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Short sale with National City Home Mortgage as second lien holder.

Hi everyone,

Just thought I would share my experience so no one else would be as surprised as I was today.
I have been working on a listing where the second is National City Home Mortgage. I got an approval last year but the offer fell through because the BPO for the first came is about $15,000 higher than the same exact home for sale next door (an REO) the buyer bought that home. It has taken me months to secure another buyer which I just did in the beginning on this month then.... package resent to first, to 2nd and then starts the follow up. The day before yesterday I receive a call from a new negotiator from NCHM telling me the previous one is no longer there and I could resend all the information to him because all has been misplaced.

" NO PROBLEM! You already have it" I sent it while on the phone with him...

Today I receive this email:

"I cannot submit this offer...Only a $1000 is going to this loan and our,investor requires a 10% minimum of their outstanding balance."

I THINK???? WHAT???????????

So I replied:
Good morning Mr. Negotiator,
Thank you for your email! You have noticed the sales price of course, which is not very much but all that the property can be sold in this wild current market. The seller is in severe distress but at no point did she give up to try to sell the home and avoid foreclosure for everyone involved. The foreclosure notice was served in November of last year and Mrs. Seller has done all is her power and gone out of her,way, even living over 2,700 miles away from the property, to answer and reply to the complaint and court papers. When a final foreclosure judgment is giving, the investor will receive nothing and this is exactly what we have worked,tirelessly to avoid for the past 8 months. I will try my absolute best to increase your payment but 10% on a sales price this small this is an enormous challenge, to put it lightly. Is this a new rule? I have been dealing with National City on this loan since the summer of 2008 and this is the first time I hear about this minimum.

To which he replies: "Sorry. It is actually a new rule. We are not permitted to submit $1000 offers to investors."

I hope this heads up helps someone else.

Help lots of people and have a great day!

Patty Da Silva, CDPE©, RESS®, AHWD®, e-PRO®, GREEN, CFS
BROKER - Owner REALTOR® - Green Realty Properties

Visit www.pattydasilva.com for SouthEast Florida's best properties.

Posted by Patty DaSilva, CDPE©- Certified Short Sale Expert- e-PRO®- Ft Lauderdale on 01/23/2009 11:25 AM

Comments (43)

Short Sale With National City Home Mortgage as Second Lien Holder. in the ActiveRain Channel

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43 Comments on Short sale with National City Home Mortgage as second lien holder.

JAN

argh -how does one become a certified distressed property specialist?

Hi Lise,

ARGH IS RIGHT!!!!!!

You can start here: http://www.cdpe.com

I wrote this:

http://activerain.com/blogsview/872728/How-my-business-has-thrived-in-the-7th-most-distressed-market-in-the-country-Fort-Lauderdale-Florida

Best of luck and Let me know if you have any questions!

Patty, The rules are a-changing EVERY day. National City was recently bought out, that may be part of the problem you are dealing with. I have seen alot of 10% on seconds. Good luck.

Hi April,

I know! Rules change so often.. that is why I wanted to share with our community.

I have been speaking with National City for 2 weeks on this deal and they just told me that today.. I am confident the rules did not change as of yesterday.

Lenders like BoA for example have not considered anything with less than 10% in several months but National City is new in this category.

I feel like our biggest weapon is knowledge.. the lenders benefit greatly from the tricks they use, from changing phone and fax numbers to rules, that I think we can all benefit from sharing our experiences.

Good luck to you!!!!!! =D

JAN

Patty

At this point I would tell the bank, sorry I have spent enough time on this file for you and the seller but if they are going to be unreasonable just go ahead and foreclose, your time is not worth it.

We ahve been getting this response from a couple of the bank we've delt with and I think they are taught in the classroom not to accept the first offer.

We recently told this to a lender on the second and the response was, let me get back with you. Now they are more resonable. We have been working on this shot for 7 months.

Hi Ralph!

This is the second offer.. The first offer did closed because the first was unreasonable and now the second is being unreasonable.

