Saturday, February 23, 2008

Aurora Loan Services: Short Sale Warning

I have had a Short Sale offer in process with Aurora Loan Services since December.


The house, in Niceville, Florida, was listed for $183,000.

Offer was for $175,900. VA financing with seller total contribution of $3000 including doc stamps on the deed, a customary seller expense in Florida. Thus, the seller contribution to buyer's closing was only about $1700.

BPO (Broker Price Opinion) determined by seller's lender - $185,000.

Aurora counteroffers $185,000. Buyers stay firm at $175,900.

30 days later- today- Aurora says sale is "approved".

Receive approval letter. Aurora will pay $363 of the total closing costs, excluding a reduced broker fee.

I call Aurora. "VA will not ALLOW VA buyers to pay certain closing costs. You had the contract and the net sheet. The contract stipulated VA financing".

Aurora: "We don't pay closing costs."

Me: "Then the deal is going to fall through".

Aurora: "Sorry."

Warning: Although this lender only countered the purchase price, they omitted any mention of closing costs until the deal was "approved". Wish me luck saving this one!

It's Wendy!
Wendy Rulnick, Broker, CRP, CRS GRI, ABR Rulnick Realty, Inc.
Specializing in SHORT SALE and FORECLOSURE work-outs on the Emerald Coast of Florida: Destin, Fort Walton Beach, Santa Rosa Beach, Seagrove, 30-A, Niceville, Bluewater Bay, Navarre, Crestview. 1-877-487-9639.

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Sunday, February 17, 2008

How to Buy a Short Sale

Buying a Short Sale? What is the Process?

  1. When you write your offer, your agent should insert language into the contract that states the contract is "Subject to seller's mortgage holders' approval". the contract that states the contract is "Subject to seller's mortgage holders' approval".
  2. Often, lenders require Short Sale properties to be sold in "as is" condition, thus not threaten a potential closing with repair items. Language should be inserted into the offer in that regard, either with appropriate addendum, or added language.
  3. The Seller may counter your offer. Remember, the contract is between you and the Seller, not you and the Seller's lender. The Seller does not want to submit an offer to the bank knowing it will likely be rejected and/or counter-offered because it is too low or has too many closing costs on the Seller's side. The lender pays these costs, and will always analyze its "net". In this case, it will be a "loss", so the lender wants to mitigate the loss as much as possible.
  4. After the contract is signed and agreed to by both you and the Seller, it will be sent to the Seller's lender, or lenders if there is more than one mortgage holder. Documentation submitted with the contract includes an estimated net sheet, the Buyer's approval or proof of funds letter, the listing agreement, Seller's financial worksheet, recent paystub, recent bank statement, last year's tax returns and hardship letter.
  5. The Seller's lender will then order an independent appraisal and/or Broker Price Opinion (BPO) of the subject property.
  6. The Seller' lender will counteroffer your offer with the appraised value.
  7. You will accept or counteroffer this amount. Your offer may ultimately be rejected if it is not at least 83% of the appraised value. This varies by lender. The lender makes it decision based on the requirements of the end-investor on the mortgage regarding price. For example, even though the "lender" may be Wells Fargo, the actual investor reaping interest may be the Bank of New York or Merrill Lynch. There may also be PMI or private mortgage insurance on the loan. In that case, the PMI company will also order a separate appraisal or BPO. Your offer must satisfy both lender's requirements. If there is a second mortgage on the property, the first mortgage holder will offer the second mortgage holder a dollar amount as a "buy out". I help facilitate these negotiations. Additionally, the lender(s) may ask the Seller for a cash contribution or promissory note. If the Seller cannot comply, you may be asked for additional monies to make up some of the difference. If the property is a good deal, you may wish to do so.
  8. The timeline for initial response from the lender may be eight to twelve weeks. This is because lenders have an overwhelming number of sellers asking for Short Sales. Some of the bank "negotiators" have as many as 400 files at one time. They often work on the files facing imminent foreclosure sale dates first. Rest assured, I contact these lenders every two business days by phone and/or email to get updates on the offer.
  9. After final approval by the lender, a "demand" or "approval" letter is sent out to the Seller. The letter will normally stipulate that closing must occur by the date stated in the contract, or there will be a per diem penalty for not closing on time. Thus, you are expected to have your mortgage, insurance and inspections completed in a timely manner. The per diem penalty is quite common in the corporate world.
  10. The lender will expect to see a copy of the settlement statement at least two days prior to closing to ensure it is accurate, and matches what was stated in the net sheet that was submitted with the offer and on the approval letter.
  11. Congratulations! Your patience has been rewarded. You got a great deal!

