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Short Sale Second Lenders Want to Have Cake and Eat It Too

By
Real Estate Agent with Elizabeth Anne Weintraub, Broker DRE #00697006

OK, so I made a pun and didn't realize it. But some negotatiators talk to me in that Lily Tomlin telephone operator voice, and it drives me nuts. One ringy dingy. I want to hang up on them but I can't. When the negotiator at Chase Bank said she wanted 10% of the unpaid balance, I let 'er rip by saying, "Let's cut to the Chase. You and I both know you are not getting 10% of the unpaid balance, so let's start this conversation over."

Sometimes I lose patience. I'm not perfect. Even though lenders often thank for me for having patience and I laugh it off by saying, Hey, I am a Sacramento short sale agent. I sell short sales for a living. Patience is my middle name.

But the biggest problem we have in California short sales lately are second lenders. Second lenders demanding excessive amounts to settle the short sale. And much of these types of problems are thanks to SB 458, prohibiting a seller contribution. When you remove the seller from the equation, sometimes you are killing the short sale process all together. Bank of America, for example, routinely denies seller contributions, even if they are offered upfront on the HUD without a lender demand which, lawyers say, fully complies with SB 458.

After I laid it on the line with the Chase negotiator, she asked: Then why did you give us $3,000 on the HUD? Good question. Why did we do that? We did that because without a beneficiary statement we can't confirm the unpaid balance. Chase refused to send us a beneficiary statement to confirm the unpaid balance.

Well, you can't have your cake and eat it, too. But this is a short sale in which the bank often throws out ridiculous demands. We finally obtained a statement from the seller to accompany our HUD and plea to the first lender. Because they know how the game is played as well.

So does the government. Which is partly why the new HAFA regulations for a HAFA short sale will increase the contributions for second lenders. Starting June 1, those allocations can be $8,500.

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Elizabeth Weintraub is co-partner of Weintraub & Wallace Team of Top Producing Realtors, an author, home buying expert at The Balance, a Land Park resident, and a veteran real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown, Carmichael and East Sacramento, as well as tract homes in Elk Grove, Natomas, Roseville and Lincoln. Call Elizabeth Weintraub at 916.233.6759. Put our combined 80 years of real estate experience to work for you. Broker-Associate at RE/MAX Gold. DRE License # 00697006.

Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.The views expressed herein are Weintraub's personal views and do not reflect the views of RE/MAX Gold. Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice; it could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.

Comments(4)

Fernando Herboso - Associate Broker MD, & VA
Maxus Realty Group of Samson Properties - Clarksburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

I;m not sure that raising allocated money to the second to $8500 will stop some of them to be ridiculous like some of them are.. I met a few.. and few dollars will not make them change.

Apr 26, 2012 12:49 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Hello Fernando: Sometimes, you're not as far apart as you might think. For example, in one recent short sale, PNC demanded close to $50,000. We gave them $9500, which included about $3500 from the seller, and they took it. So sometimes just a few thousand, what can amount to less than one month's mortgage payment, can mean the difference between an accepted short sale or a rejected short sale.

That's the thing people tend to overlook.

Apr 26, 2012 03:14 AM
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • GRI • HAFA • PSC Calabasas CA

I do agreee that it will make a difference.

Elizabeth, you constantly amaze me( God bless you!). Can not imagine how you are able to do all yourself( blogging, listings, negotiating, answering actually phone calls, ect.) You need to post a blog  about your day: Do you work 24/7?

Apr 26, 2012 10:54 AM
James Dray
Fathom Realty - Bentonville, AR

Hey Elizabeth I got an idea who not give the government all our money and let them decide where we live, what we eat, our health, what we drive etc.  And that young lady is why we need limited government. 

Apr 26, 2012 09:06 PM