Case Studies

Learn how to get your Green Tree/PNC short sale approved in this Green Tree/PNC Short Sale Case Study.

Green Tree/PNC Short Sale Case Study:

Property Location: Granite Falls, WA - Snohomish County

1st Lender: Green Tree

2nd Lender: PNC

Hardship:
“It is with great remorse that I write this letter, seeking a short sale of my home. I make this request for several reasons, namely:

• business failure
• curtailment of income
• excessive obligations, and
• fraud

"Prior to the economic downturn, I was earning $50,433 as services manager for a company that sells and services pools and spas. The company has recently reduced half of its employees to half-time status. Although I am still working fulltime, to help keep the company afloat I have experienced a drastic income cut.

“I now receive $26,960 per year, after taxes. This is not enough to pay my monthly mortgage payments, which total $1,686.86 per month ($1,596.98 to Green Tree and $89.88 to PNC) as well as my other living costs and financial obligations. After paying the mortgages, I am left with $559.81 per month, but my other obligations come to $1,621.53 per month. With my reduced income, it is impossible for me to make all of these payments.

“Also, I do believe that fraud was committed against me when I initially signed my loan documents. When I initially was purchasing my home, it was explained to me that I would be getting a traditional 30-year fixed-rate mortgage. These were the documents that I reviewed and that I was prepared to sign.

“However, at the last minute before closing, my mortgage broker switched the papers on me without notice. What was supposed to be a traditional 30-year fixed mortgage instantly became an interest-only mortgage with an 8-year adjustable arm, meaning that the $1,596.98/month that I pay Green Tree isn’t even going towards the principal. I have since learned that the mortgage broker that I was working with has a history of unethical practices - including holding himself out to home buyers as being with a company that he had long separated from.

“Despite the fraud committed against me in the signing of my initial loan documents, I have always striven to pay my mortgage. I love my home and I am saddened that I can no longer afford to keep my residence. I am a hard worker, and pride myself on taking care of my responsibilities. However, the economy has taken a turn for the worse, my finances are struggling, and I can no longer afford to pay my mortgage payments. I need to survive.”

1st Loan Balance: $227,046

2nd Loan Balance: $28,004

Sales Price: $138,000

Approved Commissions: 6%

1st Loan Approved Net Proceeds: $117,050

2nd Loan Approved Net Proceeds: $5,000

Timeline:
Seattle Short Sales, Inc., received the file from the Listing Agent in January 2011. The file was prepared, awaiting a buyer.

On March 31, 2011, a signed offer to purchase the home for $135,000 was received. The Seattle Short Sales, Inc., case manager contacted the Listing Agent in order to start assembling all updated financial documents.

On April 20, the first lender indicated that a negotiator had been assigned to the file, and forwarded a letter for the seller to apply to process the sale through HAFA. The Seattle Short Sales, Inc., case manager passed along that information to the seller via the Listing agent, and requested additional required financial information.

Meanwhile, the second lender indicated that they would approve the short sale, but would not waive the deficiency. The seller indicated that he was reluctant to proceed with the sale if he was going to still be responsible for the deficiency. The Seattle Short Sales, Inc., case manager explained to him that he was not required to proceed with the sale if he did not feel comfortable with it, but that he suggested continuing to proceed with it trying to have it proceed as a HAFA transaction, which would automatically waive the deficiency.

On May 5, the buyer countered with a new purchase price of $138,000. On June 8, Green Tree as first lender issued their approval of the short sale. Meanwhile, the Seattle Short Sales, Inc., continued to negotiate between the seller and PNC as second lender regarding the issue of the deficiency, PNC requested financial documents, which the Seattle Short Sales, Inc., case manager resent in May. On June 10, PNC requested further financial documents, which the case manager also prepared and sent, while applying a bit of pressure to them to move forward with their approval process.

On June 15, PNC requested the last few months of Green Tree mortgage statements from the buyer. The Seattle Short Sales, Inc., case manager explained that, since the loan was in default, there were no recent mortgage statements: they had not been issued. But he forward another copy of Green Tree’s approval letter, which showed the balance owing on the 1st mortgage.

On June 17. PNC indicated that it would not consider the transaction through HAFA, as the amount offered to junior lien-holders ($6,000) did not meet their minimum requirements.

On June 30, the Listing Agent contacted Seattle Short Sales for an update, as the buyers wanted information on whether the sale was to go ahead. The Seattle Short Sales, Inc., case manager contacted the PNC negotiator again, stating that they had provided every piece of documentation that PNC had requested, and demanding a response. The negotiator promised that they would have an answer the following week.

On July 7, the PNC negotiator indicated that, since the sellers would not agree to pay the deficiency, they could offer a “full settlement” which would require a minimum cash payment of 60% of the balance owing, or $16,750, due upon closing. The Seattle Short Sales, Inc., case manager explained this to the seller; since Green Tree was only allowing $1,662 to junior lenders, the seller would have to come up with the difference. PNC indicated that they could counter that value, but the counter would have to be very close in order to be considered.

On July 10, the seller contacted the PNC negotiator directly, providing a copy of an (expired) offer from PNC to settle his account for $13,832, but indicating that the maximum he couldpay was $4,000. The negotiator wrote back that that offer had expired on April 22, but she would see if they would come back to the offer of $13,832.

The Seattle Short Sales, Inc., requested that PNC accept a promissory note rather than the cash on closing, as the seller did not have the cash. The PNC negotiator indicated that the seller could either pay the cash to close the account, or he could pay $5,000 for a lien release and still be responsible for the $23,000 deficiency, and that this offer was not negotiable. On July 27, PNC issued an approval letter for the short sale.

Result:
The homeowner was able to sell the home that he could no longer afford. The total discount on his two mortgages was $133,000, and he was relieved of having to ever pay back the $110,000 deficiency balance owing on the first mortgage.

To download a copy of the short sale 1st approval letter, click here: http://seattleshortsales.com/LiteratureRetrieve.aspx?ID=90294

To download a copy of the short sale 2nd approval letter, click here: http://seattleshortsales.com/LiteratureRetrieve.aspx?ID=90295

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/

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