PHH Short Sale Madness

[SinkingInFlorida]

We having difficulty concluding a short sale with PHH. Their approval letter says, on the one hand, that they "will execute a full Satisfaction and Release of Mortgage" upon receipt of funds as provided above and, if applicable foreclosure activity will cease.

A paragraph later it says, "Please be advised that the Mortgage Investor reserves the right to pursue any Deficiency at a later date."

We asked our Loss Mitigation (Judi Matias) about these two very different sentences and were told that the 2nd one was to protect the Mortgage Investor against any fraud if its discovered after the sale that this was not an arms length transaction.

This couldn't be more arms length if we tried, so we asked Judi to add the clarifying langauge into the letter, but she says no, the language stands, take it or leave it.

The lender told our real estate agent that a 1099c would be issued for the difference between what we owe and the short sale price (about $81K).

We're fine with this but are very worried about that open-ended sentence and that they'll 1099 us and still want to come after the difference.

Is there something else we need to know here? Are we misreading the letter?

Does anybody know how to get in touch with Judi's supervisor, Sandy Preston - OR - what is the chain of command at PHH. We've had enough of getting transferred to Mumbai only to get them to transfer us back to the states.

Our closing date is set for October 17, 2009. Any quick words of advise are greatly appreciated.

[Enough Already]

Hi Sinking,

We're in the midst of waiting to hear if our short sale has even been approved. My personal feeling is that if the bank won't negotiate, and let you off the hook for collection of the debt, I wouldn't go through with it. They have to spend a lot of $$ to actually go through with the foreclosure. They're trying to have their cake and eat it too. I mean you find a buyer, bring them an offer, they get the house sold, and then reserve the right to come after you?? No thanks.

Our realtor has successfully completed about 75 short sales and says it's really a matter of playing hard ball with the bank to get them to let you off the hook. The realtor I'm dealing with has even gone so far as to decline the banks offer because they wouldn't let the owner off the hook, and come back 2 or 3 months later to see if they're ready to play ball, and once they know you're serious, and that no sale will happen without forgiveness of the debt they cave.

Good luck and please post updates as you go along.

[Angels]

Later today I have to call PHH and ask for a short sale package and was wondering how they it will work with them. We have always liked their service but working with the loss mitigation department will be a whole new world. I’ll keep an eye on this thread and contribute as I go along. I am guessing this thing will be over sometime shortly after Christmas. This really sucks…but we feel a sense of relief after having to make the decision to let it go.

[SinkingInFlorida]

Originally Posted by Enough Already

Hi Sinking,

We're in the midst of waiting to hear if our short sale has even been approved. My personal feeling is that if the bank won't negotiate, and let you off the hook for collection of the debt, I wouldn't go through with it. They have to spend a lot of $$ to actually go through with the foreclosure. They're trying to have their cake and eat it too. I mean you find a buyer, bring them an offer, they get the house sold, and then reserve the right to come after you?? No thanks.

Our realtor has successfully completed about 75 short sales and says it's really a matter of playing hard ball with the bank to get them to let you off the hook. The realtor I'm dealing with has even gone so far as to decline the banks offer because they wouldn't let the owner off the hook, and come back 2 or 3 months later to see if they're ready to play ball, and once they know you're serious, and that no sale will happen without forgiveness of the debt they cave.

I couldn't agree with you more and (like everyone else) just want to be done with this ... for good!

Since we've been having difficulty communicating with our Loss Mitigation contact, as well as her supervisor (the first we can only reach by email, we've never spoken by phone, and the second won't return our phone calls), we decided to follow the lead of another on this website and contact the President and CEO, as well as the VP, of the company.

We'll let you know what happens.

[faith]

Originally Posted by SinkingInFlorida

We having difficulty concluding a short sale with PHH. Their approval letter says, on the one hand, that they "will execute a full Satisfaction and Release of Mortgage" upon receipt of funds as provided above and, if applicable foreclosure activity will cease.

A paragraph later it says, "Please be advised that the Mortgage Investor reserves the right to pursue any Deficiency at a later date."

