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I submitted an offer on a shortsale, which has two lenders, 1st is nationstar and 2nd is citi. I just heard from the LA that 2nd lender has approved, but 1st lender wants all their money. I don't know how much the seller owns to each lender (LA won't tell me even though I asked twice). She said now she sent all the doc to the title co to have them calculate the closing cost and tax that the seller might own etc and to see if it will work out.
So does it mean the 2nd lender pretty much gave up on their portion, and we will be approved if the portion will cover the commission, and other costs involved in the deal?
What are our chances? Anyone working with short sale with nationstar as the lender??
I had high hope at the time she said the 2nd lender has approved the offer and now I am pretty much beat again...
This is a common problem. I am very surprised that the listing agent did not have this information before she starting the short sale, since both creditors would have wanted a pre-lim HUD1 before considering the sale.
There is no telling what the second lender will do. They usually try to get a couple of thousand just to appease the investor. Sometimes they will try to get the buyer to pay the 2nd off, but be careful, the 1st may not agree to it.
At this point all you can do is wait and see. I would not invest too much into this deal until you know how it will shake out.
There may be enough in the sale to pay the first off completely, meaning the short would all be to the second. Agents in my office have done several short sales that were that way. If the 1st is getting paid in full with enough left over for the 2nd to get more than 6% of their outstanding balance, then in my experience, they should take the deal, since when the first takes a short, they usually only allot 3-6% of the 2nd balance toward the 2nd lienholder.
To put those in real numbers, let's say the 1st outstanding balance was $100,000 and the 2nd was $50,000. And let's say that you were making an offer to purchase of $120,000. And for easy math, let's say the closing costs for the seller are $5000. That would be enough to pay the 1st in full, leaving $15,000 for the 2nd. $15,000 is 30% of $50,000, so they almost for sure would take it. If, however, your offer was only $107,000, that would be enough to pay the 1st and the closing costs, but only leave $2000 for the second, which is only 4%, so they likely would not approve that.
There is still no guarantee. Sometimes the lenders will just say that if they aren't going to get 100% of their money, they will just foreclose rather than deal with the short sale.
Do you not have your own agent working with you? In my area, an agent can pull the records and at least find out how much each loan was to start with, which would give you an idea how much the loans MIGHT be today, so you would have at least a ballpark idea what you were up against.
Thanks AZJoeD! Unfortunately she doesn't know until now, which has been over two months.
Lacerta, your example is of great detail to enable me to understand the situation. I do have an agent, again unfortunately I picked the wrong one and he doesn't know anything and doesn't do much either.
I only know that the total loan is 276K and we paid 275K, which is extremely high... In this case, will the seller pay the tax for 2013 out of his own pocket? Besides closing cost for seller, commission, what other expenses needs to be covered?
The taxes (property, irrigation, etc) along with any unpaid municipal (city/county) utilities, HOA dues, and any other local fees you may have that could lien the property if left unpaid should come out of the net proceeds available to pay off the 1st and 2nd. I suppose the banks could insist the seller pay them directly, but I've never seen a short sale successfully complete where that happened. These fees should all be prorated through the date of closing. So if it closes on January 15th, 2014, anything outstanding for 2013 would be due plus 15 days of 2014.
What the banks will cover for closing costs varies A LOT from bank to bank. We've had some who said they would only pay 1/2 of the escrow fee and 5% total commission, and nothing else, even though there are other expenses that are usually seller expenses. We've had others who said they didn't care what they paid as long as the total wasn't more than $xxxx.xx, all that concerned them was the bottom line.
It is possible to ASK the seller to cough up some more money for the loans, but I've never seen it actually happen on a short sale.
at this moment I just received an email from the title company saying 'commitment to buyer', with the following four docs,
commitment to buyers.pdf
title commitment.pdf
tax certificate.pdf
plat.pdf
exceptions.pdf
one of them has the tax for 2013. Others I don't really know much about...Does this mean anything?
I see you have an agent.. in my opinion.. you need to get him off his butt and have him do his job. It is not acceptable to have a client have to come on to CD to ask these types of questions. Unbelievable. If he doesn't want to ask for help in his office to be able to answer your questions, then go to his managing broker.
Did I read correctly that you and the LA are communicating directly??
at this moment I just received an email from the title company saying 'commitment to buyer', with the following four docs,
commitment to buyers.pdf
title commitment.pdf
tax certificate.pdf
plat.pdf
exceptions.pdf
one of them has the tax for 2013. Others I don't really know much about...Does this mean anything?
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Sounds like what you have received is the preliminary title report and title insurance commitment (with exceptions). While this is important information and it helps you to understand what you are getting, it does not answer your questions regarding any approvals, fees, costs, etc.
As azcater said, you need to get your agent off of his/her butt and explain these things to you and start getting involved. If they don't know they should get help, I bet they know how to cash the commision check.
I really think that you are in need of talking to your agent or the agents broker. The lack of help and guidance that you are being given should have your agents license taken away.
Of course you can ask the seller to help pay some of the closing costs or price gap btwn what u have and what bank wants to have a sale. heck, you can even ask the seller to leave the living room set if you wanted to. BUT- will they? Usually in a short sale, the sellers are up to their neck with debt, bills, etc. and they are selling it at a lower price as a last effort to rid the property without going into foreclosure.
Or, they are taking a loss and will still have to pay the bank something. Any type of negotiation as to who pays taxes or if the seller is contributing any money to the sale should be written in to the contract by adding an addendum to it. Please, dont let your agent tell you "they said" and thats it. Always have it in writing.
As far as the sales price goes.. they will try to sell at comparable prices. Short sales are the hardest because most of the time, the banks dont budge.. and the sellers finances are worn thin and they arent in any position to monetarily help.
You can call up the property tax dept for your prospective home and find out how much the taxes are and if current owners had already been paid for the year. hopefully its covered and you will have some relief at closing.
Last edited by Mandy612; 11-14-2013 at 05:04 PM..
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