All Forum Posts by: Denise Evans

The only time the bank says "not enough" is when their appraisal indicates the buyer should be offering a significantly higher amount of money. If a servicer says "not enough," then you should ask something all the lines of some of the following:

Me: What is your appraisal?

Bank: They either (1) tell me and I laugh because it's ridiculous and we talk about the process to appeal the appraisal, or (2) they tell me and it's realistic and I have to decide what to do, or (3) they don't tell me. Let's suppose they won't tell me.

Me: Do you need more money in the deal, or do you think the borrower should be able to bring cash to closing?

Bank:  They almost never think the borrower should bring cash to closing. If they do, they've misinterpreted your paperwork, usually. Discuss that, because THERE is your problem.  Usually, however, they will tell you how much more money needs to be in the deal, based on the appraisal, even thought they won't tell you the appraisal amount.

Me: My buyer won't increase his price that much. How about if the buyer increased his price by 1/2 of the amount you need, the seller borrowed some money from relatives for 1/8 of the amount you need, the real estate agents agreed to cut their commissions to generate 1/4 of the money you need, and the HOA receiving delinquent dues agreed to compromise some and generate the other 1/8 you need. Would that work?

Bank: Almost always, they will go along with this.

@Mindy Jensen, I usually tell people to allow 45 to 60 days for a short sale. The more complete the package, the faster things go. These are things I do that help, but are not required:

• ASK the document processor and the negotiator about things that might slow down the process. This might include required PMI approvals. There are certain delegations of authority by HUD and by PMI companies that allow the servicer to approve a short sale without getting specific approval from HUD or PMI. Others might require separate analysis and approval. If you learned that increasing the offer by $5,000 would reduce the loan loss by $4,500 and thereby make the whole deal fall into the servicer's delegation of authority, and save 60 days on approvals, would you be willing to increase your offer? Of course! But, you must ask that questions, and then react appropriately, if that makes sense. Servicing company personnel are evaluated on how quickly they are able to close files within internally recommended time frames. They want to help you get the deal done in a timely manner.
• Be mindful that all documents transmitted other than through Equator must be imaged into the system and the proper file. This goes more quickly if the scanners can detect which file your documents belong to. Buy some return address labels, print the borrower's last name and account number on a few pages of labels, and slap a label at the top right of every single piece of paper sent to the servicing company. 
• Make sure all pages are legible. This should go without saying, but you'd  be surprised how often a sales contract, for example, is circulated among 4 people in 4 different cities for signatures, and the final product is not readable. Let them all sign separately, and then send the 4 different legible copies to the servicer. Same with arms length affidavits.
• Provide a one-page recap of important sales contract terms. Parties, price, earnest money, closing date, contingencies, and deadlines to remove contingencies.
• Make sure the estimated closing statement is accurate. You'd be surprised how often closing companies don't know how to do an estimated closing statement properly for a short sale. The most frequent mistakes are showing cash to/from seller, not having all the blanks completed at the top of the form (including address. For some reason, many do not put the address in all the blanks required) and not knowing how to handle payoff deficiencies on the settlement sheet. Also, find out ahead of time what closing expenses are routinely disallowed. For some, that is overnight fees. It might be past due HOA dues. Every one is different. Find out on the front end.
• Send separate documents separately. If you send a package of 150 sheets of paper, a person must look through all of those, separate them out into the correct smaller "packages" of papers, and then label each one as "2016 tax returns," for example, and save them. If you send each set of documents separately, the process goes a lot more quickly.
• Most of the borrower's monthly expenses, and amortized annual expenses, fall into the "other" category. Attach a separate sheet giving details of "other." It saves the time of the negotiator wondering, "Why is "other" so high? Is the borrower gaming the system?" and the research required to answer that question.
• The tax returns sometimes cause questions. Attach sheets to explain anything that might be a red flag. Had rental income on tax return but did not list rental houses as assets? Why? Were they foreclosed, sold, no equity in them, etc?
• Be succinct with the hardship statement. Usually, three sentences is all it takes. If the borrower has 5 pages of hardship explanation, that one goes into the negotiator's "read later" stack of papers .
• Write N/A in EVERY blank that is "not applicable." That way the document processor or negotiator does not have to wonder if you forgot something.
• Write on bank statements with explanations of every deposit that is not from a readily identifiable source, such as non-payroll deposits. Usually, those are just bank transfers or loans from relatives or credit card advances. Putting an explanation (and showing the same transaction from the account from which the money was transferred, if relevant) cuts down dramatically on due diligence time by the negotiator.
• Make sure EVERY blank on the form sales contract is completed, contains "n/a" or contains the appropriate initials or signatures. Every one.
• Never wait for the negotiator or document manager or single point of contact to reach out to you. When you think you've submitted a complete paperwork package, as the document processor how long it will take to evaluate for completeness. Call back one day after the date they set.  Do this with everybody.

If the mortgage pay off is $135,000, a sales price of $135,000 will not generate enough proceeds to payoff the mortgage. What closing expenses are typical in your area? Will there be a real estate commission? Personally, I'd probably pay up to $140K for a quick closing and getting on with life.

That's interesting @Jennifer Kinzle, I HATE dealing with Nationstar. Maybe I just got some bad eggs.  I like Citi, WF, BofA and I LOVE Regions short sales.

It depends on how much your time is worth.  A DIY easy short sale will take up around 5 hours of your time, beginning to end. A difficult one will take around 40 hours.

Since a probate estate does not have living expenses, the lender will look to any cash or liquid assets in the estate to see if the balance over your short sale offer net proceeds can be brought to closing by the estate. If so, they will demand that money. Then you won't have a rapport with the family any longer.

Some lenders prohibit assigning the contract to someone else. Whatever name is on the short sale approval letter, is what name must be on the deed.  Others readily allow you to apply for an approval letter in a new name, once you get approval in your own name.

The REAL problem with wholesaling a short sale is that in order to obtain short sale approval, you must almost ALWAYS provide proof of ability to close. You must have a bank or investment account statement showing the cash on hand for the non-financed portion of the purchase (or a bank or investment manager letter saying the same thing) and a pre-approval letter for the financed portion. For wholesalers, that is typically the requirement they cannot meet.  So, it's not illegal. It's just not practical.

There is no difference among properties and short sales EXCEPT that loans originally booked as commercial loans rather than residential loans generally require less paperwork for a short sale. That is because there was no FHA, no Fannie, no VA, no PMI, etc. So, no federal requirements as far as standardization of paperwork to approve a short sale.

Large commercial loans originated between 2003 and 2007 were generally packaged and securitized, just like residential loans. Some were sold out to insurance companies, others to a variety of bond holders.  Others, usually less than $5 million, were generally originated by a local or regional bank and retained in the loan portfolios of those banks.  If the loan is still owned by the bank that originated it, a short sale is usually just a matter of negotiation with the officer in charge of that loan, or the special assets department.

Thank you, @Angie Williams!  I'm not a high volume poster, but I like to make sure my comments count!

If her lease expires in June, then the landlord is giving her the ability to buy out of her lease for less than the full rent for the remaining term. If she buys out of the lease, then the landlord can re-rent it the next day and keep the money. Or it can stay vacant for 6 months, and it does not affect her.  Under the circumstances, I think it is a good thing to pay the 2 months rent and buy out of the lease. She is getting the certainty of being off the hook. The landlord is taking the risk of re-renting it within the two months or maybe not.  This is a good deal for everybody.

If the listing agent is the reason for the delays, I'd ask him to reimburse you out of his commission.