This tale begins way back in the spring of 2010 when I took my very first HAFA-hopeful listing in Orange County, Ca. Since then(and during), I've negotiated others, especially with Bank of America that went very smoothly. But this first one was the thorn in my side, pain in my neck, and the thing that kept me up at night for months and months... and months.
The homeowner is young man who suffered a loss in income and who -at the time- was borrowing money from friends and family to make his mortgage payments. I could have taken the listing in March but we opted to sign the paperwork in April, after the HAFA program's official launch date.
The first lien was with Aurora Loan Services. The second lien was with Bank of America. Both were purchase-money loans. We received a great offer on the property right away and immediately opened escrow.
Since Aurora Loan Services had no system in place to process HAFA short sales at the time, I was instructed to fax my file to the regular loss mitigation department. Five months later, after faxing and refaxing and customer service reps not finding my paperwork and then magically finding it, the processor assigned to my file deemed it complete. But alas, the HAFA flag was never attached. This was an easy fix, she said. As I was on the phone with the processor while she attempted to add the HAFA flag to my file, she accidently cancelled my short sale.
No matter how many times I complained, no matter how many managers I spoke with( and ok, once cried to), my file was gone. I had to resubmit the entire package, gather updated financials from the seller and buyer again, wait for another appraisal and hope someone would have mercy on me and assign my file promptly. Well, that's not how things went. After another long wait, two processors and finally a fantastic negotiator, I received my HAFA approval from Aurora for the seller in late January, 2011. The written short sale approval arrived on February 23, 2011. As relieved as I was to finally get my hands on that approval, I was now in a time crunch because my BofA approval expired on February 28, 2011.
On to Bank of America.....
I was in constant contact with my BofA negotiator. He assured me that once I received my Aurora approval, my BofA closer would grant an extension for our BofA approval to allow the buyer ample time to close escrow. I loved that negotiator. He was on top of everything.
We all understood this was a HAFA short sale. The word “HAFA” was written in my cover letter, on the estimated closing statement, in virtually every piece of correspondence and had been mentioned in almost every phone conversation with the negotiator and short sale department representatives.
On February 23, 2011, I contacted Bank of America through Equator and by phone requesting the extension on the short sale approval. On February 25th, I received a phone call from my BofA closer. She began the conversation by saying, “I have bad news for you... really bad news.” And then said, “This file was never processed under the HAFA program”.
Anyone who works short sales is always kinda prepared to hear things like that from time to time. But, on this occasion, I felt sick.
She explained that my file had been in the system since before BofA partnered with AMS and LRC to process their HAFA files and that my file was never switched over, probably because my negotiator was unaware that it needed to be. I had asked several times during the process if my file needed to be moved to one of these servicers since it was a HAFA short sale. I was negotiating other short sales with both AMS and LRC and was concerned this particular file was with the regular crew. I was told it was unnecessary because the short sale was already HAFA-approved and that the information was already in the system. So, after doing my best to cover my bases, I was going to have to resubmit my paperwork.
Indeed, on February 25, 2011, the BofA closer canceled my short sale in Equator. I was crushed... and so was the seller, the buyer, my escrow officer and even for the loan officer who at that point just loathed me. But, we kept moving forward.
I was assigned to the LRC negotiator within hours. He called that afternoon and promised he would call the next morning to “get this done”. Well, it took him three weeks to return my calls and exactly one month to let me know that my file did not qualify for HAFA because the investor for this loan was not participating in the program. According to him, we should have closed escrow in February.
In order to move forward with the short sale, my seller had to opt out of the HAFA program and accept a traditional short sale approval. When I told this to my Aurora underwriter, she said, “Man, you could have closed in September of last year."... No kidding.
Our closing date was May 2nd, 2011. There was more pain involved in this short sale than in most others I've negotiated. Still, I learned so much from it that I am positive I will close my short sales -and possibly yours- with more ease because of it. Look for the second installment to this post. Happy short selling.