Learn how to get your Litton short sale approved in this Litton Short Sale Case Study.
Litton Short Sale Case Study:
Property Location: Kirkland, WA - King County
1st Lender: Litton
2nd Lender: Litton
Hardship:
“In August of 2008 we were already struggling to make our payments due to ups and downs with work and not always having enough income coming in. We always made our best effort to make sure we made our payments.
“But on August 12th our lives took a huge change and for the worse. Our son who was 3 at the time became very ill and was diagnosed with Type 1 Diabetes. His medical needs became our number 1 priority. With all the new medical bills flowing in and the bills for our hospital stays adding up, we became very overwhelmed and started falling more and more behind.
“On top of that the in-home daycare that was my job started falling apart from people losing their jobs and not being able to afford daycare any more, which pretty much put me out of work.
“Then, to top it all off, our mortgage payment which was set as an adjustable loan went up. Our payments went from $1400 a month to $1800 a month. We were already struggling, so this just caused us to fall even more behind. We were to the point where we had to decide between getting groceries and paying our heating bill, or paying our house payment. The only way we could afford to keep paying our house payment and live there is if we stayed there with no power or water and no money for groceries.
“We did try several attempts to do a modification, and even hired someone to help us do the modification. After failing that, and being turned down numerous times, we decided it would be in our best interest to try to sell the house. We love our home and had planned on living there forever. We had only good intentions and we were really hoping to be able to modify and make it work, but that was not working out at all.
“We have chosen to try to short sale our house because we are out of options. We would love to get the house sold and settle our accounts. We are not looking to walk away with money in our pocket, just looking to walk away without any debt. If that does not work, we will be forced to file bankruptcy, which we really do not want to have to do. Our life has been very hard and we just want to start over.”
1st Loan Balance: $206,385
1st Loan Arrears: $1,181
2nd Loan Balance: $49,673
2nd Loan Arrears: $1,666
Sales Price: $210,000
Approved Commissions: 5%
1st Loan Approved Net Proceeds: $180,635
2nd Loan Approved Net Proceeds: $0 (because processed with first)
Timeline:
On January 19, 2011, the homeowners received a signed offer to purchase the home for $200,000. On February 4, the Seattle Short Sales, Inc, case manager submitted the completed short sale package to Litton, who were both 1st and 2nd lender. The Seattle Short Sales, Inc., case manager checked in with Litton on February 7, 10 and 18 to make sure that all documents were received and that the case was progressing. On February 18, the lender indicated that a processor would be assigned to the file within a week.
On February 23 the lender ordered an exterior BPO (Broker’s Price Opinion). They indicated that the file would be reviewed for HAFA qualification, and that a negotiator would then be assigned to the case. The case would not likely qualify for HAFA since the owner did not live in the subject property.
Following receipt of the BPO, the lender indicated that the current purchase offer would not meet their minimum acceptable net procceds requirement.
On March 15, the Seattle Short Sales, Inc., case manager requested the Listing Agent to advise whether the buyers would raise the offer. On March 18, the buyers countered at $210,000. On March 25, Litton assigned a negotiator to the file, and indicated that they would review the counter offer the following week.
On April 8, the Litton processor indicated that the HAFA paperwork had been sent to the seller, and that they could not proceed with the file until it had been completed and returned. On April 21, Seattle Short Sales, Inc., received some of the HAFA documents from the seller. On April 29, the Litton processor indicated that the file had been passed on to their decision-maker.
On May 2, since the seller had not supplied all necessary documentation for HAFA approval (missing the rental agreement), the lender indicated that they would review the case for approval as a traditional short sale. Seattle Short Sales, Inc., revised the financial documents, omitting the HAFA relocation payment.
On May 5, the negotiator from Litton indicated that approval letters would be issued soon. On May 10, Litton issued both approval letters for the short sale, for closing by June 6, 2011. At the request of the Seattle Short Sales, Inc., case manager, on behalf of the seller, Litton extended the closing date to June 10, 2011.
Result:
The homeowners, stuck with unexpected medical bills for their young child as well as declining employment, were able to short sale the home that they could no longer afford. They were waived of having to waive back the deficiency balances on the two loans - a total of $78,000 of debt written off - and so were able to achieve their objectives of avoiding bankruptcy, and settling their mortgages without having any debt.
To download a copy of the 1st short sale approval letter, click here: http://seattleshortsales.com/LiteratureRetrieve.aspx?ID=86276
To download a copy of the 2nd short sale approval letter, click here: http://seattleshortsales.com/LiteratureRetrieve.aspx?ID=86277
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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