Are San Jose Short Sale Lenders Playing God?

Reblogger Joe Jackson
Real Estate Agent with Keller Williams Capital Partners Realty 277320

Kathleen makes a good point in her blog post. Short sale lenders in general have been a challenge to deal with and it makes it harder and harder to keep a buyer engaged.

Original content by Kathleen Daniels CA BRE#01366594

Are San Jose Short Sale Lenders Playing God?

Or do San Jose Short Sale Lenders Require Buyers, Sellers and Agents to Sign a Deal with the Devil?

Many short sale lenders require mandate that buyers, sellers, and agents sign Lenders Terms and Conditions for Short Sale Approval Consideration. Among other things, the Terms and Conditions of a San Jose short sale approval state:

"There are no agreements or understandings between the Seller and the Buyer that the Seller will remain in the property as a tenant or later obtain title or ownership to the property."

It's not bad enough that the homeowner loses their home, destroy their credit, and go through mental and emotional torture dealing with the lenders short sale process, BUT the lender is also going to mandate, as a condition of their approval, that the sellers must also move!

As a San Jose Short Sale agent I find this requirement outrageous! What difference does it make to the lenders/servicers if an investor purchases the short sale property and chooses to rent it to the former owner? It does not make a hill of beans difference other than the lender wants to play God and dictate where their former customer (borrower) lives, or does not live. That just feels wrong on so many levels I can't count them. 

3D character devil with a briefcase and contract

How on God's Green Earth do these lenders get away with this? Am I the only one who finds this condition outrageous? Why do lenders feel it is necessary to force San Jose short sale homeowners to move when they, and the investor buyer, want them to stay? The transaction is already "arms length" which means the parties (buyers, sellers and agents) do not have a close personal or business relationship, as defined in one Wells Fargo approval letter. It feels more like an agreement with the Devil to me!

What is one to do when they have approval from the short sale lender, are ready to close escrow, but the seller needs more time because the place they secured to rent is not available for 2 weeks? The logical answer may be to get an extension from the short sale lender(s) or get the short sale lender to approve a Interim Occupancy Agreement.

We know how long it takes short sale lenders to get anything done. The seller could be moved before the short sale lender grants an extension of time to close and/or authorizes an Interim Occupancy. The risks of taking this route are high, in my professional San Jose short sale agent opinion.

What are the possible consequences with the short sale lenders if the seller holds over (stays in the property) for a short period of time after the close (with the buyers permission of course)?

We know any violation of the arm's length transaction requirement may cause the short sale lender to void the short sale approval and the short sale lender may pursue available remedies at law, as outlined in one Wells Fargo approval letter.

What else might you do under these circumstances when the San Jose short sale transaction is ready to close and the sellers need 2 weeks to get moved?

Related Post: Whose Sleeping in my Closed San Jose Short Sale

Are San Jose Short Sale Lenders Playing God? by Kathleen Daniels, San Jose Short Sale Agent - San Jose Homes for Sale - 1-800-972-1822

 

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Kathleen Daniels, Broker-Owner of KD Realty, Short Sale Agent, Certified HAFA Specialist (CHS), Certified Distressed Property Expert (CDPE), Certified Short Sale Negotiator (CSSN), and REO Default Certified Professional (RDCPro), serving San Jose and surrounding San Jose Communities in Silicon Valley.

DRE# 01366594

San Jose Homes for Sale | San Jose Short Sale Agents

Kathleen Daniels CDPE, CHS, CSSN, reviews

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Rainer
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Kimberley Kelly, SFR, HAFA, GREEN
HK Lane, Christie's International Affiliate, 760-285-3578 - La Quinta, CA
I do Real Estate like I played polo-to WIN!

I feel your outrage, but Lenders and Logic are very far apart.  Yes, they are playing God or Goddesses and it is insulting and damaging.  I've been doing shorts for 5 years here in Palm Springs.  If the Investors do not want to sell Short, they just drag it out, then counter ridiculously high at last minute to force a DIL or foreclosure.  I suspect to bundle the notes and sell to some hedge fund groups down the road.  Fortunately, my standard sales have overtaken the shorts here in my resort desert area...whew!

Dec 27, 2012 09:44 PM #1
Rainmaker
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Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

Joe, Thanks for the re-blog.  Lenders are so dirty ... they make these rules yet they don't play by the same rules.  A legitimate arms length transaction should not be prohibited from renting back to the former owner.  I'm sticking to my guns on this.  I have many legitimate situations where sellers are forced out when it is absolutely not necessary. 

Dec 28, 2012 11:28 AM #2
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Rainmaker
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Joe Jackson

Clintonville and Central Ohio Real Estate Expert
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