Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
Here's a fun story...it's long, but I think you'll get a good chuckle:
We have a short sale under contract, and there are two mortgages on the property, both held by Chase Bank. To get the short sale approved, there are two separate Chase Bank negotiators that need to negotiate the payoff of the two separate mortgages (let's call them C1 and C2).
C1 says they're happy with our offer and have accepted. C1 also says that they will even agree to pay C2 up to $2800 to get them to release the second mortgage lien. C2 says they want $4300 to release the lien. That seems fair. So, I agreed to pay the extra $1500 to satisfy the C2 mortgage lien.
But, C1 is now saying that they refuse to allow C2 to get anything more than $2800, even if it's ME (the buyer) that's paying it. C1 says they'll foreclose if C2 doesn't accept $2800. And C2 says they won't accept anything less than $4300.
So, basically, one part of Chase Bank is refusing to allow me to pay more money to another part of Chase Bank, and even worse, if C1 forecloses, C2 will get nothing and C1 will ultimately get even less money from a foreclosure.
Specialist · MA · Member since 2009 · 858 posts · 306 votes
13y
Ann is too kind. Sorry gang. I'm not very active on BP anymore, but when you get stuck on a short sale file, you have to escalate. MOST lenders have a way to escalate the file, ie, calling their executive departments and a direct route to talk to someone in a higher department to try to resolve the issue. It works in MOST cases.
Once you escalate most times, your issue is resolved within 24 hours.
If you have two files with the same lender, it doesn't mean it's the same investor that backed both. Most lenders are just servicers for a different investor, ie freddie fannie, mtg backed securities, portfolio loans, fha, etc. If you have two different investors EACH may have a different minimum NET requirement so on this file it seems as if that happens. Having two loans with the same servicer doesn't mean each department talks to each other either. In most cases if you have two BOA loans, you're doing one on Equator and one through faxing.
Don't assume it's an easy sail if both loans are with the same servicer. I would say for the MOST part they will and do work together but definitely don't expect that ever time.
Real Estate Investor · Pensacola, FL · Member since 2012 · 136 posts · 83 votes
13y
Wow, that pretty much sums it up, doesn't it? I am sure there are many people on this board that are very successful with short sales, but I won't even waste time with them anymore. The last one I wanted I spent 3 months from the time I submitted an all cash bid until the time they requested the seller's financial statements.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Ben Siegelbaum:
Wow, that pretty much sums it up, doesn't it? I am sure there are many people on this board that are very successful with short sales, but I won't even waste time with them anymore. The last one I wanted I spent 3 months from the time I submitted an all cash bid until the time they requested the seller's financial statements.
We've been relatively successful with short sales, but that's just because we've learned that it's a numbers game and we don't let ourselves become emotionally involved. At least we TRY not to... :)
While this story is bad, I have about a dozen other almost as ridiculous.
Lexington, KY · Member since 2009 · 2k+ posts · 1k+ votes
13y
I never get tired of stupid bank stories and there are so many out there. That isn't the first time I have heard of a bank arguing with itself either...in fact, they even sue themselves occasionally.
Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
13y
That's completely stupid. The only thing I can figure is that one or both of these loans is serviced by Chase but owned by someone else, so Chase doesn't see it as bidding against themselves. Either way, when it comes to bank stupidity, nothing is surprising anymore.
Investor · Reston, VA · Member since 2011 · 683 posts · 191 votes
13y
I've pretty much "had it" with shorts. I got a call tonight that one I've had under contract for 8 months came back with a new bpo 35K higher than their approved price. I was in at list for 130K. Bank came back at 140K. I took it. Then the bpo expired (after title issue delays made it more than 90 days old). So now they want 175K. This has happened on several. It's a total crap shoot at this point.
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
13y
Chase might be acting as trustee of a securitized asset for the one loan, and they might be the actual owner on the other. Or they could be trustee on both. And the servicing agreement could stipulate some of this silliness, so that it looks like Chase is being stupid, but the negotiators are just following what their servicing agreements require.
Involved In Real Estate · Jacksonville, FL · Member since 2012 · 216 posts · 42 votes
13y
The best thing that could happen is that they are broken up so they would actually be separate. lol These banks are so large that no one can properly oversee them. That's how they end up not serving their own interests. Just this year I've probably personally seen over a million dollars in mistakes that banks have cost themselves. Foreclosing and reselling a property for much less then a previous short sale offer, having "Property Managers" managing properties they no longer own, allowing REO agents to give "pocket deals" to friends at 50% of market value, not fixing minor leaks that lead to extreme water damage, etc. etc. The fact that anyone can make so many large mistakes and still be in business is amazing.
Clemson, SC · Member since 2012 · 82 posts · 19 votes
13y
How do you balance appropriating funds for acquisitions if you're purchasing short sales? It seems like short sales can be relatively quick but usually take months or even a year to get approved and closed. If you're limited as to how many purchases you can make in a year, you could lose out if you wait too long on a short sale or pull the trigger on another property and can't get financing for the now-approved short sale and hurt your reputation with the bank.
& how does the earnest money work in this kind of situation?
In my dealings with FNMA I've realized that many banks (mostly BoA) are too big and that's WHY they failed.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Maryann L.:
This is totally normal. It happens all the time.
