Short Sale CASE STUDY: 002

The Details

Every time I start a new short sale there are a few basic questions I want to know up front.  These questions help me determine the work flow, timeline, and identify any lender specific or program specific forms I will need to use to get the short sale moving. Here are some of the basic things we need to know about this particular short sale and how they will impact the process.

What is the Hardship?

A hardship is crucial in a short sale.  When asking the lender to take a loss on a loan it is important that there be a reason that the homeowner is selling.  Most people don’t consider the fact that if they would just stay put for 30 years the loan would be paid off.  There needs to be something forcing the sale.  A hardship.  In this case, the homeowner has had health issues over the past few years and lost the business he owned as a result of it.  A triple bypass, a mild stroke, and the complete collapse of the construction business.  All of this is spelled out in his hardship letter.

Who is the lender?

Different lenders have different processes.  In this case, there is just 1 loan against the property with Wells Fargo.  The seller is several months behind on payments and Wells Fargo has started the judicial foreclosure process.

Based on this information, I know that I will be using the Equator system to initiate the short sale and there are some lender specific forms that will need to be used.  Wells Fargo requires a short sale affidavit to be signed up-front by all parties.  I will forward that affidavit to the listing agent so that it can be placed in the mls and submitted with any offers.

Currently, Wells Fargo is one of the more difficult lenders to deal with.  The utilize a “gatekeeper” that audits the short sale packet very meticulously.  I have yet to be able to submit a packet that doesn’t have some part of it viewed as unacceptable to the gatekeeper (processor).  They have gone as far as to telling me that they can’t read the affidavit I submitted (that they wrote!). They also insist on having the principal brokers initials on every document that has a spot for it, even though those initials are for internal reference and have no impact on the validity of the contract.

Other important facts

Because the foreclosure process has started, I will want to monitor any foreclosure proceedings carefully so that the short sale process can move forward without fear the home will be foreclosed while I am actively working it.

With Wells Fargo as the servicer on the loan, I am going to be extra careful in screening the documents I have before submission.  One bad document can cause a 2 week delay.  For example, If I submit everything today, it will be at least a week before it gets looked at. If they don’t like 1 item in the pack they will cease work on the file and ask me to correct it before moving forward.  Even if I get that item to them the same day it will be another week before they look at it.  2 weeks gone, just like that.

I have asked the seller and listing agent for the neccessary documentation need to work this short sale.  Once I have a complete package I will upload the short sale into the equator system and get things rolling.  Until then…stay tuned.

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