Wendy Rulnick, Broker, CRP, CRS, GRI ABR Rulnick Realty, Inc.
Specializing in SHORT SALES and FORECLOSURE work-outs on the Emerald Coast of Florida: Destin, Fort Walton Beach, Niceville, Navarre, Santa Rosa Beach, 30-A, Crestview, Seagrove and vicinity. 1-877-487-9639

Email me at [email protected]
Copyright Rulnick Realty, Inc.

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Saturday, February 16, 2008

Saved from Foreclosure- My Best Real Estate Sale on the Emerald Coast

A few weeks ago I wrote a blog about an imminent foreclosure for one of my sellers-
"The 11th Hour". We had little time and a foreclosure sale date set at the courthouse steps for 11:00 a.m. the next business day, when I finally got an offer on the property. I wrote how I frantically and repeatedly tried to call and fax Litton Loan to stop the sale and consider the short sale offer. How no one would call me back or let me know if the sale had been stopped. I eventually heard back from the bank the next day. They postponed the sale to look at the offer. The short sale was approved two weeks later- that was yesterday.

The seller had lost two-thirds of his income, his wife had had a liver transplant, and the home I was selling had been destroyed and then rebuilt by my seller after Hurricane Ivan. He had bought the home two months before the hurricane hit. The cost to rebuild had added an extra $200,000 to his mortgage. He could no longer make payments, and all his hope in the world and himself were lost. He was seriously depressed and told me "I am not the man I was".

I cannot begin to tell you the relief in my seller's voice and the gratitude in his heart when I told him the short sale was approved, that he would not have a foreclosure. He said he would repay me in any way he could. I told him that I was repaid enough in that it was the most fulfilling sale I ever had.

It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
1-877-487-9639 or 850-650-7883

Specializing in SHORT SALES and FORECLOSURE work-outs on the Emerald Coast of Florida: Destin, Santa Rosa Beach, Fort Walton Beach, Niceville, Navarre, Crestview.

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Friday, February 15, 2008

Countrywide: Existing Home Equity Lines Slashed

Countrywide has been sending letters to their existing home equity line borrowers in my market on the Emerald Coast of Florida. They are decreasing home equity line values. The letters read:

"Countywide Home Loans is reviewing and analyzing home equity lines of credit in its servicing portfolio. As you know, home values in many areas of the country have declined. We believe that the decline in the value of your property, from the original appraised value at the time your loan was made, is significant. In accordance with the terms of your Home Equity Credit Line Agreement... we have elected to suspend further draws against your account."

The letters go on to say that Countrywide will try to work with the borrower if they were in the middle of a major expense (home improvement, college tuition). They also say that the new Automated Valuation Method that came up with the value may be contested if the homeowner believes the value is incorrect. I wonder how many homeowners will go after Countrywide for the closing costs associated with their home equity line, since they will no longer be able to use it. There were volumes of lines taken out by property owners in anticipation of limited mortgage resources.

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Wednesday, February 13, 2008

New Short Sale Site

I specialize in Short Sales and Pre-Foreclosure workouts, and get many calls from sellers and other agents asking for advice and about the short sale process. Instead of emailing my information to each individual with explanations about short sales, I decided to create a new website, called and
I am adding information to the site on a regular basis, but in it you will find a plethora of information to enlighten you about short sales. Let me know if I can help.

