Replies to This Discussion

Permalink Reply by Cindy Billman, CDPE, SFR on January 12, 2012 at 11:09am

This can and does happen but I see several things that would have raised a red flag to me - 1) Did the seller and sellers's agent have contact with lienholder to determine if the seller qualified for a short sale? 2) Did the Seller provide the necessary documents to the lienholder prior to listing the property? 3) Why would you pay your out of pocket expenses prior to obtaining an approval from the lienholder? 4) Did the seller or seller's agent provide you with a copy of the denial letter? 5) Did you know what the seller's "hardship" was prior to making the offer? 6) Was either agent experienced in short sales?

Here is one of my most recent experience with BoA Short Sale - In July 2011 the seller and I contacted BoA I sent in the 3rd Party Authorization Letter - the Seller sent in all the required documents - I was told it would be better to wait before listing it on the market pending the "okay" for a short sale - By the end of Sept 2011 BoA sent a letter approving the seller to list the house for a short sale with a recommended list price (BoA had ordered an appraisal). With that info in hand the Property was listed $30k more that what BoA recommended and 3 weeks later we had a contract for just under list price. All docs were uploaded in equator.com and 4 weeks later we had our approval from BoA that also stated the seller is released from any deficiency judgments. 

 

Now I just had another BoA listing that was scheduled for foreclosure sale in 4 weeks - again BoA was notified upfront but because the sale date looming, the house was listed and advertised that BoA approval was in the works - BoA not only called me but sent me a denial letter. The seller was not approved for the short sale because they were too far delinquent, however, if I could submit a contract prior to foreclosure sale, BoA would postpone the sale. Unfortunately, time did not allow us the opportunity.

 

We are sorry that you were not able to purchase the house but hope that your twin daughters will bring you more joy!

 

Permalink Reply by Angela Alfe on January 12, 2012 at 1:20pm

Cindy, this would be a HAFA short sale (the process you described above--waiting to put on the market).  That was the Pre-Foreclosure process...where you send everything in and they tell you what to list the process at.

I would wonder why the buyer's lender ordered appraisal prior to approval, as well.

But, really, to me...it sounds like someone dropped the ball...or something happened and the seller's agent did not escalate.  Just checked, saw nothing happened and just left it.  

I've rarely had BofA decline over a hardship letter...without calling and telling us what the problem was (usually ends up being a "badly worded" issue that is corrected with a more thorough explanation).  

The only recourse you have, at this point, is a refund of all of your earnest money/escrow.

Permalink Reply by Cindy Billman, CDPE, SFR on January 12, 2012 at 9:48pm

Angela - you are correct - it was a HAFA - the 2nd one was not that why's it was listed immediately. I do find that banks are more willing to try and work with a seller if they know upfront what the seller's intentions are!

Permalink Reply by Emmanuel (Mannie) Makhathini on January 12, 2012 at 11:47am

First of all, it sounds like your realtor (Buyers agent) does not understand the short sale process. When the seller accepts the offer it does not mean the short sale is approved. Your agent did not do his or her due diligent to ask the sellers agent the right questions about the viability of the short sale before submitting your offer.  Your agent should have advised you not to spend any money until you have a copy of the banks written short sale approval. My buyers due diligent always start 24hrs after receipt of bank approval. I also think that the sellers agent is a novice at short sales and took a short sale listing with no legitimate hardship. The sellers agent is the one that determines that the house should be listed as a short sale after interviewing the seller and looking at the sellers financials and hardship. Some short sale are pre-approved by lenders prior to list.

Your lender jumped the gun as well by ordering the appraisal without a copy of the approval letter from the short sale lender.

The offer can be approved even if the seller does not have a strong hardship letter.  The only thing is... the seller has to be prepared for cash contribution or promissory note. If I were you I would request a copy of the equator denial letter to see the real reason why the short sale was denied.

It is unfortunate that you ended up with bad representation all way round.

Good Luck!

Permalink Reply by Joseph C. Alfe on January 12, 2012 at 8:55pm

This is why you should never offer on a short sale when you absolutely have to move by a certain date.  Short sales are unpredictable as a rule, more so when you have a clueless agent working on it.

Permalink Reply by Sheyenne Schultz on January 18, 2012 at 12:03am

I am so sorry this happened to you. First off, in short sales...the horrible side to be on is the "buyer's side", no pun intended. Too often I see this happen because there are listing agents that don't really know what they are doing when it comes to short sales. You have several options in the future. 1) don't make offers on short sales...hate to say it,but unless it was APPROVED at a price and the 1st buyer walked, you don't know what price it's going to get approved when you make an offer..first time around. 2)unless your buyer agent can convince the listing agent to let them negotiate the sale for all involved...you will have no control. I've come across sales where the listing agent DID NOT want to negotiate it and allowed ME to negotiate the short sale..so we could get the sale APPROVED AND GET PAID AND GET the seller to walk away from their debt and GET the buyer a house. Win WIN for everyone. However, this will not always be the case.

YOU didn't do anything wrong. Sometimes it is the roll of the dice. I had a listing with B of A and Wells was the investor and after submitting everything and them countering and us just awaiting our approval..I was told same thing. Wells denied the short sale because they felt the owner was not in a hardship!!!! R U KIDDING ME?  BEFORE file could be closed out in the system, I escalated it immediately and fought it vigorously. I wrote a rebuttal letter LISTING all the ways in which the owner WAS IN A HARDSHIP...and how the blind mice overseeing the file needed to get some glasses, yet alone a brain. My owner was a radiologist...who HAD money saved up in 401ks,iras, etc...and still current on her payments  trying to be a good citizen....was in the middle of a divorce and could NOT pay the mortgage without the help of her husband who BY THE WAY, was smart in NOT being on the loan. He just told her to get lost and stopped paying.

He also had a car on payments under her name, and stopped making his car payments...ruining her credit and hiding the car from her. This was an IMMINENT DEFAULT. It did NOT work with out BOTH making the payments. And as if perfectly scripted out of a movie...timing couldn't be better...because once I was ready to send in my rebuttal letter of reasons all the way to the office of the president and the media...she found out she was also 3 months pregnant and he wanted NOTHING to do with it at all. And she couldn't get a job in LA, but had to drive over 60 miles a day to southern orange county to work for a doctor down there, forcing a job relocation in order to work. If THESE weren't reasons for a hardship, I don't know what was?????  Once I escalated and SPELLED OUT THESE reasons and sent to all senior VPS, office of president AND the INVESTOR wells fargo's upper management. I GOT the approval and we closed..so NO , it was NOT a waste for the buyer to have opened escrow and order his appraisal and be ready to close. It just takes an agent who won't take NO for an answer and to submit the reasons properly on the hardship letters, etc.

Each scenario is different....but the listing agent is wrong. The only recourse is NOT to pay FULL VALUE for the house. Is she insane? It's UPSIDE DOWN? She needs to ESCALATE this immediately and get a case number and re write her hardship letter and the reasons WHY... and submit. If she doesn't, then she doesn't care..period.  Sounds like the agent is not proficient in short sales. :((((((