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Yes, even in swanky Vienna, VA there are real estate short-sales.
As the process has been allowed to pickle over the last few years, banks have come up with strategies to streamline the process. That sounds like good news but I still have to advise home buyers that these are tricky transactions that will require patience and some hard work.
I say tricky because real estate short sales are never “final” until the current mortgage lender “approves” the HUD-1. Yes, I am talking about the HUD-1 that you will get on the day you close or settle on the property. If they need to make a change or don’t approve it then you may have to wait a day or two.
Wait? But my lock will expire!
Here is my advice for home buyers: Make sure your interest rate lock doesn’t coincide with the planned closing date. If you have to change your rate or lock, then you may be subject to the “cooling-off period” mandated in the HUD guidelines. You are responsible for knowing about this.
Yes, Vienna Real Estate does feature short-sales
Recently some friends of mine bought their rental home in Vienna when it was offered as a short sale. From my point of view the situation looked grim because the next step by the bank is foreclosure, but the deal went through and they purchased the home. Yes, a percentage actually work out.
But some clients recently put in an offer on a Vienna townhouse listed as a short-sale, and that negotiation was a slightly crazy experience. It seems that the streamlined Bank of America short sale system known as Equator required some extremely sensitive information be submitted with the offer. This information included the buyer’s Social security number and date of birth. Say what? They were already submitting a Wells Fargo approval letter based on a credit report, so are they planning to pull credit too?
I used to work for a Fortune 100 listed company that had “work-flow” procedures in place, so I understand why B of A would implement a “work-flow” system to speed up short-sale transactions. My problem is that this requirement was a non-negotiable requirement of the submission process.
Please beware of the advice that I saw on the Internet to just “make-it-up”. Making information up is called “fraud”, and fraud will land you in jail.
You must have their Social Security Numbers?
Sharing this type of confidential information was just a little too much for me to stomach. I advised my clients to tell B of A to take a hike and move on to another property. Identity theft is a huge problem and consumers need to do their best to control who they give information to. Equifax is a credit monitoring company and I suggest reading their advice and blog if you have questions about keeping your confidential financial information secure.
There is a lot that is up in the air in a short sale transaction because the seller is asking the bank or mortgage holder to agree to sell at a loss (and banks hate to show a loss). Many short sales do work out but remember to understand your contractual obligations, watch the “lock” on your mortgage rate, and know that your deal will be up in the air until the seller’s lender approves the HUD-1 just before your closing.
(Update from original post: As we were hashing out the details on the short-sale offer that was the inspiration for this blog post, the listing agent called to tell me that the bank had foreclosed on the house. This situation is not unusual because the seller will have only a short time to try and salvage their reputation before the bank decides to cut their losses. At this point, the house is the responsibility of the “trustee” and sooner or later will wind up in the bank’s REO Department.)
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