We asked our Loss Mitigation (Judi Matias) about these two very different sentences and were told that the 2nd one was to protect the Mortgage Investor against any fraud if its discovered after the sale that this was not an arms length transaction.

This couldn't be more arms length if we tried, so we asked Judi to add the clarifying langauge into the letter, but she says no, the language stands, take it or leave it.

The lender told our real estate agent that a 1099c would be issued for the difference between what we owe and the short sale price (about $81K).

We're fine with this but are very worried about that open-ended sentence and that they'll 1099 us and still want to come after the difference.

Is there something else we need to know here? Are we misreading the letter?

Does anybody know how to get in touch with Judi's supervisor, Sandy Preston - OR - what is the chain of command at PHH. We've had enough of getting transferred to Mumbai only to get them to transfer us back to the states.

Our closing date is set for October 17, 2009. Any quick words of advise are greatly appreciated.

I agree with enough already, if you are dealing with a hard headed Negotiator and lender, you have to do a scare tactic. Meaning you need to tell the Negotiator and the lender two things: If you are in California and you never refinanced, you are covered under CA Section 580b meanting the lender after foreclosure or the house was sold and they did not get enough money for the sale of the house, by law your lender can not pursue any deficiency against you, you have to let them that you know that and always mention to them CA Section 580b said that they can not pursue you for any deficiency judgment. Second, if they will not put in writing that they will not pursue any deficiency judgment against you, tell them you will not sign the escrow papers and you will have them foreclose the house, the second gets wiped out and becomes unsecured debt. And you will file for bankruptcy. Now this is an old tactic and it's still works today. That's what I did to my lender and it worked. Lenders actually delays and prolong the approval of the Short Sale with the hope that you will agree to their terms, but no to promissory note and get a letter stating they accept the Short Sale as Paid, Settled in less than full balance, or no deficiency judgement against you or the term forgiven. You alse need to email your Negotiator to ask who is going to give you the 1099C and ask who is going to issue the 1099C, is the amount forgiven is $200,000? That way when he respond to your email saying who is going to issue the 1099C and the amt forgiven, you have everything in writing. At least you have evidence in case you dispute any report that you did not like.

God bless and take care,

[SinkingInFlorida]

Originally Posted by faith

I agree with enough already, if you are dealing with a hard headed Negotiator and lender, you have to do a scare tactic. Meaning you need to tell the Negotiator and the lender two things: If you are in California and you never refinanced, you are covered under CA Section 580b meanting the lender after foreclosure or the house was sold and they did not get enough money for the sale of the house, by law your lender can not pursue any deficiency against you, you have to let them that you know that and always mention to them CA Section 580b said that they can not pursue you for any deficiency judgment. Second, if they will not put in writing that they will not pursue any deficiency judgment against you, tell them you will not sign the escrow papers and you will have them foreclose the house, the second gets wiped out and becomes unsecured debt. And you will file for bankruptcy. Now this is an old tactic and it's still works today. That's what I did to my lender and it worked. Lenders actually delays and prolong the approval of the Short Sale with the hope that you will agree to their terms, but no to promissory note and get a letter stating they accept the Short Sale as Paid, Settled in less than full balance, or no deficiency judgement against you or the term forgiven. You alse need to email your Negotiator to ask who is going to give you the 1099C and ask who is going to issue the 1099C, is the amount forgiven is $200,000? That way when he respond to your email saying who is going to issue the 1099C and the amt forgiven, you have everything in writing. At least you have evidence in case you dispute any report that you did not like.

God bless and take care,

Thanks for that Faith, but while we are in California, the house is in Florida, so the CA CCP does not apply.

One of the most important things I've learned in this process is to know whether or now you are buying a house in a recourse (judicial) or non-recourse (non-judicial) state. For those of you who don't know, a recourse state (like Florida) is one where they can come after you for any deliquency (especially if you are out of state like we are). For those who resided in home in FL and foreclosed, those folks are forgiven thru 2010.

Also, even if you are buying in a recourse state, you can pay an extra point or so on the loan and turn it into a non-recourse loan.

