Archives for November 2009

Sample Short Sale Approval Letters

I am posting the following short sale approval letters to illustrate the difference between a short sale & a short sale with loan settlement.

Take a look at the following Bank of American Short Sale approval letter.

http://investutah.com/wp-content/uploads/2009/10/short-sale-approval-letter_bank-of-america_with-deficiency1.pdf

You can see here clearly that the lender is willing to release the lean against the property to allow it to sell for less than the amount owed, but not willing to settle the note the borrower signed promising to pay the principle balance.

Here is a sample Indymac Short Sale Approval letter issued for a Lehi Utah short sale with loan settlement.

http://investutah.com/wp-content/uploads/2009/10/short-sale-approval-letter_indymac_no-deficiency.pdf

You will notice the similarities and differences in the above Indymac short sale approval letter and on the below Orem Utah short sale approval letter with the same lender.

http://investutah.com/wp-content/uploads/2009/10/short-sale-approval-letter_indymac_with-deficiency.pdf

The first letter clearly releases the seller from all obligation to repay the balance, the second clearly reserves the right to collect the balance. Both of these letters were received about the same time from the same department but from two separate Indymac negotiators.

Sample short sale approval letter for EMC mortgage on an Elk Ridge Utah short sale.

http://investutah.com/wp-content/uploads/2009/10/short-sale-approval-letter_emc_no-deficiency.pdf

Sample short sale approval letter for Wells Fargo on an Orem Utah short sale.

http://investutah.com/wp-content/uploads/2009/10/short-sale-approval-letter_wells-fargo_no-deficiency.pdf

Sample short sale approval letter for AMHSI (American Home Mortgage Servicing) on a short sale in Lehi Utah.

http://investutah.com/wp-content/uploads/2009/10/short-sale-approval-letter_american-home-mortage-servicing.pdf

This letter is not quite as clear. It says clearly that is is taking a short payoff on the loan,  doesn’t specifically reserve the right to collect and does not ask for a promissory note.

Sample short sale approval letter for SPS (Select Portfolio Servicing) on an Ogden Utah short sale.

http://investutah.com/wp-content/uploads/2009/10/short-sale-approval-letter_select-portfolio-servicing_no-deficiency.pdf

Pretty clear in this letter that the loan is satisfied.

Sample short sale approval letter for LLS- Liton Loan Servicing,  on an Provo Utah short sale.

http://investutah.com/wp-content/uploads/2009/11/short-sale-approval-letter_litton-loan-servicing_no-deficiency1.pdf

Good, clean approval letter.

Sample short sale approval letter from Green Tree on an a West Valley City Utah short sale.

http://investutah.com/wp-content/uploads/2009/11/short-sale-approval-letter_green-tree_with-deficiency.pdf

The interesting thing on this letter is the way the negotiator named the document in the footer in the lower left hand corner of the approval letter, “note remains”. So getting them to switch to the full satisfaction and release letter is the trick. When I submit a short sale I specifically request a full satisfaction and release. I think in the future I am going to leave the term short sale off of all of the documents.

Most of the time when they issue a release of lean only,  they will also ask for a promissory note detailing the amount of the deficiency and the re-payment terms. So it is very clear that they are asking to be re-payed. Its not a bad idea also to ask your title company to reference the “full satisfaction settlement and release” in the wire transfer along with the borrowers name and account number when they send the short payoff.

The goal for any experience short sale professional is not just to approve the short sale but to settle all leans against the property in the process. This however is getting increasingly difficult. The home owner should be aware upfront that there is always a possibility that the lender will not be willing to settle the account.

Read the following post about settling a Citi Mortgage account when the file has been transferred to the Citi mortgage recovery department.

http://investutah.com/approval-letters-citi-mortgage-loss-mitigation-vs-citi-mortgage-recovery-department/

Approval Letters: Citi Mortgage Loss Mitigation vs Citi Mortgage Recovery Department

Sample short sale approval letter for Citi Mortgage on a Saratoga Springs Utah short sale.

http://investutah.com/wp-content/uploads/2009/10/short-sale-approval-letter_citi-mortgage_no-deficiency.pdf

This approval letter was received from the loss mitigation department in May of 2009. You can see on the second page that the approval is clean and will even show how the settlement will report on the borrowers credit. It took 4 additional months to receive approval from the first mortgage on this deal. By the time we received approval from the first mortgage this second mortgage with Citi had “charged off” and gone to their “recovery department“.  Cities recovery department is at lease twenty times more difficult to work with than their loss mitigation department. They try to collect the full balance and only allow a release of lean.

Here is the approval letter they issued on the same loan just 4 months later.

http://investutah.com/wp-content/uploads/2009/10/short-sale-approval-letter_citi-mortgage_with-deficiency.pdf

The way Citi Mortgage is running their recovery department this year it would be wise to do whatever is necessary to keep the loan out of the recovery department and settle with loss mitigation. You can see even though they were getting an additional 1K, they were still not willing to settle. 1 Week later we were able to reach a settlement for a total of 10K.

http://investutah.com/wp-content/uploads/2009/10/short-sale-approval-letter_citi-mortgage_no-deficiency-3rd.pdf

In this case the lender required an additional 7K to be paid as a settlement that had to come from the buyers or seller. (in this case the buyers) The other 3K came from the proceeds from the sale that would have gone to the first mortgage.

I currently am working on a Orem Utah short sale where we have been assigned one of the most difficult Citi Mortgage “recovery department” negotiators I have worked with. She gave us a verbal approval of the short sale but said that the full balance of 40K would have to be paid by the seller at settlement. Ya right. =)

So she said she would accept 10K, 2K from the first mortgage and 8K from where ever, but we had to source it, as a settlement. I thought that was still to high but we had a pair of buyers willing to pay it.

So we sent her the preliminary settlement statement showing the 10K settlement, 2K from the first mortgage and 8K on the buyers side of the settlement statement for a full 10K settlement.  She then issued us the following approval letter.

http://investutah.com/wp-content/uploads/2009/11/short-sale-approval-letter_citi-mortgage_lien-release-only.pdf

You will notice clearly that the letter is only a release of lean even though they are getting 8K as a settlement amount from the buyers. The negotiators response was she wasn’t willing to settle the account because the settlement wasn’t sourced from the seller! I have never seen this before! She said that she would need an extra 3K from the seller personally.

Thankfully most lenders aren’t as reluctant to settle as this particular negotiator at Citi Mortgage recovery department. To date we are still working this settlement. I’m guessing the buyers will probably walk and we will settle for much less that what we were previously willing to settle for, it will just take more time. 😉