Wells Fargo Short Sales – What You Should Know
Wells Fargo will work with you in a short sale. However, just as with any other lender the process can be tedious at times. Here are some tips to avoid a bit of the hassle.
Situations that help!
As a general rule of thumb if you in debt far more than what your house actually costs then you qualify for a Wells Fargo Mortgage short sale. However, this is applicable if you have a single mortgage currently. In case you hold two mortgages and both happen to be with Wells Fargo then you will find it little easy to figure out the situation. Even in cases where you have loans with two separate lending agencies you might qualify for a Wells Fargo short sale. However, this will happen only if and when you present a clear case that you cannot afford the current mortgages. Also when you hold mortgages with different lenders (not Wells Fargo) then the process of getting a short sale through them is much tougher. That makes sense logically as Wells Fargo is incurring a loss which they didn’t take on in the first place!
You do not get the cash
When you perform a short sale through Wells Fargo you are not going to get any of the money (see wells fargo cd rates). Whatever amount the buyer has promised to pay will all go to Wells Fargo. This is in spite of the fact that the amount quoted is much lesser than what the home is worth! However, short sales are a convenient way to get away from the rigors of mortgage payment. At least you do not have to end up paying the entire amount and it is any day better than a foreclosure which can be disastrous on your credit score!
Negotiation is possible
If you are worried about your credit score getting affected by a short sale then there is hope now. Wells Fargo allows you the option of negotiating with them to prevent a foreclosure from leaving a black mark on your credit report.
Getting an agent is a great idea
Chances are the short sale process will be a long drawn out affair. Therefore doing it all by yourself and negotiating the terms can be a very harrowing experience. The best way to avoid this is to hire an agent. This agent needs to be motivated to go the long distance with you and present the case in your favor. Often short sales take really long to materialize and investing in a good agent can work to your advantage.
Keep a record
Whenever you have any conversations or written communication with Wells Fargo make sure to keep a record of it. You could tape the conversation or note it down. Also note down names of personnel whom you have spoken to at Wells Fargo. That way if they choose to deny anything they have promised you have evidence. It will also reduce chances of dissimilar facts being stated by different agents in Wells Fargo.
What I Did In My Short Sale
What I did (hiring a real estate agent with short sale experience) worked for my situation. It may not for your short sale, but I found it the best option. Working with a real estate agent you at least can get a background on the person, and if they work for a larger brokerage you know they have resources to help you. Think short sales are hard for you? They are equally as hard on the real estate agent! Getting a short sale deal done (especially right now with the overwhelmed lenders like Countrywide) takes alot of work. I do think its the best option vs. foreclosure though. You can also read my 7 steps to a successful short sale guide.
You Need An Experienced Short Sale Agent!
From my blog here I’ve developed an extensive network of real estate agents that have short sale experience. If you’d like a referral, fill out the form below and I’ll have someone available in your area to help with your short sale ASAP.
{ 23 comments… read them below or add one }
Hi Debtkid,
I love your advice. It makes you feel better knowing you are not the only one going through all of this.
I really just want an outsiders opinion that is not related or a friend of ours. Because sometimes I think they say what you want to hear. I know you are not an attorney or all of that legal mumbo jumbo.
My husband and I bought a 2 bedroom townhome in California for 425,000 we had a plan of being there 2-3 years taking our equity and buying a small single family. Well clearly it did not work out as planned. The market took a turn for the worse and now we are deciding between keeping and being stuck there for I dont know how long, short sale or foreclosure.
The bank said they would not work with us on our payment so we moved out of the property in a small apartment and now all of the sudden they are willing to work with us because we are 2 1/2 months behind on payment. We have a first with wells fargo and a 2nd with bank of america.
We have two small kids now and we do not know what to do! The bank has said they will lower the payment and we would be paying about $400 more than our rent in our apartment but we would still be home owners and have the write off. But I am also concerned because we are 200k upside down and if we go back it seems like it would have to be forever and we already have out grown the house. But on the flip side our credit will be ruined and I dont want to live in an apartment forever either.
No one seems to be able to answer our question. If we short sale what are our financial obligations vs a forclosure. I know either way our credit is ruined for a period of time I am more concerned with our financial obligation in the long run.