[SinkingInFlorida]

Update on our situation:

I took a lead from someone else who posts on this site and contacted the Vice President, as well as the President and CEO of PHH Mortgage Services.

Never heard back from the V.P. but have heard back from the President's Liason, who is still checking with (mysterious) parties to see about modifying the language in our approval letter.

I also contacted Fannie Mae 800-732-6643 directly to confirm that ours is one of their loans. It is. PHH is one of the loan servicing companies Fannie Mae uses to manage their loans.

I told the rep of the conflicting language and he has sent a request up to his Level 2 supervisor to get back to me to either determine if PHH is handling this loan appropriately (I'm sure PHH got the language from Fannie Mae's lawyers), or to get further insight into what the open-ended sentence really means.

Otherwise, I'm welcome to make formal complaints with any/all of the following:

FDIC (Federal Deposit Ins.) 877-275-3372

OTS (Office of Thrift Supervision) 800-842-6929

FTC (Federal Trade Commission) 877-382-4357

The rep also advised contacting the State Attorney General ~ Florida in our case since that's where the property is located.

Okay, we just got off the phone with Fannie Mae. The news is good, but this process has been so frustrating, I need to clear my head.

More to follow shortly...

[Enough Already]

Hi Sinking,

Congratulations on your progress! Please do let us know how it turns out.

EA

[JohnBurns]

Hi SinkingInFL,

Its great that you were able to get some positive momentum. Did the escalation to the CEO prove fruitful in your case? I have an 80/20 loan and the servicer is BOA. The primary mortgage is with an unknown investor (BOA won't tell me whom) and the second is with BOA.

Please share what steps actually made this happen for you. I'm stuck at a point where the negotiator assigned to my file is persistent on her position - sign the approval terms or file for bankruptcy, they say there is no negotiation prior to closing...

Thanks!

[SinkingInFlorida]

Originally Posted by SinkingInFlorida

Update on our situation:

I also contacted Fannie Mae 800-732-6643 directly to confirm that ours is one of their loans. It is. PHH is one of the loan servicing companies Fannie Mae uses to manage their loans...

I told the rep of the conflicting language and he has sent a request up to his Level 2 supervisor to get back to me to either determine if PHH is handling this loan appropriately (I'm sure PHH got the language from Fannie Mae's lawyers), or to get further insight into what the open-ended sentence really means...

Much to my surprise, Fannie Mae called back right away and from there we had our Breakthrough moment.

According to the Fannie Mae Level 2 Supervisor we spoke with, FNME is aware of PHH's approval letter and the confusion it is causing. FNME says that the letter is strictly PHH's, written by PHH attorneys, and something FNME is trying to get them to change.

The bottom line is this: Even though PHH's approval letter comes across as a contract and the final word (and would leave us open to deficiency collection at a later date) ~ **PHH's approval letter, etc. is merely the first step in the short-sale finalization process**

Once we say okay to PHH's package containing the approval letter, Waiver Release and Payoff Instructions, the package STILL has to go to FNME for THEIR approval. And THEY are the one's to make the final review and verdict, not PHH. (Although this is not how PHH presents things. If PHH had offered any explanation of this process at all, we could have avoided 3 weeks of frustration and sleepless nights.)

FNME will review everthing, and from there, it all hinges on the Broker Price Opinion (BPO) and the Buyer's offer.

If the Offer is at or near the BPO (which we believe is our case), FNME will issue a statement saying $0 is owed. We'll receive a 1099-C, but are otherwise in the clear.

If, however, the BPO is for more than the Offer, FNME could "counter" with a promissory note asking for money -- at which point the Seller (us) can say yay or nay, or try to negotiate the amount down at the close.

The most important lesson here ~ know if your loan is a Fannie Mae (or Freddie Mac). Whatever bank you then dealing with is only a processing agent for FNME, etc. and must act within FNME's guidelines.

From the tone of the Supervisor though, it sounds like FNME really just wants to close as many of these deals as fast as possible. (As of August, 2008, Fannie Mae announced that it wanted to make the short-sale process fast and easy due to the volume of these deals.
Fannie Mae Makes Short Sales Easy)

Its anybody's guess as to why the banks are being so difficult. But knowing that they are not the end all be all really helped part the clouds for us. So, know who you're REALLY dealing with!

