Today I closed on another short sale. It seems each one I do, gets worse! Again, I represented a great seller. The buyer’s agent and buyers were fabulous. Without co-operation and commitment from both sides, as well a great escrow agent, completing a short sale is nearly impossible. The lender was impossible. Here is a short synopsis so future sellers and buyers know what to expect. Please remember that each lender is different. Aurora Home Loans must be one of the worst!
I took this listing back in August of 2011. The property is a nice 2 bedroom, 2 bath vacation rental in South Kihei. We had our first offer and acceptance within 2 weeks. My client worked with us to get all the documentation into the lender. I submitted the authorization forms so that I could talk to the lender about the sale. I coached my client on writing a financial hardship letter. We filled out all the financial profiles and prepared all the recent bank statements, retirement statements, 2 years of tax returns and employment records. I wrote an agent hardship letter to summarize the market, future market predictions (act 48), the unit condition and my clients’ hardship. Just so you know a short sale package is well over 100 pages that need to be FAXed! About the time we were ready to submit, the buyer cancelled.
Back on the market, I did open houses whenever I could. I really wanted to get it under contract before the busy peak season. Success came in mid-October with a reasonable cash offer with a 30-day close after acceptance. We submitted the package to the lender after collecting the new bank statements and employment records. Full package was submitted on 10/31/2011. We (tag team between myself and my escrow agent) started the constant status checking. We tried to contact the lender at least twice a week. We got verification that they received the package. A processor was assigned to us on 11/14. Suddenly, all calls were directed to her voicemail so we couldn’t even talk to a real human. Then her voicemail was full. I happened to get lucky and talked to her on 12/6. She told us to supply new bank account statements since they were now out of date. On 12/21, by some weird fluke, I talked to a very nice available representative named Melody who told me that the notes in the file said they wanted an updated Hardship Letter so we submitted that. Mind you that each time you submit anything, you FAX it in and then call 2-3 days later to confirm it was received and filed properly. Finally on 12/31 the BPO (Broker Price Opinion) was ordered. Yea! Start the New Year with some progress. A BPO is performed by another agent who is familiar with the area and gives an opinion of the value. This is important so the underwriter can decide if this offer is reasonable and should be accepted.
So back to the regular status checking. On 1/26 we received a fax (mailed to another agent in my office; they didn’t have the right fax number for escrow either!) saying that the short sale was approved. But wait, it was approved with my seller paying $136,000. Wait a minute. We could have sold it without a short sale and my seller would be better off! Back to the negotiating table. The good news was that I was able to talk to the underwriter (i.e. person with a brain). A few more documents re-sent over the course of the week and on 2/2 we got a acceptance with no seller contribution.
Now we are running! The bank gave us until 3/25 to close but the contract had a 30 day close. So close date was set to 3/4. The normal inspections, inventory and walk-throughs are performed. The buyer is very easy to work with and everything proceeds as planned. Lender instructions said to submit the final HUD 5 business days before close to ensure approval. Final HUD (standard form used to describe the costs to buyer/seller) was submitted by my escrow agent. She called to verify that she was faxing it to the right number. She called to verify that it was received. We both called and left messages with the processor who told us repeatedly “it is with the underwriter”.
The days pass with no approval. Mind you, this is a one page form. They have already seen and approved it. It has slight changes on pro-rated items based on the close date. We delay close. Buyers are frustrated. We call daily. Finally, on March 22nd, in desperation I send an email to the “DO NOT USE THIS EMAIL except to notify of buyer cancellation or closing delays”. I state that the lender acceptance date was about to expire while we were waiting for over 3 weeks for approval of the final HUD which was supposed to take 5 days max! Within 10 minutes, I get a message back saying “Did you FAX it this number as instructed.” Before sending a flippant reply, I decided to I call my escrow person to confirm. She said “The documentation said to fax the Final Closing Package to that number but didn’t specify the Final-HUD. I called and asked and they gave me another number and I faxed it to that. ” So I write to the underwriter telling him this and say that we will update the HUD (it is now 3 weeks old and out of date) and send it immediately to them. We did that.
The next day I called to confirm that they received it and to ask for an extension. I was told “You are no longer authorized on this account”. OMG – I almost lost it. But it was clear that no one in the company was going to even recognize me…my 180 days were up! I was past the breaking point. It was Friday and the short sale acceptance ended on Sunday. At least my processor did tell me that they often extend after the expiration. I sat for over an hour trying to calm down. Then I prepped new authorization forms and another contract extension and got my client to sign them.
About an hour later, a miracle happened. Escrow got an email saying the final HUD was approved with one demand. They gave us an automatic extension. The demand was that we needed to do a Deed switch to put into my client’s name instead of the LLC. I don’t know why they didn’t ask this earlier or why they needed this. My client agreed which cost him a few hundred dollars.
We recorded today. Thank you to my seller, his family, the buyer’s agent and buyers and to Old Republic Title and Escrow in Wailea for making this a successful close. It takes a community and tons of persistence to close a short sale.
And I received this text from the other agent after I thanked him for keeping his buyers on board:
“The thanks ALL goes to you. You dragged it across the finish line. Awesome job.”
Short Sales are not my favorite. The time and money are probably not worth it. But I do them because people need to get out of bad situations that are usually no fault of their own. Contact me if you know of someone who may need assistance (and is persistent!).