Chris Diaz is the founder of Charis Financial, Inc. He has over 15 years experience in helping homeowners with their mortgages and has closed hundreds of short sales over the last 4 years. His website is http://www.charisfinancialinc.com. Send questions to firstname.lastname@example.org; reference ³Short Sales² in the subject line. I was recently approved for a short sale by (my bank). The loan was in escrow and ready to close within a few days. I then got a letter from (the bank) denying my short sale due to “quality review”. My approval letter wasn’t set to expire for another two weeks and nobody in (the bank) could give me a valid reason as to why I received this denial. Have you seen this scenario before and do you have any suggestions for me as I really don’t want to lose my home to foreclosure?
Yes, the out of the blue “QA Review” denial. This one is a difficult one because of the lack of explanation from your bank. It’s difficult to accept that one can have an approval in hand, with an expiration date that hasn’t yet expired, and still get a denial for a reason that is unexplained. However, this is a reality and it does happen, albeit somewhat infrequently.
Even though your lender has accepted responsibility for their part in one of the largest instances of mortgage fraud on record with the robo-signing incident, they have a QA team that dedicates a great deal of time and effort in making sure that their company is free from other purveyors of fraud. As well they should because there are lots of unscrupulous people trying to steal a buck instead of earn one.
One recent incident, in which a bank was victimized, was where short sale negotiators were doctoring up fake approval letters along with a fake bank account to have funds wired to, and stealing money that way. The FBI said that three California men probably netted $10 million doing that.
Here are two of the main reasons that we’ve been told as to why a QA department would deny your file and what you can do to reverse or overturn the decision:
1. Buyer information is incorrect. Sometimes QA will deny a deal if the buyer’s preapproval has inaccuracies like the wrong NMLS number, broker number, or property address. This can also happen if the buyer’s “proof of funds” is determined to be fraudulent or doctored in any way. We have also seen it happen where the buyer is getting a loan but has enough money in the bank to pay for a property in cash. Even though they could’ve bought the house in cash, because there was no preapproval letter for a loan, QA denied the short sale until we provided that letter. This has happened even if we weren’t specifically asked for the letter.
2. The Equator account being used to process the short sale has been flagged. Some banks use an automated processing system called Equator to handle their short sales. Equator centralizes all communication for all files that a real estate licensee is working on with them. Sometimes, a licensee can involve themselves in schemes like I described above, or can just be guilty of shoddy work and upload documents from files incorrectly. If the QA team catches either of these two things they may flag that file or all of the files of that particular agent. Once that happens they would contact the agent for an explanation. However, if they feel that there are deliberate inaccuracies in the file an agent can be suspended from doing any further deals with that bank. If that happened your deal could be denied even if there was nothing fraudulent done on yours.
If a QA team has denied your short sale, have your agent address these two situations first as they are the most common. So long as you’re dealing with someone who is ethical, there is probably just a minor oversight of buyer info that the bank needs to have satisfied. Have your agent submit the complete buyer info first and then call to have the decision reversed.
The number of homes worth less than their outstanding mortgages fell slightly in the first three months, according to figures released Tuesday by CoreLogic Inc. (NYSE: CLGX), a Santa Ana, Calif.-based real estate data firm.
According to CoreLogic, 27.2 percent — or 13.5 million homes — had negative or near-negative equity in the first quarter. That compares to 27.7 percent in the fourth quarter of 2010.
In Oregon, 17.2 percent of homes are worth less than their mortgages and another 5.8 percent had near-negative equity. Collectively, Oregonians owe $121.9 billion on 696,142 mortgages on properties worth a total of $175 billion.
“The current economic indicators point to slow yet positive economic growth, which will slowly reduce the risk of borrowers experiencing income shocks,” said Mark Fleming, chief economist with CoreLogic. “Yet the existence of negative equity for the foreseeable future will weigh on the housing market recovery by holding back sale and refinance activity.”
Negative equity occurs when a borrower owes more than the home is worth. “Near-negative” refers to homes with less than 5 percent equity, a figure that would be wiped out by transaction costs if the property were sold.
In Washington state, 16.9 percent of homes had negative equity and 5.8 percent had near-negative equity. Collectively, Washingtonians owe $291.7 billion on 1,412,110 mortgages on properties worth a total of $429.1 billion.
Nevada, where 63 percent of all mortgaged homes are worth less than the outstanding loan balance, led the nation for negative equity. The other top five states were Arizona, 50 percent, Florida, 46 percent, Michigan, 36 percent and California, 31 percent. Nevada, Arizona and Florida showed improvement from the prior quarter.
The average “underwater” home is worth $65,000 less than the outstanding mortgage balance.
Apartment rents rose across the U.S. West and South for the third straight quarter as record foreclosures boosted demand for rental housing, RealFacts said.
The average asking rent climbed to $958 a month from $950 in the second quarter, according to a report released today by the Novato, California-based research company. It declined 0.7 percent from a year earlier. Rents reached a record $1,002 in the third quarter of 2008.
“We’re getting to be much more of a culture that puts a premium on rental housing,” Sarah Bridge, owner of RealFacts, said in an interview. “People are disillusioned with the housing market. They don’t want to spend their money that way if they’re going to be foreclosed on.”
Sales of properties in the foreclosure process accounted for almost a third of U.S. transactions in September and surpassed 100,000 for the first time, RealtyTrac Inc. said on Oct. 14. The data provider’s figures go back to 2005.
Apartment rents rose fastest in the Denver area, with rates increasing 2.4 percent from the second quarter to $883 a month, followed by the Austin, Texas, region, with a 2.3 gain to $837 a month, RealFacts said. In the Atlanta area, rents rose 2.2 percent to $834, and in the San Jose, California, region they increased 1.9 percent to $1,587.
The San Jose area, which encompasses Sunnyvale and Santa Clara, was the priciest region in RealFacts’ database in the third quarter.
Apartments were 92.8 percent occupied, up from 92 percent in the second quarter and 91.7 percent a year earlier, according to RealFacts.
“It seems the apartment sector is outperforming the economy in general,” Bridge said.
The survey covers 3.29 million rental units in states including California, Florida, Indiana,Arizona, Texas, Colorado and Nevada. Closely held RealFacts surveys apartment owners quarterly.