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The One That Got Away – Through No Fault of Mine

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Real Estate Broker/Owner with Daytona Condo Realty, 386-405-4408

The One That Got Away – With No Fault of Mine

It started as a short sale as some others. We helped a client, from New York, and she referred her friend Jennifer to us.

It was all pretty usual stuff. The Sellers forwarded us all the documents, after we secured the contract.

The one that got away

It was the Bank of America, so we were working via Equator. And one day the task required information from the Buyer, like Equator asks every time, and one of the pieces was the first 5 digits of Social Security number.

Forwarded to the Buyer, and, unexpectedly, the Buyer refused to provide this pice of information.

Why on earth does the buyer to give any information to the Short Sale Lender? It is a cash deal, so what is their freakin’ business?

I tried to explain that this is not a matter of choice. If we do not provide it, there would be no deal. And that he did not have to put the whole number, but only first 5 digits.

Instead of calming him, it added fuel to the situation. The Buyer said that the bank was playing him, as everyone is using last 4 digits, and only the lazy one does not have the last 4 digits. Here the Lender wanted 5 first number, so this effectively gives them the full number.

I did not tell him that he needed to trust the bank. Why? I myself do not get why Bank of America need to know all that (or anything at all for that matter) about the Buyer.

And also, I could not tell him to trust the Bank. Why? Because I don’t trust them myself…

Yes, there is no fault of mine here, but there is still a lesson to learn. I now tell every Buyer or ask the Buyer’s agent to tell their client upfront that the Lender can make stupid or possibly unreasonable requests, and if they will feel offended and will go on the defensive, they should not enter the short sale.

Can anybody give a reasonable explanation why the Lender needs that information about the Buyer?

Does reasonable explanation even exist?

Picture of Jon Zolsky

Photo via Flickr.com Creative Commons by 

 taberandrew

Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Don - Sorry, but I think it is BS, that they want us to believe in. Before Equator nobody in short sales was asking the info on the Buyer, whether cash or financing. Like in any sale, it is not short sale lender business. they had Arm's length agreement for protection, and partial SSN is most probably nothing in terms of protection 

Nov 25, 2011 03:55 AM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Than - Looks like you are a lucky one and do not do short sales with BoA. No, they do not explain anything. No, this is not when they have a concern, this requirement is for EVERY buyer.

And there are no rules that would make selling short sale different from regular sale in this aspect, and nobody is asking the Buyer information, when they are deciding the case for the Seller.

Nov 25, 2011 03:58 AM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Tim - welcome to the club

Nov 25, 2011 04:01 AM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Miriam - they use Arm's length disclosure for that purpose. I can't see how 5 first digits can help avoid fraudulent transactions. I also think that we think too good about the Banks' reasoning.

Usually, the most common reason is simple bureaucracy.

Nov 25, 2011 04:05 AM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Thank you, Kim

Nov 25, 2011 04:10 AM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Laura - I am not sure I will be happy to disclose my information to a Lender with which i have no relationship, which is not a party to the transaction.

tome it is too much curiousity on their part

Nov 25, 2011 04:12 AM
Sebastian Barrett St.Troy
Austin Market-Ready Services, Home Staging and Real Estate - Austin, TX

Jon, Thanks for sharing.  I'm sure there are some legal issues here, but after some research, I did find some articles that provided some insight.  One company said that they would always enter 00000 for the buyer's social and it would go through on the Equator system.  Here's the article link:  http://www.trulia.com/voices/Home_Buying/does_the_equatorsystem_need_the_buyers_social_secu-213770

And this article, it seems many people are not happy with the Equator system - http://www.theshortsaleguide.com/group/reotransequator

Nov 25, 2011 04:31 AM
Norma Toering Broker for Palos Verdes and Beach Cities
Charlemagne International Properties - Rancho Palos Verdes, CA
Palos Verdes Luxury Homes in L.A.

Jon - I'm receiving BofA Equator paperwork for my buyers to sign this week...this will be interesting as my clients are savvy investors but not cash buyers.

Nov 25, 2011 05:06 AM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Sebastian - thank you so much for your research. I followed the link and read the answers. Fascinating. I haveno reason not to believe that all zeros work as fine, as 5 real digits. It just conforms my theory that this is a function of bureaucracy, not real reason.

 

Nov 25, 2011 06:25 AM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Norma - at least, you know that if this becomes a breaking point, just put there all zeroes and see what happens.

Because what if the investors are foreigners and do not have SS#, does it mean that they can't buy?

Nov 25, 2011 06:27 AM
Broker Nick
South Florida Real Estate & Development, Inc. - Coconut Creek, FL
Broker Nick Relocation Broker Service

Jon -That has been the rule of Bank of America and Wells Fargo for many years now. I have a form I give to buyers when I have the listing - it states the name, address,Phone number to be reached (important because sometimes the agent is no longer with us) and the first or last five digits of the social security number to prove that it is a "real" person or not.

No big deal if you get the information right away when the buyer is hot and wants the place badly - after a few months they are not so willing and the fire is almost out.

Little tricks that help me close over 100 short sales in four years.

Nov 25, 2011 01:10 PM
Kathy Schowe
California Lifestyle Realty - La Quinta, CA
La Quinta, California 760-333-8886

Bank of America never fails to surprise me... I closed a sale on Wednesday after 90+ days... frustrating and dramatic until the bitter end.  But it did close!  My buyers provided whatever I asked-- they were great!  Kathy

Nov 25, 2011 03:45 PM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

It could be a way of making sure there us no fraud. At the closing they do ask for full social security number as a way of verifying and as they want no familial relationship

Nov 26, 2011 01:29 AM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Nicholas - we dealt a lot with Wachovia before it was gobbled up by Wells fargo, and we did not have to give them the info on the buyers, but we did not have experience with Wells Fargo.

Now we learned our lesson and are telling the Buyers that this is what they are required to provide.

the only thhing I regret is that we did not try to put all  zeroes and see if it goes to closing

Nov 26, 2011 08:19 AM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Ed - and how is it that Social Security Number verifies that there is no relationship? There an Arms LOength Disclosure for that, but this is a different story

Nov 26, 2011 08:20 AM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Kathy - congratulations on closing the short sale. We do close ours, usually people do not question the stupid moves by the bank, like in this case.

Nov 26, 2011 08:22 AM
Laura Sargent
Carolina One Real Estate - Mount Pleasant, SC

Lots of sensitve and private data needed when buying and I think that's why lots stay renters.

Dec 07, 2011 04:14 AM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Laura - when buying for cash, actually not much. And what is the 3rd party lender's business is it anyway? Besides Arm's length agreement, they did  not require anything from them before. Now they are.

So, what has changed? Which laws?

Dec 07, 2011 06:07 AM
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

So much distrust...but the fact is that unless we play by their rules, we don't get the house. 

Dec 17, 2011 03:58 AM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Karen - exactly. It is sometimes difficutl to explain to my clients. "Tell the bank this and this". Do they really think I am talking to a bank? And theat whoever I can talk can make decisions based not on their guielines, but take into account every conceivable situation and also adjust to the emotions of the customers/

I do not think so...

Dec 17, 2011 08:35 AM