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bearishgurl.
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May 16, 2013 at 3:16 PM #762084May 16, 2013 at 5:20 PM #762088
SD Realtor
ParticipantThe fact that your offer was never submitted to the lender is curious and indicates another offer was on the lenders desk to begin with. Most short sales are quite straightforward. The seller will accept the offer and that offer is then sent to the short sale lenfer for review. Do you have a copy of your original purchase agreement that was accepted by the seller? Additionally many agents include a short sale addendum so you should have that as well. I have never done a deal with Don but he is a seasoned guy. Many agents do employ short sale processors but NEVER do those processors charge more then 1% so ypu should demand answers. Better then what you have received
May 16, 2013 at 5:59 PM #762089bearishgurl
Participant[quote=t36tran]…Why would Blue Anchor, an outside party with no ownership stake want 45K paid directly to them to settle all the secondary liens? Why would I trust them to do so?…[/quote]
Because it would appear that the seller (and title co) would be on the hook if they didn’t do what you paid them $45K to do. In addition, your escrow company couldn’t prepare your file to close if all the conditions of escrow had not been met.
You could have countered your offer with a title company (and officer) of your choice now or included the contingency in your offer early on and the same goes for your vacancy contingency specifically mentioning that it is tenant occupied and the (owner’s) vehicles stored there must be removed. As an “arm’s length” purchaser, you have the right to title insurance. A reputable title insurance company will issue you a CLTA policy after COE. For your premium, they are guaranteeing your ownership rights subject to the purchase money lien(s) YOU placed there and any easements on the property previously granted to others. Back taxes are not a “lien” per se. They are automatic and are appurtenant (not exactly the correct word) to the property. The assessor won’t be able come after you for back taxes AFTER closing when the “seller” (in this case, the “SS negotiator”) was supposed to pay them. A reputable title company isn’t going to close and file your grant deed and trust deed if the outstanding property taxes aren’t paid and/or you can’t get clear title as they will be exposed if they do so and subject to an expensive “quiet title” claim. In CA, escrow officers have to divvy taxes up between buyer and seller up to the closing date. Their duties are strictly laid out ad infinitum in state law and they will not do ANYTHING not agreed to by both buyer and seller and included in the escrow instructions and all the amendments thereto which they prepare.
Had you had your *own* agent, they would have ordered you a preliminary title report at a discounted rate (refundable towards eventual purchase of your CLTA policy) and it would have answered all your questions early on … to avoid wasting so much of your time . They also would have kept on the LA like glue to find out the status of “negotiations” and asked for proof of submission of your offer to the lender (fax/e-mail confirmation) immediately after receiving a signed acceptance back from seller. At least a GOOD agent who knows what they are doing would have.
You stated this was your first offer yet you placed it with the LA. I am curious if you ever had your own agent and if not, why not?
It is possible that Don and agent Weintraub aren’t speaking to you now until they talk to their counsel because you threatened them with a DRE complaint. I don’t know. Maybe he had only recently sent your offer into the lender (or his SS negotiators to negotiate with the lender(s)) when the $371K offer of his supposed “investor” was turned down. He did not properly explain to you in November that your offer was actually in a “backup” position.”
I’m not condoning the way the broker representing you does business. He might have gotten the seller to accept your offer as a “back-up” to an existing investor offer which ended up not panning out. So the SS negotiator in FL had already negotiated with the first and second TD holders and knew what they would accept when he finally e-mailed you. The way I see it, “Sullivan” wasn’t “technically” negotiating on behalf of any of the parties. He was performing a paid service for Don’s brokerage and thus is a “service provider.” Don and his agent, Weintraub were the parties’ frontmen. If it is set up like this, I can see how the FL SS negotiators don’t have to be licensed in the states of the properties they attempt to negotiate on. I feel Sullivan contacting you directly was stepping over the line. He should have contacted Don who would show you Sullivan’s e-mail to explain why you had to raise your offer $45K to get it accepted and handle it involving you from there.
