I recently sent the attached e-mail to all of my short sale agents and thought that I would pass it on to those who are interested. While not a shocking development, think what could happen if ALL lenders take the same position as Wells Fargo has with delayed closings, etc. on short sales.
Dear Agents,
Wells Fargo has notified our short-sale negotiating team that, effective September 15, 2010, it will not issue any foreclosure sale date postponements or closing deadline extensions for the following investors--FHA, Freddie Mac, and Fannie Mae. There will probably be other investors adopting this policy--most likely VA and Ginnie Mae. By the end of October, Wells Fargo will issue a definitive policy listing of all the investors involved. Wells Fargo's own bank-held mortgages are not currently affected.
For all of us, it means that we need to change how we do business with this lender. Agents need to be aware of this policy change to help their distressed buyer clients avoid a foreclosure sale date or miss a closing deadline.
Our short sale negotiators offer the following suggestions:
- Advise your Seller clients to choose the buyers carefully--one with staying power, who understands the length a short sale takes. Wells Fargo doesn't substitute buyers. A BUYER THAT WALKS MEANS A FORECLOSURE! I (Martin) suggest that you encourage your sellers to accept only a Cashiers Check or Money Order for any escrow deposits. If a buyer sees that the money has been debited from their account, they are more likely to be serious about their offers and also more likely to stay until the deal is closed. Remember - we do not cash any checks or put any funds in escrow until an offer to purchase has been accepted by both the seller and the lender.
- Get the Buyer's Agent and Buyers on board--inform them about these policies
- Ask the Buyer's Agent to request the Buyers to have the home inspection performed within 10-15 days of the execution of the purchase contract
- Ask the Buyer's Agent and Buyers to have their loan secured--not just a pre-approval letter
- Alert the Buyer's Agent and Buyers when the short sale file is being sent to management or the investors for approval--fine tuning the financing, ordering items for the closing that take longer than 5 business days should be completed
- Any Buyer Documentation Fee (BDF) or Buyer Closing issues should be resolved
- The attorneys and title company should do a thorough search--confirm taxes and other pro-rated costs/fees and all costs/fees that should be on the HUD
- Second liens can complicate an approval and interfere with closing deadlines.
- We need to get accurate/timely documents quickly so we can initiate a short sale and move it forward. When our negotiating team requests additional information/documents, the faster you get them back this information, the faster your file moves to an approval. Owners, buyers and buyer's agents need to understand their role in responding to document requests in a timely way.
Before anyone gives up hope on dealing with Wells Fargo, or any other lender that may impose stricter guidelines, let me reassure you that we are teamed up with one of the nation's finest professional short sale negotiating companies. I am confident that this will continue and your client with a competitive advantage to work through a short sale ahead of other distressed sellers that may be relying on a local team or agent to handle negotiations with a lender.
Martin
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