I am a bleeding heart.. I do not want my client to have a foreclosure because the lenders are completely nuts! The seller has kept up the home, paid the HOA dues (she is struggling VERY much to keep making the payments because ASC will not allow for back HOA payments to be on HUD.

I have spent an enormous amount of time on the file and there is no way that what I will get paid if the closes would justify all the time.. but I took the listing and I have to see it through.

The lenders are losing money hand over fist because of bad decision after bad decision. ASC said no to the first offer and it might say yes to the second with is 10% less. It makes absolute no sense at all.

Thank you Ralph!!

JAN

Patty,

You are out of luck here. I have closed a few with NC, but since they got a new investor, that investor has gone and insured all of their second mortgage debt with default insurance. They will get a 10% payout if there is a loss. To put it directly, they could care less if it goes to foreclosure, because they will get their 10% either way. Your only recourse is to use this info to try and bully the first into accepting the 10% to NC, or kill the deal.

JAN

Hi Joseph,

Thank you so much for sharing! I really appreciate the information and I am going to use it.

I am waiting on the second BPO from the first and I will go from there. The buyer might be willing to pay a little more and I also have a back up offer on this home.

Does B of A also have default insurance? They really play hardball and won't negotiate at all.

B of A is the 900 pound gorilla and they know it. They are the "investor" on many lenders loans, and they hold the paper on most of their loans as well. They do not conform to HUD guidelines, therefore they can do whatever they want.

Endea, Joseph is correct. BoA has all the cash so they make the rules, because they can afford it.

The do not negotiate it is either 10% or walk.. very hardball.

FEB

I am a buyer trying to purchase a home through a short sale -- paying about appraised value. National City is the second lender (the price covers the first mortgage). Recently, the negotiator indicated that the "investor" will give us their decision within a few days. Who is the "investor" and how does the investor get into the picture. My understanding had been that the bank owns the loan. If not, then why is the bank in the picture?

Very few banks own the paper. They may service the loans, but they got funded by a larger bank, the govt. (fannie/freddie) or sold as mortgage backetd securities to insurance companies, pension funds, mutual funds etc. These are the investors. They are the ones who ultimately take the loss.

Does anyone know how long it typically takes for an investor to respond?

Hi Aaron,

You asked: "If not, then why is the bank in the picture?"

The bank is the negotiator on the short sale, they service the loan for the investor. The investor has to approve the loss that they will take.

There is not way to know how long an investor will take as it varies from investor to investor, transaction to transaction. I have had short sales approved in one week.

You best bet is to make sure the listing Realtor has not only sent a complete short sale package but is also following up.

Report back, I am curious to know how it all turns out. Best luck to ya!

Help lots of people and have a great day!!!

Patty Da Silva, CDPE©, RESS®, AHWD®

CERTIFIED DISTRESSED PROPERTY EXPERT©

Visit http://www.pattydasilva.com for SouthEast Florida's best available properties.

Ph: 305-244-0609

The complete package was submitted. The bank indicated this at the end of December. The only thing to do now is to wait.

I am curious though -- I went into contract on this property back in November. Since then the prices have dropped. If I now tell the bank that I am no longer willing to pay my original contract price, and give the bank a revised number, would we need to resubmit a whole new package to start this process again, or can we ask them to now consider the new number without causing further delay?

FEB

Hi Aaron,

Once the loss mitigator gives an approval you can try to prove to him/her that the prices have fallen.

He/she will need to see closed sales for the same type of property within one mile from the property you are buying that have closed since they did they appraisal or BPO (broker's price opinion).

You can always order and pay for an appraisal. An appraisal does not cost that much ($350 - $450 depending where you live) and it would make it very difficult for the lender to argue against it.

Any negotiation on the terms will cause a delay, in my experience with National City, it does not start the process over.

Patty Da Silva, CDPE©, RESS®, AHWD®

CERTIFIED DISTRESSED PROPERTY EXPERT©

Visit http://www.pattydasilva.com for SouthEast Florida's best available properties.

