Tales From The Short Sale Trenches

Tales From The Short Sale Trenches

With two thirds of the local Northern Nevada listings being Short Sales today, it is important to know what is going on in the World of Short Sales. It is especially important to remember that each Short Sale is unique unto itself and these stories shouldn’t keep you from buying or selling such a property. Remember, forewarned is forearmed. Seller’s circumstances vary, the lenders and their investors vary, the market changes, etc. There is no one formula for success.

While many Short Sales go through handily, there are those that defy logic, reason, and sanity. We had one such situation last week causing us to call a U.S. Senator for assistance. What caused such a drastic action? Consider the facts. On December 30th we received a Short Sale approval letter providing that escrow close by February 21st. No problem, everyone went in to action and we are well on our way to closing. On January 18 we got an amended Short Sale letter saying we had to close on January 25th. Whoa! What’s going on?

Correspondence with the lender revealed it to be a FNMA … Fannie Mae … requirement and they will not postpone the Trustee’s Sale (foreclosure) which is scheduled for February 2nd. The Buyer’s lender said she can close on the 4th, but no movement by the bank until January 24th when they said we had until January 31 to close. This with a Seller expecting her fourth child on March 1st not knowing if, or when, she is moving. For the sake of a couple of days there may be another bank-owned property in the neighborhood.

We had another dandy experience with lender Short Sale lunacy last week. Here’s the back story – Listed at $235,000. No action until priced at $189,000. Two offers – one at $184,000 and one at $165,000. Bank counters $197,000 which is accepted. We motor along getting ready to close when suddenly the bank comes back with a price of $250,000, a requirement of the investor. Clearly, the home is not worth that kind of money.

We assemble information to show value, confirm with all parties that they are at their maximum price and contribution and go back to the lender. The lender accepts the original deal, which was theirs in the first place, and we continue on for a couple of days. The bank comes back at $222,000 from the investor … Fannie Mae … with no give. The market just isn’t there, but the investor is locked up. Had to get some tricks out of our sleeves on this one … we’ll see if they work.

Our Advice: It is amazing how belligerent the investors are becoming. Yes, it is their right as it is their money, but it seems senseless for them to negate viable Short Sales only to acquire the property via a Trustee’s Sale. They seem to be forgetting the human side of things – the homes that are being destroyed and the incredible emotion that is tearing at so many people these days. Most sellers are victims, not strategic Short Sellers. They are selling short because they have to. Whether job loss, divorce, illness, transfer, or any other valid reason, it is beyond their control. Had prices not dropped they could sell and move on with their lives. With the market being what it is, they have no choice but to sell short or let it go. When they opt to sell short they don’t deserve the emotional roller coaster that is thrust upon them by inconsiderate lenders representatives.

Stay strong in your Short Sale. It can be maddening, but stay the course and you will be justly rewarded. When it comes to choosing professionals to assist you with your real estate needs…

Experience is Priceless! Lisa Wetzel & Jim Valentine, CDPE, SFR, RE/MAX Realty Affiliates, 775-781-5472. carsonvalleyland@hotmail.com, www.carsonvalleyland.com

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Lisa Wetzel and Jim Valentine are the authors of this blog. Lisa, Jim and Jessie are experts in Carson Valley , Carson City and the tri-county area of Douglas County , Carson City and Lyon County. Call our team anytime at 775-781-5472 or 775-781-3704. To Search for Homes go to: Carson Valley Listing Book or visit our website at www.CarsonValleyLand.net or www.CarsonValleyLand.com

Northern Nevada Short Sales vs. New Short Sale Rules

Northern Nevada Short Sales vs. New Short Sale Rules

New Short Sale guidelines were just released for the Homes Made Affordable, HAFA, program. They take effect on February 1st, and loan servicers have been encouraged to implement them as soon as possible. The HAFA program was originally instituted to help expedite the Short Sale process, but the results have been abysmal. The new changes are intended to change those results.

The new guidelines are quite varied, each addressing a weakness in the system. Interestingly, the Loan Servicers are no longer required to verify a borrower’s financial information to determine if the total monthly loan payments exceed 31% of the borrower’s monthly gross income, but they must verify the borrower’s hardship. Each Servicer may include a requirement on their own that borrowers provide updated financial information. Another significant change is that there is no longer a minimum distance requirement for how far a Borrower moved to cause a problem holding the property. Also, the Borrower’s reason for relocation does not need to be connected to re-employment or transfer of employment.

The property must be or must have recently been the Borrower’s primary residence. Now a property that has been vacant or rented to a non-borrower for less than 12 months prior to the date of the Short Sale Agreement is eligible. The 6% cap for payments to each subordinate lien holder has been removed. The Servicer can determine the amount or percentage of the unpaid lien that will be paid to each subordinate lien holder up to a point where a $6,000 aggregate cap has been reached.

The lender must communicate an approval, disapproval, or counter within 30 days of receipt of an executed sales contract. This should help reduce the number of Buyers that walk away out of frustration with past delays. The Servicer may not charge vendor fees against the listing broker’s commission. Also, the real estate commission paid shall be the amount indicated on the listing agreement, not to exceed 6%.

The HAFA program does not apply to Fannie Mae, Freddie Mac, FHA, VA, or USDA (Farm Home Loan) loans. Servicers are not required to implement the new terms to any loan reported via the HAMP Reporting Tool, or for a borrower already determined ineligible for HAFA, but they are allowed to reevaluate borrowers using these guidelines.

Our Advice: Short Sales constitute 30%, or more, of the Northern Nevada Real Estate Market right now. Short Sale nightmares are real, but many go through just fine with minimal hassle, just a lot of hard work on the part of your agent. Don’t decide whether or not you are going to sell or buy a home that is selling short based on what you’ve read or heard. Take your specific situation to your agent and discuss it thoroughly. Many factors come in to play including the lender involved, the property value perceived by the investor, the Sellers circumstances, Buyer’s circumstances, and more. These new changes will have a positive impact on the success probability of many potential Short Sale properties. Check it out – you might find great results for your situation, both Buyers and Sellers.

More rule changes to make things better? Time will tell. We’ll see if the fine tuning gets the job done. When it comes to choosing professionals to assist you with your real estate needs … Experience is Priceless! Lisa Wetzel & Jim Valentine, CDPE, SFR, RE/MAX Realty Affiliates, 775-781-5472. carsonvalleyland@hotmail.com, www.carsonvalleyland.com

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Lisa Wetzel and Jim Valentine are the authors of this blog. Lisa, Jim and Jessie are experts in Carson Valley , Carson City and the tri-county area of Douglas County , Carson City and Lyon County. Call our team anytime at 775-781-5472 or 775-781-3704. To Search for Homes go to: Carson Valley Listing Book or visit our website at www.CarsonValleyLand.net or www.CarsonValleyLand.com