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Bio
Sean Wilder 1st Licensed Debt Negotiator in the State of CT
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Sean Wilder started in the pre-foreclosure business in 2007. Previously he enjoyed a successful business in the transportation industry. Upon the sale of that company in 2005, Sean became a successful real estate investor, landlord and licensed Realtor. Sean brought the same determination and work ethic that lead to great success in his previous business to Loss Mit Services based in Enfield, CT. His focus, combined with his drive to succeed, have been essential to his success as one of the area’s top pre-foreclosure negotiators.
Known for finding creative ways to overcome hurdles; Sean, believes in the power of team. Sean is in the trenches everyday, plowing through challenges and objections while negotiating with various lenders, and finding solutions to difficult problems. It is this daily experience that brings him his consistent success and provides him the knowledge to share.
Sean belongs to a number of industry groups and associations that allow him to collaborate, share, learn, and be updated on the latest changes in the pre-foreclosure industry at the federal, state, local and lender specific levels.
Effective Oct 1, 2009 all debt negotiation companies the offer loan modification, short sale, or foreclosure rescue services needed to be licensed by the CT Dept of Banking. Sean and his company Loss Mit Services were the 1st to be awarded the Debt Negotiation License # 27332 which can be verified at the CT Dept of Banking Website by Clicking Here.
Hi Sean! The biggest challenge I have had with short sales is the amount of time it takes a lender to approve the short sale. Will HAFA reduce the time it takes to get a short sale approved assuming no SSA is in place? How long will lenders have to provide an SSA if the seller opts to go that route? Timing is key to successful short sale transactions. Thanks for taking this question. I look forward to reading your responses.
Maria,
I agree that the timeframe is a huge issue. That’s why knowing as much as possible about the expected timeframe at the biginning is crucial in setting those expectations for the buyer up front. I have not seen any timeframe given for the issuing of the SSA. The lender still has to order a value and that can cause delays and the lender has little control over it. Also if they were slow to begin with, this will not make them faster. The lender does have a 10 business day requirement to approve an offer if there is already an SSA which, like FHA, means they already have established what they would accept. So the answer in both your instances is I doubt it. If there was already an SSA than yes they have 10 business days. If not then it is not much different then it is now. However if they already have an SSA, then the lender had the opportunity to set a commission below 6% if they choose to. Thanks for the great question.
What is the difference between a lender and an investor? I have a short sale in the process with CitiMortgage and my contact has to ask permission of the investor to accept an offer. What does that mean? Is the contact just someonewho works in the bank’s short sale department?
Great question. The vast majority of lenders are actually servicers of those loans for the actual owner of the note or “investor”. They do not own most of the loans they service. As a matter of fact, many lenders who are also servicers, still have the loans they do own, serviced by others.
In short, it is very common for a bank to lend money, charge fees up front for the loan via origination fees and points, then sell the loan to either Fannie Mae, Freddie Mac, or some other secondary market “investor”. The lender may retain the servicing rights on that loan, meaning they send the bill, collect the payments, and send off the funds to the investor minus their servicing fee. Other times when the loan is sold it is transfered to the servicer that the investor already has lined up.
So the owner of the loan, the investor, has the final say when it comes to mitigating any losses via loan mod or short sale. The sevicer, in your case Citimortgage, processes the offer using the investors guidelines and once they feel the offer meets those guidelines, they have to send it to the investor for final approval.
This is the same if there is mortgage insurance. They must send it to the mortgage insurance company for their approval as well.
The first thing we do when opening a new short sale file is find out who the investor on the loan is. Be it Fannie Mae, Freddie Mac, FHA, VA or some other conventional investor. Knowing who the investor is dictates the guidelines the servicer has to follow. The guidelines determine things such as, what the acceptable net to the bank as a percentage of the BPO or appraisal must be, whether the value will be determined by an appraisal, BPO or multiple BPOs, acceptable closing costs, and how much if any buyers credits are allowed.
I hope that helps shed some light on that issue for you.