Ph: 305-244-0609

FEB

Patty,

In response to the short sale offer, the bank today sent back what initially appeared to be a letter approving the short sale. However, what the bank actually said was that the bank agree's to release the lien interest in the property upon payment of the funds. The the letter states that after applying the funds to the account "you will remain liable for the outstanding balance." It goes without saying that the seller will not sell the house under these conditions.

Is this kind of letter common in response to an application for approval of a short sale?

National city, like alot of second mortgages, especially HELOC's, operate as finance companies and not mortgage companies. because seconds are usually getting .10 on the dollar from the close, they will always try to collect. To cure this, offer a promissory note for some of the difference.

First of all, they are actually getting 29 cents on the dollar in this case. Second of all, I thought the whole point of the short sale was that they are getting a portion of the balance. There should not have to be an additional note on more of the balance.

Aaron,

I understand that, but they are owed the full balance, and they have the right to do whatever they want. In this case, NC has insurance, so they will collect whether it goes to foreclosure or not, so why not play hardball. You didn;t promise your seller that they would get off scott free, did you?

I am the buyer -- not the broker. I didn't promise the seller anything. As for insurance, I was under the impression that insurance covers 10%. Here, they are getting 29%. Seems to me the ball isn't in their court to play anything!

Ahh, OK, then in this case the broker maybe promised the homeowner something he shouldn't have. Bottom line is that the seller is the homeowner, and if they do not accept the banks offer, there is no deal.

FEB

National City finally agreed! - it would not have made any sense for them to turn it down, which is why I was surprised with the first letter we received.

Hi Aaron,

Congratulations!!!

29% is a good deal and I glad they took it, you just never know.....

So, the seller has no consequences? He does not have to sign a note? What about the loan? Are they going to release the note and leave the debt?

The seller's only consequence, I believe, is that there is some kind of notation of "settlement of debt," which may affect his credit. The balance of the loan is forgiven and the lien is removed.

FEB

Hi Aaron,

That is really great news for the seller, just a mark on the credit is a minimal consequence in comparison with what he/she would have had if the short sale did not happen and the home went into foreclosure.So, when is the closing?

Help lots of people and have a great day!!!

Patty Da Silva, CDPE©, RESS®, AHWD®

FEB

The closing is as soon as we get the title report, the lastest by the beginning of March. Hopefully all we go well.

APR

To comment on your National City Post, I too have just reinvigorated a short sale request for the second time since December 2007. National City is in the 2nd postion with a $76k HELOC. I had an approval for $1,000 with no promissory note back in June of 2008 but the buyer backed out. before Indy Mac get figure out what to do. I will let you know how things progress. For future refrence, try to find out how many distressed homes the servicer bank has for sale as REO's near your home, then share this with the loss mitgator. It has worked for me several times.

Bruce Elliott, CSP, Certified Short Sale Professional - Stirling Sotheby's International Realty, Orlando, FL

MAY

Hi, National City Bank has offered to accept 25% (about $27k) of the outstanding balance on a 3rd position loan. The home is now worth about $625k, loans total about $995k. Should I take this offer? I live in Calif.

JUN

Yes very hard to work with. They told me to begin with they require a 10% ( 5,500 payoff. ) I got the first lender ING to finally consider that amount. Now right at the end they want 25 % or ( 14 K ) or they will approve with 5500 but retain the right to sue later on the balance so they release the lien to let the seller close. negotiator is trying to convince me that they won't got to hard for the rest of the money cose AZ is a non deficiency state. So then why not just get the 105 and give a full release.

Seller is now in Europe, lost his job here, looking for job there .. I told them if they woudl have informed me they want 25% of ballance I woudl have declined to owork on this short sale. WE ARE DOING SHORT SALES IN AZ FOR THE BENEFIT OF THE BANKS MOST TIMES AS THIS STATE IS NON RECURSE, IN TURN AS A PAYBACK THEY COME UP WITH THIS TO MAKE EVERYOEN MISERABLE. THEY DESERVE WHAT THEY GET AND HOEP ALL THEIR 2ND LOANS GOT TO TRUSTEE SALE SO THEY CA NGET NOTHING :)

JUN

I've negotiated many successful shortsales (full settlement) with National City in the past years. Recently the have definantly changed their guidlines. Before I could get a full settlement for 10% or less and now 10% only gets a release and still leaves the seller liable for the balance.