You're likely dealing with two different investors on a loan.
Looks like it's time to escalate.
Hi Maryann,
Who would you recommend it be escalated to? The listing agent is dealing with the negotiators, but if you have any suggestions I can pass on, I'd appreciate it!
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
13y
Maryann L. Can you explain a little more about "escalating" in short sales. The only times I've heard that phrase is from short sale educators and mentors. Is it getting the attention of someone higher? Any tips?
Lender · Tyngsboro, MA · Member since 2009 · 3k+ posts · 2k+ votes
13y
I posted this in my network, and Maryann L. chimed in on FB. She is a very experienced short sale negotiator, and I know her well. Maryann, can you elaborate on escalating?
Specialist · MA · Member since 2009 · 858 posts · 306 votes
13y
Ann is too kind. Sorry gang. I'm not very active on BP anymore, but when you get stuck on a short sale file, you have to escalate. MOST lenders have a way to escalate the file, ie, calling their executive departments and a direct route to talk to someone in a higher department to try to resolve the issue. It works in MOST cases.
Once you escalate most times, your issue is resolved within 24 hours.
If you have two files with the same lender, it doesn't mean it's the same investor that backed both. Most lenders are just servicers for a different investor, ie freddie fannie, mtg backed securities, portfolio loans, fha, etc. If you have two different investors EACH may have a different minimum NET requirement so on this file it seems as if that happens. Having two loans with the same servicer doesn't mean each department talks to each other either. In most cases if you have two BOA loans, you're doing one on Equator and one through faxing.
Don't assume it's an easy sail if both loans are with the same servicer. I would say for the MOST part they will and do work together but definitely don't expect that ever time.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Thanks Maryann L.!
So, in the case above, assuming it's two different lenders (perhaps both with Chase as the servicer), would you escalate with 1st lien holder, the 2nd lien holder or both?
Seems the 2nd is in a worse situation, so would you start there?
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
Pay the difference outside of closing to the second as a payment, there should be no problem with a payment being made to obtain a new payoff amount. It can be paid in escrow with the payoff letter made to the closer. The second will apply the payment first and then the payoff.
The C1 will see on the docs that C2 has issued the desired payoff, they don't get to see the books of C2 with the reduction made prior to closing.
Depends on how C1 issued its acceptance. If they simply said C2 to receive no more than $$$ at closing, then you are in compliance. If they have stated it as an amount to be forgiven (probably not), then there is a problem. I'm assuming the borrower is not in bankruptcy.
There is no law against making any payment prior to a closing unless such is covered in the short sale application and acceptance. I don't know what was required there.
The only other issue may be with the representations of debts and ability to pay made by the borrower, but I don't see much fluff there if any debt of the borrower is paid by a third party as the representation was correct when it was made by the borrower and the third party contribution was unknow at that time.
I doubt too if C1 has any recourse against any third party since the borrower is not benefitting or walking away with any money nor is the amount paid by a third party an amount available to C1. The third party is under no obligation to pay anything.
I'd actually pass this along to C1 and they may admit the seller has the right to reduce the loan prior to closing by a third party, the hitch may be that C1 can only allow a % of any second mortgage to be paid at closing and such a payment would then reduce the loan but also the % to be forgiven. I doubt they can control waht goes on prior to closing, but I haven't seen the package.
This does sound like a servicing issue and not inner-bank department fighting. So, I'd ask for specific payoff requirements for compliance and technically abide by such as of the day of closing and to what is required to be recorded on the HUD.
I like the suggestion Maryann made, seems to be that C1 is the problem. The higher up at C1 can contact C2. Guessing, I'd say the first is serviced and the second is owned. Interesting to see how this pans out.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Bill Gulley:
Pay the difference outside of closing to the second as a payment, there should be no problem with a payment being made to obtain a new payoff amount. It can be paid in escrow with the payoff letter made to the closer. The second will apply the payment first and then the payoff.
The C1 will see on the docs that C2 has issued the desired payoff, they don't get to see the books of C2 with the reduction made prior to closing.
Great thought, Bill!
The only problem I see here is that the HUD will reflect the lower payoff amount, and part of the transaction requirement is that both lien holders will have to approve the HUD prior to closing.
The 2nd lien holder will likely refuse to approve the HUD, even if there is a verbal agreement to pay the difference after closing. If the seller chooses to close without HUD approval from the 2nd lien holder, the seller runs the risk that after closing, the 2nd lien holder refuses to accept the payoff (and there is nothing in writing that binds them to accept it if they didn't approve the HUD prior to payoff).
Now, if the 2nd lien holder will approve this transaction in writing, the seller doesn't have any risk. I wonder if the 2nd lien holder would do that?
Also, since C1 is saying in their approval letter than C2 is only allowed to receive a certain amount, and because everyone signs the approval letter saying they agree, C1 could claim fraud, since the intention was to pay C2 more after closing.
It's all ridiculous, but your line of thinking is great...thanks for the idea for next time this happens!
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
Oh no, I didn't mean to suggest paying anything after closing, but before. Yes, both want to review the HUD. Woundered if both would accept the third party making a pament prior to closing.....?