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Originally Posted by cruz5010  I dont think I want to refinance because the value is not there. any advice on a short sale? what other options do I have? If maybe I can get rid of my 2nd mortgage with HSBC, and maybe i can just keep the one w countrywide for $450k. |
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Good morning Cruz5010,
Peace be with you. I hate to tell you this but Countrywide Home Loans as they have already told you doesn't do Short Sale to family members and relatives, as the same if you work for a company where they prohibit hiring employees related to one another which is called nepotism. Unfortunately, the only option you have is your mom asking for Loan Modifications, or her doing Short Sale. I've tried that with
CW and they denied that, actually I've tried everything with
CW but all denied but they approved my Short Sale. Please see below if your mom and you have decided to do Short Sale.
Here's how Short Sale works:
1) Hire a real estate agent that knows how to do Short Sale, check bbb search to get a good real estate agent. Your agent will put in MLS listing and the flyer Short Sale "Pending Approval of the Lender). You can find out from your lender through their website their process of doing Short Sale. Your agent will prepare a Short Sale package once you get an offer from a buyer. Make certain the lender will consider accepting a short sale offer. It's a good idea for you to talk to your lender your desire to take this approach early in the process. Lenders do not have to approve short sales. They can choose to start foreclosure proceedings if mortgage payments are unpaid or late so you are best off knowing whether they are willing to consider this option before investing too much time in it.
2) List your home with a below market price to attract a buyer in a "short" amount of time. Find out from realtors.com or zillow.com how much the selling price in your area, for example if the selling price is $140k, you have to lower that amount down to $135k to attract a buyer. Without a buyer there is no short sale. Time is against you if your goal is to be relieved of the debt before foreclosure proceedings evict you or compel you to file for bankruptcy so be aggressive with the listing price. You need to give a Letter of Authorization giving permission to your lender to talk to your agent.
3) Once you get an offer your agent will submit the Short Sale package, including the buyer's offer to the lender. Along with the fully executed contract submit the following documents in this package. Include listing contract, days on market over 90 is good, closed comparables that support the price offered and a net worth statement from the sellers, HUD1 form, your agent knows what HUD1 is for. You need to write a hardship letter explain why you are unable to pay the loan and you want to work with the lender by doing short sale. enclosed pay stubs. You as a seller has to prove there is a hardship and unable to make payments due to loss of job, disability, etc. If you have other liquid assets equal to what you owe, your lender willprobably not to accept the short sale.
4) Once the lender receive your request with your buyer's offer, you will be assigned a Negotiator. That Negotiator willl order an appraisal or Broker's Price Opinion (BPO). This is usually conducted by a real estate agent and submitted to the lender. The purpose of the BPO is to determine the property's fair market value.
5)The lender has the final say on approving the sale, in Short Sale you are at the mercy of the lender. It takes 4 to 10 months to approve a Short Sale.
Doing a short sale is hard enough, it's a long process, you have to be strong, persistant and patient and always emailing your agent and Negotiator. I feel your pain, you need the cooperation of the first lender,and the second mortgage holder needs to release that loan too.
Actually the success of the Short Sale is having a right attitude, the right seller's agent, the right Negotiator and the right buyer and his/her agent.
In Short Sale you as a seller don't pay your agent's commission, your lender will pay your agent their commission, and depending on the agreement before approving the Short Sale, your agent should negotiate to your lender that you don't have to pay the Seller's Closing Costs, and your buyer's agent will tell your buyer to make an extra offer to include their closing costs. Like in my case, my agent negotiate with my lender that I don't pay any closing costs and my buyer offer $8k extra to cover their closing costs, I was selling my house for $290k and they made an offer of $298k which is an extra $8k to pay for their closing costs.
If you are to pay the closing costs, here's the scenario I would like to give to you:
Let's say that your closing costs are 5% or $6750. After deducting the closing costs from the sales price of $135,000, you will have about $128,250 left. Now it becomes a tug of war between the two lenders.
Generally, the first negotiation is to offer the second lender a small amount, say $1,000. Now, that might not seem like much when compared to the second loan balance of $63,000 because you're asking the lender to lose $62,000. On the other hand, however, if the second lender refuses, it may ultimately get nothing.
Sometimes, that 2nd mortgage or we called junior lenders didn't want to work with the 1st lender. But this is where the first lender can give up a little more to make the deal work. In my experience, my loan was with the same lender but the 2nd mortgage has PMI without my knowledge. It took 3 months for the 1st and the 2nd to agree and disagree. First I offered to buy out the 2nd mortgage and I've offered $3,000 to get the 2nd mortgage out of the way, Countrywide Home Loans didn't want me to do that, they want to buy out the 2nd mortgage so they can claim the whole losses in 1099 because they knew they can not get anything from me besides, I am protected by CA Civil Code Section 580b, never refinanced and I had a Purchase Money Mortgage.
The 2nd mortgage finally gave up when Countrywide Home Loans offerred to buy them out for
$20k, so I was lucky because I kept saying no, I will not sign the promissory note, I threatened to file Bankruptcy and told them to foreclose the house. I told them they have to accept the offer as soon as possible before the selling prices goes down, and it went down big. We closed escrow on 07/09/08 for $298k, my next neighbor foreclosed their house and was sold on 07/14/08 for $229k and now the selling prices is down to $189k same size as mine.
Most lenders in first position are happy to receive at least 90%, which would mean on an $135,000 loan, the first lender might agree to take $121,500.
If the net is $128,250 (if you pay the closing cost), that would leave $6750 that the first lender could offer to the second lender. The second lender must agree to release the loan. If not, the short sale will be denied, and the first lender will most likely get the property back in foreclosure, eliminating the second loan.
You need to act fast if you want to do Short Sale, your agent needs to keep negotiating until a resolution is reached. Remember, both the first and second needs to work together so the short sale work. I have prayed a lot and asked all my friends and churches in our area to pray for me that God will give us favor and the right people to have our Short Sale approved and He did. Thanked God and again I thank loansite.org, I thank Moe, Cat, Professor Shays and Andrew they have given me information, help andtricks on how to email my lender.
I pray that everything will workout for you too.
God loves you and God bless you.
Hope this helps....
Faith
House just went into foreclosure w countrywide 
Re: House just went into foreclosure w countrywide