I have a HAFA approved SS through Wells Fargo, loan was formerly Wachovia, we are preparing for closing in a couple of weeks, and my seller calls me this morning to inform me Wells Fargo called her on Friday to inform her that they decided to approve them for a loan modification instead, even though they were denied 6 months ago on a loan modification.
I called this morning and Yup, WF has indeed approved my sellers for a loan modification and their new loan docs will be sent via overnight this week for them to review the figures for their new loan terms. I asked them if there have been changes and was informed WF has made some calculation changes to some of their loans that they had previuosly denied for loan modifications and they are trying to go back and offer the loan modifications prior to the short sale closing escrow or the homes being sold at auction.
So, we will wait for the package to arrive and go over the terms of the new loan to see if it make sense for them to accept the new loan modification or move forward with the short sale. This is a certainly a first for me, anyone else have this happen?
the problem with HAFA approvals is that the home owner is giving up some of their rights. For example, they are expressly agreeing to give a Deed in Lieu if a short sale is rejected. I have clients execute a HAFA "Opt Out" document on all short sales....
My question on choice is: Is Wells Fargo going to totally withdraw their approval of the short sale if the seller opts not to do the modification. I am in Arizona also and I know the form you are talking about. Also, doesn't matter to the bank what our document says - they are not a party to that document and it is not binding on them. tt is binding on the seller and buyer. But if the bank withdraws their approval - the seller cannot close and is left open to a lawsuit by the buyer. I am seeing more and more approval letters stating that they can withdraw the approval at any time or it is subject to final HUD approval which is right before closing - well after our acceptance addendum is executed.
I just closed a HAFA with Flagstar and the approval letter stated:
Notwithstanding our approval of this short payoff, Flagstar Bank reserves the right to withdraw approval at any time and demand full payoff prior to funding.
I have seen similar ones with Chase - so where does it leave our sellers - That would be an interesting court case. Shows how little control anyone but the bank has.
Debbie, the approval letter is a demand letter from Wells Fargo and there is no language stating they can withdraw their approval at any time. it just states the final HUD must match the terms set forth herein this demand notice and final approval of the HUD must be requested 48 hours prior to closing.
I think we need to bring this up to AAR as I see where you are going with this and this could be extremely problematic going forward to our sellers and the buyers who are patiently waiting.
My sellers are moving forward with the short sale, and the notifying department told me this morning the sellers have a choice to complete the short sale or accept the terms of the modification.
I've advised my sellers to seek advice from legal counsel. I'm going to call our legal hotline again in the morning about lenders pulling their approvals. I have sought legal counsel previously on numerous occassions about the real possibility of lenders pulling their approvals and it seems with these new activities going on this seems more realistic this could happen.
i'll keep you posted on my conversation.