I always try to work for a full settlement but it's not always possible.. as mentioned above, BofA does not negotiate! They actually have a new policy that they require 5% of the total NET amount of the transaction (sales price - all costs x 5%) for a short sale release... and I believe they require 50% of the balance for a full settlement.

I'm having a terrible time getting National City to accept a settlement figure since this home is only worth about $125k (CA home) and the 1st will only allow $2k to the 2nd max... no if's and's or butt's! No one has any more money to give to the 2nd and 10% is $6200 for release only. I would love to hear if anyone has some bright ideas on how to make this work!

Jennifer Horton- Realtor/Short Sale Coordinator Lic:01390614 Full Service Realtor Since 2003 Trin Hong Real Estate Cell: 415.599.6789 or 530.864.2677 (both go to same phone) Fax: 415.814.5745 Jen@JenniferHortonSells.com

JUN

Here's the full scenario from California...

A credit union's HELOC is now in 1st position as the HELOC slid into 1st after a refi some years ago. Loan balance is $125k

National City Mtg is the 2nd, they thought they were in 1st. They are in denial about being in 2nd position. A pre-lim shows that they are in 2nd. Loan balance is $801k. Private investor. Not a Freddie or Fannie loan.

National City Bank is in 3rd (they thought they were in 2nd) Loan balance is about $115k

Home appraised for $1mill in '05, now worth $575 as a distressed (REO or short) sale, perhaps up to $650 w/pride of ownership sale.

Credit union is going to wait it out as they will get their full $$$ eventually.

NCB will accept a 25% payoff for full release. I''m thinking about letting it "charge off" as the 3rd loan is way upside down to value.

NCM just postponed the trustee sale yesterday; 6/25/09. The invetor wanted a full payment of $8k to postpone the Trustee Sale, I said no, the sale was postponed anyway.

We want to stay in the home and are willing to neghotiate if we can pay fair market value as determined by BPO or appraisal.

Any ideas? Thx. PJ

JUL

I was wondering if you can comment or have any suggestions on my case.

I'm in contract for a short sale property in Suffolk county, NY since early May 2009, the NCM is the only lien holder. total loan amount is over $700G, our offer is $575

We have been waiting over 2 months now, and just 2 weeks ago heard that the interior BPO was ordered. after that we've been notified that there is a wait of 12 weeks before the negotiator reviews the short sale, so we are looking at another 3 months ahead of us.

The house is 2 years old and is in excellent condition but we can't find out how much the appreaised value was. the median home price in the area is $420 and this house was sitting on the market for a year at the listing price of $599 (I gues due to the fact that the backyard faces busy highway)

We can legally cancel our contract any time as of now becuse our attorney put in a raider giving us right to cancel after 60 days of being in contract.

is there anytimg we can do to push the NCM to move a little faster, like giving them a deadline since we can walk away from the contract now?

Thank you

Paul

AUG

I know this blog has been down awhile, but I appreciate all the info on NC. I'm in the process of doing a short sale with WF as the first and NC as the 2nd (120K HELOC). We are expecting an approval from WF any day now (fingers crossed!).

But NC sent us a letter accepting 3K for a lien release only. They initially wanted 12K for just a lien release! We are thinking about making them an offer to settle the debt. Does anyone have an opinion as to how much we should offer?

SEP

I am working a short sale with National City as a second lien holder. They want their 10% of the loan amount, which the seller and first lien holder have agreed to contribute to. Just found out today this is to release the lien only, and that they expect the sellers to keep making monthly payments. The collection agency (negotiator) says they would rather the deal go into foreclosure then to dismiss the debt and just take the 10%. Sellers cannot make any payments for the future, as they are already 5 months behind on the second. Can't believe how pig headed NC is. Now looks like the whole deal is about to impload. Any ideas on how to get around this "rule"?