In defense of SS negotiators, in many instances, it is not easy to locate the 2nd and 3rd TD investors and it could take weeks or months to do so, having to go thru MERS. Many are simply individuals and they are scattered everywhere. B of A only has what records they could locate which were stored at Countrywide at the time of their takeover. Some of CW’s “independent loan officers” processing the loans on the buyer’s end also handled the immediate sell-off of CW’s PM 2nd TDs and cash-out refi 2nd TDs or procured the investor themselves. CW paid them points, fees and HUGE yield-spread premiums for doing so … all coming out of the borrowers pocket in the form of closing costs. I know of TWO former CA loan officers who primarily originated for Countrywide in San Diego County who are serving time in Federal prison for their wayward RE lending activities, ONE being housed in Northern CA. Of course, their DRE licenses were revoked.
Several weeks after closing, you could check ARCC and see if the two reconveyances were filed in seller’s name, just to satisfy your curiosity.
http://arcc.co.san-diego.ca.us/services/grantorgrantee/search.aspx
I am now unclear whether your outstanding offer (before Sullivan’s e-mail) was $371K or $411K. Adding the $45K recently asked for would make it an “offer” for $416K or $456K, depending on what you ended up coming to after being asked by your agent to “raise it” a couple of times.
In any case, this property was WORTH $411K, $416K or $456K and would easily have appraised at the highest sale price in the absence of structural problems.
Again, I’m not siding with your RE broker here. At the very least, he had poor communication skills.
I just think you may have had a knee-jerk reaction and jumped the gun. That is an exceptional property and I would have insisted my broker raise my offer including the $45K to Anchor Blue Advisors and list the liens and closing costs it would be used to pay on it on the appropriate CAR form and insist on a receipt from HIM for my check or certified funds made out to Blue Anchor. In any case, the disposition of your $45K would all be shown to you line by line on your HUD 1 at COE). At the same time, I would have included my vacancy contingency, approval of a soils-report contingency (giving my engineer time to make the report) and selection of my own title company if I didn’t have confidence in the one the LB wanted to use. I doubt these (very reasonable) contingencies would have been countered by the seller.
For the sake of discussion, let’s say the 2nd TD holder is currently owed $63K. If taxes were going to be $3K, Don’s commission was going to be ~$20K, Blue Anchor’s fee was going to be ~$7K, termite tenting (house only) was going to be ~$2K, seller’s other closing costs were going to be ~5K, that only leaves ~$8K of your $45K for the investor to satisfy the 2nd TD. That’s about 12.7% of what they were owed and 6.7% MORE than they would have received if foreclosure had already been commenced by BNY Mellon.
As they say in RE parlance, this is the worst house on the best block (it even appeared to have been recently painted – at least the trim). As I told you in PM, it doesn’t get any better than this, tran. 15-20 yrs ago, in another life, I would have JUMPED on a (rare) property like this if I had seen it listed (with my engineer chained to my ankle, of course ).
I now feel that the reason the investor didn’t end up taking it when Blue Anchor wanted them to up their offer $45K was because there was very little work they could do to raise the value and flip it. It wasn’t worth buying for $416K and then attempting to resell it for $456K+? UNLESS they were part of a scheme described by SDR where there were two simultaneous closings in very close proximity to one another. This property would be too cost prohibitive to buy and hold it as a rental due primarily to maintenance costs, IMHO. And transaction costs would eat them up.
May 16, 2013 at 6:04 PM #762090Participant[quote=SD Realtor]The fact that your offer was never submitted to the lender is curious and indicates another offer was on the lenders desk to begin with. Most short sales are quite straightforward. The seller will accept the offer and that offer is then sent to the short sale lenfer for review. Do you have a copy of your original purchase agreement that was accepted by the seller? Additionally many agents include a short sale addendum so you should have that as well. I have never done a deal with Don but he is a seasoned guy. Many agents do employ short sale processors but NEVER do those processors charge more then 1% so ypu should demand answers. Better then what you have received[/quote]
Just saw this and agree with all. I honestly don’t feel there was anything untoward going on here … that is, unless the OP can show me otherwise.
