Short Sale Blog

Great news for this Seattle, WA, homeowner! Not only did he avoid foreclosure through a short sale, he also had the $141,000 deficiency balance waived.

He owed over $215,000 on his Wells Fargo mortgage, as well as another $31,910 in arrears - a total of $247,000 of debt. But his home was valued at only $124,000.

Wells Fargo issued an approval letter for the short sale, accepting $106,000 net proceeds on the $247,000 mortgage balance owing - a discount of $141,000. However, the approval letter did not waive the deficiency - which means that down the road, debt collectors could pursue our Seattle homeowner to repay that deficiency.

We had our lawyer write a letter to Wells Fargo, explaining to them that if they did not waive the deficiency balance, they would end up owning the home outright (and have to absorb all of the costs of marketing it) - either by the homeowner declaring bankruptcy and not having to repay the deficiency, or through foreclosure.

Wells Fargo promptly reissued the short sale approval letter, waiving the Seattle homeowner of having to repay the deficiency balance.

You can read the original Wells Fargo short sale approval letter here: 4.25.12 - Wells Fargo - 1st Lien - 141k Deficiency - Lien Release - Short Sale Approval

You can read the revised Wells Fargo short sale approval letter, waiving the deficiency, here: 5.16.12 - Wells Fargo - 1st Lien - 141k Deficiency - Debt Settled - Short Sale Approval

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

Wells Fargo has informed the National Association of Realtors that it will allow postponement of scheduled foreclosures in order that a short sale may go ahead, but only in specific circumstances.

This development follows their announcement in September, reported in The American Banker, that Wells Fargo was implementing a new policy to stop issuing extensions to foreclosure sale dates. According to Wells Fargo, they were implementing that new no-extension policy at the request of their investors.

This month’s announcement is a partial reversal of that policy. Postponement of a scheduled foreclosure in order to facilitate a short sale may be permitted, but only under the following circumstances:

• Wells Fargo must have an approved short sale sales contract in hand (including approvals from junior lien-holders and mortgage insurers)
• the buyer has financing approved or has proof of funds
• the short sale can close within 30 days of the scheduled foreclosure sale

These guidelines apply to loans owned by Wells Fargo (including Wachovia) as well as loans serviced by Wells Fargo but owned by an investor provided that that investor approves, and in reference to one single postponement. Wells Fargo will consider postponements for situations that do not fit the criteria above on a case-by-case basis.

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/