SEP

Hi Jennifer,

That is the way NC rules these days... They do not care, they mean it. They will force foreclosure if sellers don't take the deal. You can try and you should try to negotiate but your chances are not the brightest.

You have to have a hear to heart with your seller.

OCT

I am 74 years old. I have owned my home in Northern California for four years. My mortgage loan was sold to National City Mortgage Co., early on.
In August 2008 N.C.M. paid my property taxes, circumventing me even though I requested a delay on this - as I was renegotiating with the county tax assessor, and applying for California State relief for Senior Home Owners.
N.C.M proceeded to erroneously double both the tax amount paid from the "new" Escrow Account and D O U B L E my monthly mortgage payment due!
My financial situation had fallen into "hardship-due-to-the-declining-economy", so that the error in the tax account and the error in the calculation of my monthly payment became insurmountable.
Months of phone calls, affadavits, statements, documents, applications, and letters resulted in ABSOLUTELY NO RESOLUTION, or MODIFICATION.
I was unable to pay double my mortgage ($3,000 a month); National City Mortgage soon refused my checks in the original and accurate amount; and my home fell into default and foreclosure.
A very kind and fine attorney intervened; phoned enumerable departments at N.C.M.; and was utterly ignored. He has recorded conversations of admission of error; promise of correction; statements (however) that departments do not talk to one another; and, that they could not stop the foreclosure.
We have had to Petition the court to place injunctions on National City Mortgage Company and their reconveyance company.
A costly reinstatement is required before my home becomes fully mine again. Worse yet the reinstatement quotation includes thousands of dollars in wrongful foreclosure costs, due to National City Mortgage Co's. error!!!!
The inefficiency of National City Mortgage is "criminal"; and has been very painful for me.

OCT

After reading all of these response's I don't know which way I should proceed. I have a First with Indymac bank for $245,000 and a Second with National City (HELOC) for $112,000. My homes value has dropped to $230,000 at best. I live here in Arizona and Short sale would be the only way. I lost a great deal of my income and just can't afford this home anymore. I'm current this month but don't know which way i shoul go. Any help?

Jeff

OCT

Hi Jeff,

National City is very tough but they do approve short sales. The approvals usually have consequences to the seller but every transaction is different, every situation is different.

You should contact an experienced Realtor in your area who could help you with your options.

Good luck to you! :)

BROKER - Owner REALTOR® - Green Realty Properties

OCT

Read all the comments.My 2nd is with national city and gets 32% of the money owed via short sale. They say that they want 43% to release the lien and still won't satisfy the remaining balance. This is what they want and do not accept anything different. Not sure what are the chances to negotiate. I have the situation to leave the country and is under pressure to decide to take this short sale or foreclose. Any help?

NOV

hello,

I am currently trying to short sell my clients property in CA, with NAtional city being the second. They initially approved a short sale for 10% of the balance, which my client has agreed to, but since my buyers have backed out, they have sent it to a new negotiator, and they are requesting for 50% of the balance of the loan, whichi s 30k to settle.

We have written to them to ask for a lower settlement, but they will not budge. i do not know if i should advise my clients to threaten to walk away and play hard ball, hoping they will come back and renegotiate, or if they seriously mean they will really close the file if we do not agree to the 30k.

I am looking for help with any new information on NC since I have done several sucessful short sales, but none with NC. They are quite tough.

NOV

Hi Barb,

Sorry for your troubles but that is National City for ya...

I do not know of one sigle simple that works with NC.. they are all over the place with their demands, but one thing is certain, they are very tough.

Threatening to walk is no real threat to the lenders, they hear this every hour of everyday, and unfortunately they just do not care.

Keep talking to them and showing how their demand is impossible to be met and that the transaction will not close, not because the buyer walked, but because their demand is so unreasonable that cannot be fullfilled.

BROKER - Owner REALTOR® - Green Realty Properties

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