May 16, 2013 at 6:33 PM #762091SK in CV
Participant[quote=bearishgurl][quote=t36tran]…Why would Blue Anchor, an outside party with no ownership stake want 45K paid directly to them to settle all the secondary liens? Why would I trust them to do so?…[/quote]
Because it would appear that the seller (and title co) would be on the hook if they didn’t do what you paid them $45K to do. In addition, your escrow company couldn’t prepare your file to close if all the conditions of escrow had not been met.
[/quote]
Why would there be any reason for this to be handled outside of escrow? Is there any good reason for secondary liens not be paid through escrow in the more standard manner, with the buyer receiving title, free of all liens except taxes? If the facilitator actually negotiated payoffs of other loans, there would be no reason not to properly document it.
In fact, if this purchase included a new mortgage, I’m pretty sure the fine print in standard loan docs require that everything go through escrow, or at least be included in the escrow closing statement.
May 16, 2013 at 6:43 PM #762092Participant[quote=SK in CV][quote=bearishgurl][quote=t36tran]…Why would Blue Anchor, an outside party with no ownership stake want 45K paid directly to them to settle all the secondary liens? Why would I trust them to do so?…[/quote]
Because it would appear that the seller (and title co) would be on the hook if they didn’t do what you paid them $45K to do. In addition, your escrow company couldn’t prepare your file to close if all the conditions of escrow had not been met.
[/quote]
Why would there be any reason for this to be handled outside of escrow? Is there any good reason for secondary liens not be paid through escrow in the more standard manner, with the buyer receiving title, free of all liens except taxes? If the facilitator actually negotiated payoffs of other loans, there would be no reason not to properly document it.
In fact, if this purchase included a new mortgage, I’m pretty sure the fine print in standard loan docs require that everything go through escrow, or at least be included in the escrow closing statement.[/quote]
Agree with this …. as stated below:
… I would have insisted my broker raise my offer including the $45K to Anchor Blue Advisors and list the liens and closing costs it would be used to pay on the appropriate CAR form and insist on a receipt from HIM for my check or certified funds made out to Blue Anchor. (In any case, the disposition of your $45K would all be shown to you line by line on your HUD 1 at COE.) At the same time, I would have included my vacancy contingency, approval of a soils-report contingency (giving my engineer time to make the report) and selection of my own title company if I didn’t have confidence in the one the LB wanted to use. I doubt these (very reasonable) contingencies would have been countered by the seller….
(punctuation corrected)
There is no good reason for these normal liens, costs and fees NOT to be listed on the HUD 1 and I am unconvinced at this point that the OP was actually asked to pay Blue Anchor “outside of escrow.”
May 17, 2013 at 7:52 AM #762095ParticipantIt can be sticky.
Why was this done outside escrow?
When the primary authorizes a short sale they will dictate the terms of authorization. Primaries are not very happy when those terms change. That is, if they take a 200k haircut, they would not be happy at all seeing a second receive 45k and thus would probably not authorize the sale. Thus if the payment to the second is on the HUD the primary would not be happy and could effectively kill the deal when they review the HUD.
NOTE that with short sales, even after your loan has funded the short sale lender reviews the final HUD.
I have seen cases in the past where buyers have made direct payments to second lien holders, outside escrow, in order to get them to release their lien. Again, it was done this way in order to skirt the first. It is not something I advocated but it was what the buyers were told they needed to do to get it done. In many cases the buyers did not do it, but I know of 2 cases where they did do it and it all worked out for them.
This was really dicey.
So here is what my speculation is for this case… note it is pure speculation and based only on what the op has given us.
I think this was an intended middleman flip that went sour. Blue Anchor may have been the original buyer or at least knew who the original buyer was. The original buyer probably had a cash deal for 371k for the primary lien holder. In order to secure that deal Blue Anchor probably stated that no monies would go to the second. In order to get the first deal done, on the day of closing Blue Anchor pays the 371 in cash to the first and then covers some amount to pay off the second. That same day the 450+ from the buyer is funded and pays Blue Anchor back.
Now somehow things went south somewhere. Perhaps the original investor couldn’t come up with the 371k or something like that. This actually could have been a great windfall for the buyer because he could have gotten the home for 371k plus the 45k. I would imagine that the second lien payoff arrangement (not payoff amount) was much less then 45k but of course Blue Anchor wanted a cut.
