Wells Fargo (second mortgage) wants us to wire money

[tdskkenn]

Hi there. Our property is located in AZ. Both mortgages are with Wells Fargo (WF) and both are purchase money. If we were to foreclose, there would be no deficiency judgement. (An AZ atty confirmed this for us).

The good news is we are almost done closing a short sale. WF1 has already issued its acceptance letter. The problem is with WF2. WF1 will pay WF2 $3000 at closing. It's on the HUD. WF2 wants an additional 4k from us so they can redeem 10% of the balance (balance is 70,000). We are fine with this EXCEPT they want us to wire them the money before the closing and before they will give us the acceptance letter. WF2 says that if the additional 4k is put on the HUD, then WF1 will make a stink about it because they will want the $$. My realtor asked WF1 negotiator about this and she agreed. WF2 will not accpet a prommisorry note from us for the 4k. So I have a few questions based on these facts:

1. Should we wire the money and "hope" that WF2 approves the SS?
2. What language should we ensure is in the closing docs protecting us from deficiency and tax liablity? (This isn't really relevant to the wire issue...)

Thanks for any advice you can give. Our realtor is anxious to get this closed, and WF has not been easy to deal with and we don't want to lose our buyers.

Thanks,
S. Parks

[Moe Bedard]

Hey S. Parks!

OK, tricky situation here and a decision that will come down to you.

1. Should we wire the money and "hope" that WF2 approves the SS?

This happens all the time on loan modifications and i have seen them go both ways. Meaning most of the time everything went fine and it closed, everyone live happily ever after and I have also seen it go bad and the borrower get screwed. Nothing in writing means he said, she said.

I think a good attorney should get what you need or maybe follow that first advice of walking away and paying nothing. After all everyone is benefiting here but you all, right??

2. What language should we ensure is in the closing docs protecting us from deficiency and tax liability? (This isn't really relevant to the wire issue...)

See this thread Negotiating Deficiency is Key in a Short Sale

You must negotiate for the release of both the property lien and the underlying personal debt secured by the note. If you fail to do this, the lender may not forgive the personal debt and it will become a collection.

It is wise to consult with an Attorney or Real Estate Agent who is familiar with Short Sale negotiation and has significant experience working with lenders. Keep in mind that Attorney’s fees or Realtor fees come out of the lender’s net proceeds, therefore, you should not have to pay out of your own pocket for an Attorney or Realtor to assist you with the transaction.

Our Realtor is anxious to get this closed, and WF has not been easy to deal with

The Realtor wants the money and that is all. They should be as accommodating as possible.

I hope that help and I wish you the best of luck!!

[amiesheikh]

Your title company should be able to figure out a way to get this to work. I've had this problem a lot with my short sales (especially Countrywide/Bank of America). We have dealt with this issue by having the seller bring a seperate check to closing for the amount to the second trust to "pay them off".

I wouldn't wire any money to them beforehand. That sounds very fishy to me.