Home Closing Process

Walk a mile in our shoes…

Each Short Sale is a unique and sometimes dangerous animal that we must tame and conquer!

Here is a tale of a short sale with two mortgage liens:

• Wells Fargo Home Mortgage
• Green Tree Servicing

The first was going smoothly as planned, the second… not so great!

Anyone that is working with a Green Tree-serviced loan, should be aware of a couple of ‘quirks’ in the “Green Tree servicing model”.

First, you should anticipate working with two separate departments during the short sale processing. This would not be so troublesome except for the fact that the departments do not communicate with one another or share information.

According to the negotiator with whom we spoke, “we don’t even see or talk to the people in that [the other] department.”

NICE!

As it was explained to us, the first step is working with the Loss Mitigation Department (LMD). You will send your short sale package to the LMD and work with with a negotiator from that department. In our case, we worked with the LMD for months. We were shocked to find out that after all this time and effort, the file was no longer with LMD. It had been transferred to the Recovery Department.

So we thought we were making process…

NOT!

The second step is working with the Recovery Department (RD). This department required that we start the whole process over. A completely new short sale package was needed to review for submission to management/investor for approval

So why is this such a backwards process?

A kind woman named Wendy explained that the LMD retains the file and negotiates until the loan is “charged off” and determined to be non-performing. She could not provide a time frame for the non-performing determination. But again, in our case, we had worked with LMD for months before the file was turned over to RD.

Oddly, LMD and RD will entertain the same short sale request but they don’t share the information or documents – that’s a picture of ineffectiveness!

You should plan to allot at least 5% of the purchase price for Green Tree in order for their negotiator to submit the request for approval. This 5%, in our experience, has been the threshold amount without which they have refused to move the file forward.

Wells Fargo’s approval was limited to the amount payable to junior lien-holders for $3,000, which was about $2,250 short in the subject short sale.

Fortunately for this short sale, the buyer agreed to assume responsibility for the $2,250 shortfall and because of Green Tree’s firmness, Wells Fargo has agreed to the buyer contributing to Green Tree beyond the original $3,000 limit.

So what have we learned from this journey through the Green Tree Servicing Short Sale Process at Winged Foot Title?

1. Prepare all involved in the process for the dreaded “switch” from the Loss Mitigation Department to the Recovery Department
2. Per Diem penalties are being assessed
3. Communication with the negotiator sometimes freezes
4. In the worst case scenario, the first lien holder will cancel the approval altogether if another piece of the puzzle is missing or refuses to fit.

When working with Green Tree Servicing as the second lien holder in a short sale, make sure to:

1. Request as much time as possible from the first lien holder to close the sale.
2. Plan for the worst (negotiations with Loss Mitigation and then the “switch” to the Recovery Dept.) and build that in to your plan for working with the first lien holder.
3. Perhaps “slow playing” the first lien holder may be in order, especially if you know that they are reluctant to grant extensions.
4. Plan for 5% to Green Tree and stick to it. Also make sure to communicate Green Tree’s 5% demand to the first lien holder as soon as possible – MAKE SURE IT IS REFLECTED ON THE PRELIMINARY SETTLEMENT STATEMENT SUBMITTED TO THAT LENDER – so that they can tell you sooner rather than later whether or not they will allow the full 5% to a second.

It is so important that all parties understand how things can go awry in order to keep things on track!

To work with a short sale expert who has the experience to make this kind of transaction easy, contact Winged Foot Title today.

- Chris