I’m a buyer trying to get a short sale property in tampa, FL. The property was listed at 200,000. and we offered full price plus all closing cost. The owner has an 80/20 loan 80 by gmac the 20 by b of a. The 80 accepted the offer and the 20 did not. B of A has come back and said they want 5,000 more so the selling price will now be 205,000. We agreed. What is the next step it sounds like to me this should be a go. What are your thoughts as we have a great rate 4.75 locked until 6/28 and we dont want to lose this rate.
Hello Danny,
Yes you should be good to go but there are some pitfalls to be aware of.
1. If GMAC says that B of A can’t have more than $1,000 or whatever you need to put the extra money on the buyer’s side of the HUD-1 as “Proceeds to B of A” at the end of the second page. This also needs to be an approved estimated HUD-1 by GMAC. They need to see it before the closing, because if they don’t know about it up front and have an issue with it after closing you are all screwed.
2. You need an approval letter from B of A to show to GMAC that says they are getting whatever $ amount from the offer at closing and the additonal money is up and above the $200,000.
If GMAC won’t allow any more money to go to B of A it is possible to put the additional money in escrow witht he escrow agent with instructions for it to be released to B of A if the property successfully closes. That way it is just a principal paydown on the loan done before the closing. So it is not necessary to put on the HUD-1 or notify GMAC of it. Then once B of A has verified with the escrow agent that the money is there, they will give you an approval letter to show GMAC for the ammount GMAC allowed to B of A.
Hope that wasn’t to confusing and helps your situation.
Hi Sean,
I read your very informative and intelligent blog on Short Sales. I have a question you may be able to answer.
In your example re: the property with a loan balance of $290,000 but a current value of $250,000, why would the bank not ask the PMI company to cover the $55,000 deficit? That is : instead of asking the seller to pay a promisory note. Isn’t that why the seller paid PMI all those years. And what is the PMI guaranteeing anyway?. Is it only the 20% cushion that all banks want to have? If so 20% of the balance is $58,000 (or $60,000 if on the original loan).
Would appreciate your early reply.
Thanks..
Hello Bryon.
Great Question. When PMI is involved all negotiations have to be approved by them as well as the lender. Even if they pay off the lender in full, The PMI company can make a short sale approval contingent on a promissory note.
PMI companies have differing coverage percentages and it is often not the 20% that we assume that it is. Also PMI companies can be a real thorn in short sale negotiations. Say in that example that PMI covers $50,000. They will have to pay a full payout whether to property sells now as a short sale or later as an REO. Either way it is the same to them, only if they delay, they won’t have to pay it out till months later. So sometimes they will even try to prevent a short sale from be accepted if they think it is in their best interests.
This doesn’t happen often, but it does happen.
Also, even though the homeowner is paying for the PMI, the coverage is for the banks loss not the homeowner. The homeowner is paying for the banks insurance policy.
The lender can actually accept the short sale and send it for PMI approval and the PMI company will say no, or try to keep the homeowner on the hook to the PMI company to collect from them later.
All these things are negotiable and often the lender or PMI company is just trying to slip it by the negotiator so they have the right to come after the homeowner. They may even just sell that promissory note or deficiency judgment to a collection agency for pennies on the dollar and then the seller is getting calls from a professional collection agency. Not fun.
I am a realtor in Glastonbury. I have a client who owes about $425000 on a house worth $375,000. He has never been late for a payment but needs to sell now and doesn’t have the dollars to bring to a closing. He is going through a divorce … can you help?
c
Thank you for your question Carole.
The answer is YES. It is possible, especially in today’s environment, to get a short sale approved even if the property is not in default.
The lender(s) require pretty much the same things to approve any short sale.
1. A Legitimate Hardship
2. A Financial Inability to Bring Cash to Closing
3. An Offer
4. The Property Value is Less Than Full Payoff.
Now there are documents that are required to substantiate these points but basically that is what they will want.
The big caveat with sellers that are not in default and have good credit is that the bank will often times leverage their good credit against them and want some sort of payment plan towards the remaining balance.
So these cases have more negotiating required on what happens to the balance of what is owed. And we negotiate all those points during the short sale negotiations with the lender(s).
We always want to put the sellers in the best possible position after closing, that we can negotiate from the lender(s).
Thanks again for the great question.