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Sunday, February 10, 2008

Homeowners Insurance: I Was Dropped

I thought I had it made. My Florida Allstate homeowners insurance policy was only $1900 last year. That is almost unheard of it my part of Florida-- Destin, on the Emerald Coast. I got my policy that low by doing two things. One was by having my builder fill out a construction questionnaire about my property, along with providing photos proving I have a hip roof and photos of the attic roof deck attachment. Second, I raised all my deductibles, including hurricane, to the highest amount. At the time, Florida had placed a temporary freeze on dropping customers, so I skated through while many of my neighbors and clients were dropped. Now I guess my time is up. I got a cancellation notice in the mail. I've already started shopping, but the lowest quotes are $1200 more than I have been paying. My next stop is to the Florida state website to ShopAndCompareRates.Com. I am determined to get my rates down. Let me know your Florida insurance stories, too.

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Friday, February 8, 2008


Here is a summary of the requirements for an FHA-insured Short Sale:

1. The borrower must be delinquent at least 3 months.
2. Net proceeds of the offer should be at least 82% of appraised value.
3. The appraised value should be at least 63% of the mortgage.
4. The mortgagor must be an owner-occupant.
5. There is verification of the borrower's decrease in income showing inability to pay the mortgage.
6. The property was marketed in such a manner that an offer for fair market value could be obtained.

I found this information on the U.S. Department of Housing and Urban Development website. The site provides many helpful links for those in financial trouble. Remember, these guidelines apply to FHA-insured loans only, and there may be some latitude in those requirements.

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Monday, February 4, 2008

Assistant Woes

My wonderful assistant, Meagen, will be leaving in July to have a baby. Congratulations and happiness to Meagen! Dread on hiring for me! The new assistant hunt will begin soon. I intend to hire someone to start June 1, so they can have a full month of training with Meagen. Here are the qualities I am looking for-- and I won't put them in the ad. I find that resumes end up with the exact qualities you list in the Help Wanteds, don't you?

"Excellent attendance, clear phone voice, great customer service, quick learner, computer skills, multi-tasker, resourceful, fast worker, smart, can handle stress, detail-oriented"

I was lucky with Meagen, she was the only one I interviewed at the time. I've had many assistants, some have lasted a day, some a couple of years. I've never enjoyed the hiring process. The interview no-shows, the ones who take the job but don't even know how to email, the ones who take the job while waiting for the offer they really want and quit in a week, the cell-phone talkers, the ones with crazy boyfriends, the always-sick ones, the internet games ones. I just hope the next one is the right "one".

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Friday, February 1, 2008

For Sale By Owners Calling ME

In the last two days I've had two unsolicited calls from For Sale By Owners.

1. My market is the Emerald Coast of Florida. I had a builder call me from North Georgia asking if I had anyone that might want to trade a condo for a house there. Hmmm. I told him "no", but I appreciated his creativity in trying to market his property. I told him about possibly purchasing email lists of agents for $150 and sending flyers. I recommended he talk to a LOCAL agent and hire him to give his property full exposure, not to call agents in another state. I think he was taken aback and appreciated my advice.

2. I had a local seller call me and ask me to sit in front of my computer while I typed in his For Sale By Owner website address to look at his waterfront house. He proceeded to walk me through it like one of those companies who try to sell you web sites over the phone. It was quite interesting. Again, I said, "Are all the agents you are calling asking you to list?" He started on a long explanation that he didn't want to be tied to one person, etc. I told him there were a plethora of waterfront homes for sale, he would get his greatest exposure from listing his property with an agent, even if he didn't like the agent! I also told him if he did not need to sell in this market, he shouldn't put the property up for sale, as there is a two to six year inventory of homes depending on the micro-market

I find it quite interesting that the public is relying on the professional, and perhaps swinging more towards appreciation of the field of real estate sales, especially in this trying market.

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