody people on the playing field (sellers, buyers, agents, etc.).

*article titled – With Tweaks to Programs, Short Sales Could Boom Now

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Bravo to cash buyers

Cash Money

Last week we were taking offers on a short sale of a triplex in Richmond.  The amazing point was not really that there were 19 offers after 1 week or that it sold for way above what it listed for but that almost 2/3 of all the listings were coming from CASH buyers. 

Needless to say we accepted the cash offer.

I really want to commend those buyers with cash!  It is not an easy feat to amasse cash to the tune of hundreds of thousands of dollars.  That saving style is a successful action.


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