As for us, our real estate agent has contacted FNME and confirmed what we found out, our closing date has been extended a couple of weeks, and it looks like everything will work out okay.

We hope this helps anyone in a similar position.

We'll keep you posted.

[SinkingInFlorida]

Originally Posted by JohnBurns

Hi SinkingInFL,

Did the escalation to the CEO prove fruitful in your case? I have an 80/20 loan and the servicer is BOA. The primary mortgage is with an unknown investor (BOA won't tell me whom) and the second is with BOA.

Please share what steps actually made this happen for you. I'm stuck at a point where the negotiator assigned to my file is persistent on her position - sign the approval terms or file for bankruptcy, they say there is no negotiation prior to closing...

Thanks!

Hi John,

FYI - there are several threads on this site dealing with BofA, and situations that sound like yours.

From what I've researched, each bank is handling things in their own uniquely frustrating way. Like I say in my previous post, find out if yours is a Fannie Mae loan. That will part the waters more than anything...

Good luck!

[JohnBurns]

Bank of America refuses to tell me who my investor is. They are only making things more difficult. I'll try to find out...

[SinkingInFlorida]

Originally Posted by JohnBurns

Bank of America refuses to tell me who my investor is. They are only making things more difficult. I'll try to find out...

PHH has been the same way with us. Our Mortgage Investor is Fannie Mae.

You can call the Fannie Mae number I've listed above and they'll tell you if your loan is one of theirs by running a check on the property address.

Good luck!

[rbolski_in_NV]

Originally Posted by JohnBurns

Bank of America refuses to tell me who my investor is. They are only making things more difficult. I'll try to find out...

My first was originated via National City and was sold to Wells Fargo and is now an investor owned loan. National City continues to service it. I was able to find that Wells Fargo owned it because a friend worked in a local National City lending office. Granted, once I had this info I could do little with it. I contacted about 50-different people at Wells Fargo via email and phone asking for the right person to talk to (that being whomever manages the investor backed mortgage loans). I even tried LinkedIn inMail and sent requests to 20 Exec Level and Department Managers. The only answers I got was - "we can't help you with that". I finally gave up as it looked to be a road to no where.

With that said, go to your local Bank of America branches and see if someone can help you out and pull up your loan. Reach out to all your friends and co-workers and see if someone works at BofA that can help or knows someone.

I also remember coming across some Gov websites that you entered your address to see it the loan was a Fredie/Fannie loan. I don't know I would rely on the answer though.

[emc0317]

Originally Posted by faith

I agree with enough already, if you are dealing with a hard headed Negotiator and lender, you have to do a scare tactic. Meaning you need to tell the Negotiator and the lender two things: If you are in California and you never refinanced, you are covered under CA Section 580b meanting the lender after foreclosure or the house was sold and they did not get enough money for the sale of the house, by law your lender can not pursue any deficiency against you, you have to let them that you know that and always mention to them CA Section 580b said that they can not pursue you for any deficiency judgment. Second, if they will not put in writing that they will not pursue any deficiency judgment against you, tell them you will not sign the escrow papers and you will have them foreclose the house, the second gets wiped out and becomes unsecured debt. And you will file for bankruptcy. Now this is an old tactic and it's still works today. That's what I did to my lender and it worked. Lenders actually delays and prolong the approval of the Short Sale with the hope that you will agree to their terms, but no to promissory note and get a letter stating they accept the Short Sale as Paid, Settled in less than full balance, or no deficiency judgement against you or the term forgiven. You alse need to email your Negotiator to ask who is going to give you the 1099C and ask who is going to issue the 1099C, is the amount forgiven is $200,000? That way when he respond to your email saying who is going to issue the 1099C and the amt forgiven, you have everything in writing. At least you have evidence in case you dispute any report that you did not like.

God bless and take care,

faith,

re 580b, I refinanced my loan but no cashback and made it 1 loan from 80/20, does it matter? and if you didnt fall on 580b, does 580d kick in short sale?