If you want to make demands about title companies to use and other contingencies then do not participate in a short sale.
May 17, 2013 at 9:07 AM #762096Participant[quote=SD Realtor]It can be sticky.
Why was this done outside escrow?
When the primary authorizes a short sale they will dictate the terms of authorization. Primaries are not very happy when those terms change. That is, if they take a 200k haircut, they would not be happy at all seeing a second receive 45k and thus would probably not authorize the sale. Thus if the payment to the second is on the HUD the primary would not be happy and could effectively kill the deal when they review the HUD.
NOTE that with short sales, even after your loan has funded the short sale lender reviews the final HUD.
I have seen cases in the past where buyers have made direct payments to second lien holders, outside escrow, in order to get them to release their lien. Again, it was done this way in order to skirt the first. It is not something I advocated but it was what the buyers were told they needed to do to get it done. In many cases the buyers did not do it, but I know of 2 cases where they did do it and it all worked out for them.
This was really dicey.
So here is what my speculation is for this case… note it is pure speculation and based only on what the op has given us.
I think this was an intended middleman flip that went sour. Blue Anchor may have been the original buyer or at least knew who the original buyer was. The original buyer probably had a cash deal for 371k for the primary lien holder. In order to secure that deal Blue Anchor probably stated that no monies would go to the second. In order to get the first deal done, on the day of closing Blue Anchor pays the 371 in cash to the first and then covers some amount to pay off the second. That same day the 450+ from the buyer is funded and pays Blue Anchor back.
Now somehow things went south somewhere. Perhaps the original investor couldn’t come up with the 371k or something like that. This actually could have been a great windfall for the buyer because he could have gotten the home for 371k plus the 45k. I would imagine that the second lien payoff arrangement (not payoff amount) was much less then 45k but of course Blue Anchor wanted a cut.
If you want to make demands about title companies to use and other contingencies then do not participate in a short sale.[/quote]
I agree that the OP’s transaction COULD have been a middleman flip gone sour. I agree that the second lien payoff was certainly less than $45K … much less. However, I don’t see where there is money from that $45K for Blue Anchor to get a “cut” over about a 1.5% charge for their “services” unless SELLER kicks in for closing costs and/or his broker commission.
This particular buyer (the OP) HAD to demand a vacancy contingency and to a lesser extent, an approval of an engineering report contingency, IMO. Although the property is situated across the street from a handful (a dozen?) well-known lots with deciduous soil and heavily offset cracked slabs, there has also been some rear lot slide damage and settled foundations on Chocolate Cliff (above) in past decades.
I believe this lot alone (with the flood channel easement in place) would be worth $250-$300K if vacant. This is due to the fact that it is slightly oversized and in an “exclusive” area.
If this buyer had deeper pockets (poss ~$100K to spend on the property after COE), he could play games with seller’s holdover tenants for months and mitigate or fix any structural problems he found after COE (ESP if he received the property for $371K). A tenant-occupied short sale, esp one where the seller is residing out of the country and the tenants are running an established business within it, would be PERILOUS for a FTB to deal with if the tenants remained there at COE, IMHO. As would any undisclosed drainage or structural problems.
Although the MLS aggregators are stating seller purchased this property in 2004, I found no grant deed to indicate a sale occurred on this property in that year. I haven’t looked at the documents but it is possible that an interspousal transfer deed for this property was filed on 5/10/04. THIS particular seller and two adjacent neighbors were forced to grant strips of their land (easements) to the county for a flood control channel in 1992, after county began proceedings to take it over in 1990.
The channel is visible from the street and extends from the back of this lot up the hill on the left, facing the property from the street.
Without examining the documents myself, I feel this particular seller (age 67) was an original owner (1978) or purchased the property on 2/23/82. (Electronic records prior to 1982 are not avail with the SD Co Recorder.)
If the OP’s broker was using a reputable CA title company, there is no reason for him to insist on using his own. I put the service selection contingency in just in case seller’s broker had selected what I would consider to be a “flaky” title company. Yes, they are around.
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