The truth is Wachovia takes the pain out of short sales. It's a portfolio lender, meaning it made its own loans and is responsible for deciding whether to approve a short sale. Other banks such as Bank of America, CitiMortgage or Wells Fargo generally have to submit the file to their investors for approval. Depending on the guidelines those investors or PSAs follow, the process can be complex, lengthy and / or produce ridiculous demands that cause short sales to be rejected. Not so with Wachovia.
How Banks Other than Wachovia Handle Short Sales
First, to truly appreciate a Wachovia short sale, it helps to look at the short sale process adopted by the other major banks. Once you realize what hell those banks put a seller and buyer through, you'll understand why Wachovia is special.
Here are some of the problems with other short sale banks:
- The worst problem is it takes too long. Buyers get tired of waiting for short sale approval and cancel because banks can't process their short sales fast enough. It can take a minimum of 6 weeks to 6 months or longer to get short sale approval.
- Banks require a ton of paperwork from the sellers. They generally want their last 2 years of tax returns, W2s, payroll stubs, completed financial statement, bank statements, hardship letter, in addition to a slew of documentation from the listing agent.
- Some banks demand seller contributions, even on California purchase-money loans. Purchase money loans in California are typically exempt from a deficiency judgment in the event of a foreclosure, but to grant a short sale, the banks may demand money from the seller.
- Often, when there are two short sale loans, the two banks fight over how much the second bank will receive. Some second lenders try to push sellers to commit short sale mortgage fraud. It's a nasty situation all the way around.
- By the time the short sale finally closes, the sellers often feel broken down, beat up and battered. They wonder why they even tried to do the right thing by choosing a short sale over a foreclosure. And even after closing, sometimes the bank's departments are so confused that the short sale department forgets to notify the foreclosure department that the transaction has closed, and the bank files foreclosure anyway.
How Wachovia Handles a Short Sale
With Wachovia, it's like opening the door at the train station in Venice and discovering the Grand Canal is at your feet, looking just like a picture postcard. Like Dorothy, leaving her black-and-white world and entering the colorful Land of Oz. It's like eating chocolate for breakfast.
Before rendering an opinion on the short sale, Wachovia asks for basically 3 things:
- The buyer's and seller's signed purchase offer.
- The buyer's preapproval letter.
- The seller's listing agreement.
A representative from Wachovia will either call or visit the seller at home to discuss the seller's financial situation and appraise the home. If there are two short sale lenders, Wachovia knows how much the second lender is likely to accept and offers that sum to the lender. A HUD statement is delivered to Wachovia and a decision is rendered, generally within a few weeks.
In certain situations, Wachovia will offer the seller a cash bonus to assist with moving expenses. All short sale banks should approve short sales like Wachovia.
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.