Short Sales and Equator – More Information for Agents

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Short Sales in EquatorA local listing agent phoned me today about his short sale. He was expressing his irritation with the process. It’s not the first call that I have ever received from an agent who is tired of the short sale process. Interestingly, it was not the first call today from a frustrated agent.

Are you familiar with Charles Darwin, Natural Selection, or Survival of the Fittest? If I didn’t know better, I might think that Darwin came up with that theory after he attempted to work with the banks on a few short sales.

In any case, one person’s pain is another person’s pleasure and the experiences of this short sale listing agent are a great topic for a blog post about Bank of America’s (and GMAC’s) use of the Equator platform for processing short sales.

This particular short sale has two lien holders. The first lien is being handled through the Equator system, and the second lien is with another major lending institution. The first lien holder has already approved the short sale and the short sale listing agent already had the approval letter in hand. Kudos! That, in itself, is a great accomplishment. For many agents, just managing short sale through the Internet-based Equator platform is a challenge. But, the problem was that the net amount to the first lien holder on the approval letter did not jibe with the net amount on the settlement statement drawn up by the escrow office.

This is the part of short sales that confuses many folks. The lien holders in the short sale are only concerned with two things: 1) closing, and 2) how much they are going to net when the deal closes. As such, they are looking to the settlement statement that the short sale listing agent (or short sale negotiator) provides as a means to confirm the net amount. So, it is vital that the settlement statement is prepared very carefully and contains the correct net amount.

In the case of this short sale listing agent, the problem was a five thousand dollar problem. I reviewed the approval letter and I reviewed the HUD. I saw that the bank had reduced the commission and I worked out a few other issues. I then asked the agent to print out the worksheet in Equator so that I could also review the worksheet. This agent was unfamiliar with the worksheet and its role in the transaction.

If you use Equator for your short sales, then you probably have seen the form where you receive the counter offers—the one that you can accept or fill in more blanks. Well, that’s the worksheet and it shows the exact amounts that the bank will be approving. You can print out the worksheet as a pdf or you can save it onto your computer.

When you receive a worksheet for review, you must take a lot of time to carefully look at the amounts on the worksheet; this worksheet is your counter offer. Sometimes the bank will counter by asking for a higher purchase price, and other times the bank may reduce the settlement fees, the commission, or may ask for a cash contribution or a promissory note. These are all items that you can agree to or you can counter. But, you cannot overlook them. If you overlook these items, then you may end up with a short sale approval letter that does not meet the needs of your transaction. In this five thousand dollar short sale mystery, the short sale listing agent did not notice that the bank had requested a five thousand dollar cash contribution on the short sale counter offer worksheet. Since the agent did not counter that amount bank down to zero, the bank conditioned the approval on the five thousand dollar cash contribution.

I cannot stress enough how detail-oriented you need to be if you are working on short sales. You must study each document before you send it, and you must really pay attention to the details—even if you plan to avoid all future short sales as if they were the Plague.

Comments

  1. Young Lim

    yes yes & yes to that comment about I need to be detailed about reviewing documents. I need to initiate Wells Fargo Equator. If it is FreddieMac is an investor and non-owner occupied home with MI but still current do I have good chance?

    • Melissa Zavala

      Well, that would be tough to determine. With Wells Fargo, you will certainly have to be on your toes. The devil is in the details (or so they say).

  2. Karan Barr

    How do I get to the Wells Fargo web site. I have a Short Sale to enter, but when I go to Equator all I get is Bank of America’s page.

  3. James Miller

    I have a short sale with Wells Fargo. My questions: Where do I get the loan # for the home equity loan ? Where do I show it on Equator.

    Thank you

    Jim

    • Melissa Zavala

      The second is not handled through Equator. Call the phone number on the HELOC statement and get info on where they want you to fax a hard copy of the short sale package.

  4. Brenda

    Is there an agent resource website for Wells Fargo like Bank of America has which contain training and the forms necessary to submit when initating a short sale? I need the necessary to get started on one.

  5. Wells Fargo is a night mare working a short sell, I lose a short sale after working on it for
    7 months, now I am working on another one it is almost not worth it,believe me you won,t get nd help or training. GOOD LUCK

    • Brenda

      With bank of america you have to submit their 3rd pary authorization form and short sale addendum forms. Any forms exist for Wells Fargo? I haven’t initiated it yet and wanted to make sure I knew the exact forms to use. Have you done a short sale with Bank of America?

    • Brenda

      WOW! Maybe I need to turn this short sale down. With bank of america, they have a real estate agent resource website. They have a copy of short sale purchase contract addendum, short sale real estate licence certification and some Buyer acknowledgement and disclosure and 3rd pary authorization forms all on that site so you can download. They also have webnar access and training guides explaining the process and walk you through all of the phases. How in the world you know what to submit per their requirements if they don’t provide the forms somewhere. We can’t make them up. I called BoA customer care and get great service. What in the world have I gotten myself into?

      • Brenda

        I just became a member of the “Short Sale Expeditor” under this website. In the member site I did find some info about what is needed for a short sale. For Bank of America it listed the correct forms. I am assuming the first set of forms are for Wells Fargo.

  6. I am a buyer of a short sale property paying cash, and offered $1000. less than asking to make my offer more attractive . Everything was going well until the bank (Wells Fargo) appraisal came came back at a higher amount which WF is trying to pass on to me of $10,000. over the orignal listing price. This is 25% more when the market is up buy only
    6 1/4 % here in Pahrump, Nv. which is $2500. more, so that is what I countered at which is fair. Can Wells Fargo legally do that, going over asking price?

    • Melissa Zavala

      Well, in a short sale, the bank has to approve the transaction, and they will only approve it if they believe they are getting a good deal at market value. Apparently, the value they obtained in the BPO (Broker Price Opinion) must differ a bit from what you believe to be market value. Have your agent prepare a value dispute to submit to the bank–there are instructions on the site!

  7. Victoria Duever

    Where can I find a 3rd party authorization for Wells fargo. They are asking on the equator for one. But I can’t find one in the library and I have requested 2 times on equator through the email message center. I just keep getting overdue tasks emails.

    • Melissa Zavala

      You can use any third-part authorization at Wells Fargo. They do not have their own form. If you are located in California, you can use the one located in zipForm(r) 6.

  8. I have been receiving messages from Wells Fargo that I have overdue tasks in Equator and my short dale may be declined if I do not attend to this. I have tried to log in to Equator and they say I have no tasks to be done. I have put in the loan # and still no tasks to be done. The owner was mainly handling this but we have a counter offer in and I do not know the status.

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