Fairfax Short Sales: Why do short sale negotiators break the rules?

Fairfax VA – I encountered a negotiator from one of the largest lender in the country try to push me around last week.   For the last year, I’ve worked to understand all of the rules for different loan owners or insurers, including FHA, VA, Fannie Mae, Freddie Mac, and “sliced and diced.”

These are the people that own the loan and make the rules for a Fairfax short sale. Federal mortgage insurers like FHA, VA and USDA also are the ones who call the shots.  Well now that  I’ve researched these companies,  I’ve figured out all of their rules and I’d like to share some of that information with you.

80% of all loans are owned or insured by someone other than the company handling them. Meaning that in most cases, Wells Fargo, Bank of America, or JP Morgan Chase are acting on behalf of the actual owner (or insurer) of the loan. Since this entity makes the rules,  getting short sales approved is a whole lot easier.

This was an FHA loan, which means FHA’s guidelines dictate whether or not the short sale is approved. Here’s what happened.

FHA sends out a 16-page letter titled “Mortgagee Letter 2008-43,” which basically details how the lender servicing an FHA loan is supposed to negotiate on a short sale, such aswhat percentage of the appraisal they can accept, how much to pay agents, etc.

From past experience, I had read through this letter a couple of times, so I knew a little bit about the FHA’s rules for short sales. The problem was the short sale negotiator didn’t want to follow the rules!

This negotiator told me that the buyer and seller would need to split the cost of the title insurance, even though, page 12 of Mortgage Letter 2008-43, says that they are allowed to pay the standard title insurance costs. In the Fairfax VA area, the buyer pays for the title insurance in our sale’s contracts.

But this negotiator wanted to ignore that rule.  After a couple of days of back and forth arguing with her, she finally relented.  Here is why I have an issue with these lenders.

If you’ve been given specific instructions from your investor on how to negotiate a short sale, you need to follow those instructions! If you’re completing a Fairfax VA short sale, it’s a good idea for your agent to understand those rules laid out by the owner or insurer of your loan. That way, your agent will recognize if a negotiator tries to break the rules.

If a negotiator is lying to you, your agent can ask to speak to their manager or even the investor/insurer.  Bottom line is that an agent who is educated on these rules will be able to protect your best interests as a Fairfax VA short seller.

Do you want to know how to complete a Fairfax short sale and never pay the bank another penny? I can help you do that. Call me at (703) 322-0600 for a free consultation. When you call, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can e-mail me at Thierry@ThierryRoche.com

Thinking about a loan modification? Our Fairfax Loan Modification Kit has the instructions you will need to get a loan modification approved with your lender.

Thanks for reading this,

Thierry Roche

Thierry is a Real Estate Agent at RE/MAX Premier, and Host of Talk Radio’s, ‘Inside Real Estate’

Phone: (703) 322-0600.


Thierry Roche specializes in loan modifications and short sales in Fairfax Virginia. Fairfax Loan Modification Help. Fairfax Short Sales. Fairfax Short Sale Realtor. Fairfax County Short Sale Realtor. Fairfax VA Short Sales. Fairfax Realtor.

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