Thank you for your time reading this and I will be following your blog and passing it on.
Your credit will be hurt less by going with the short sale vs. going with the foreclosure. Short sales are more difficult when you have a mortgage with two different lenders. You may also be asked to sign a promissory note to one or both of the lenders for a portion of the difference between the selling price and the amount owed. If it comes to that, you do not have to agree to it and you can let the bank foreclose. But i do not think it will cost you any money to give the short sale a shot in the meantime. I would take the mortgage modification, move back in to the townhouse, pay the $400 less per month while trying to sell it using the short sale process. If in the end, you are asked to make up the difference, refuse, stop making the payments and let them foreclose. Then go rent a house, sub-let a portion of it, and try to save some money until your credit is restored. Probably about 5 – 7 years.
I understand Wells Fargo issues a 1099 on any amount below the balance of the mortage loan. Ex a person owes $299,000 and the house sells for $290,000 they issue a 1099 for $9,000. My questions is this: Are closing costs also included in a 1099?
I am a realtor in sheboygan,wi. I listed a foreclouser that the seller has a mortgage with wells fargo I listed it with the bank possibly doing a short sale I now have an accepted offer from the seller please advise me who to contact at wells fargo about a short sale.thank you very much george klover 1-920-254-2790 or 920-458-8887
good luck with that-they’ll screw you up one side and down the other……
After over two months of paperwork (sending and REsending), phone calls, hiring an agent, and an attorney, we were denied a short sale. But WAIT! First we were told yes, by the mortgage dept., and then the equity dept. (we have two loans). We have a buyer, the bank would only lose 15K, and after months of waiting, we were given a yes. The very next day, the supervisor of the person who told us yes called to say NO. Wells Fargo would not be participating in a short sale with us because we had a perfect credit score. We are living in Japan with the AirForce. The house has been on the market for over two years, and it was occupied for one year by a squatter which costs us 1000’s in attorney fees. But none of that matters because we have a perfect credit score. Wells Fargo strung us along, and then lied to us. They ARE NOT easy to work with, and we were ignored by more than one employee. After we were told to call them and given a 48 hr. deadline to get back with them. You would think that they would be willing to share some of those bailout dollars with someone who is working for their country.
I must admit that Wells Fargo isn’t the worst bank I’ve dealt with in a short sale situation, but I understand the frustration. The process takes way too darn long no matter which bank you are dealing with in my opinion.
But if you are persistent and patient, a short sale is one possible cure that may help homeowners in financial trouble.
Real Estate agent in Orlando, FL currently working on a short sale with Wells Fargo. Its been a nightmare. I had refax papers to them too many times. Offer submitted early September, BPO was done in October, negotiator worked on it, after calling every week for status, in early November, I was told file was closed and transferred to loan modification dept. without no one ’s authorization or conscent, including the sellers. My seller had to write a letter asking to transfer file back to short sale, and guess what, they want the entire package again, and start all over from the beginning. We had sent package more than 4 times since November 11, I called 12/18 and spoke to a Lisette and she told me that they have all papers needed and that file was going to be assigned to a new negotiator but I called today and another different rep told me that file was closed because not all papers requested were turned in. I just dont know what else to do. Buyers will hold till mid January. I lost the battle with Wells fargo. I thought Bank of America was bad.
The comments about Wells Fargo are interesting. I am a REALTOR in the process of completing a short sale with them and found Wells to be nothing but professional, courteous and timely in there dealings with me. I had written short sale approval within 45 days of my short sale package submission. We are in escrow and are scheduled to close at the end of next week. All told, I will have the listing for 4 months, start to finish.
This is much better than a Bank of America deal I am currently negotiating where my paperwork has been sitting on their desk for almost 3 months without anything happening.
Ben, I couldn’t agree with you more, We had to do a short sale on our home due to my husband’s job relocation and Wells Fargo was very professional and on top of everything, the whole process took only 3 months, we were amazed how fast our home short sale was done in such of short period, Our credit reports took a small hit but nothing even close to the way we thought it was going to affect us, I must say I was very happy with Wells Fargo and hope to use them again in our next home purchase.
Exellent post
Hi Lucy-
Would you mind if we could get in touch directly? I’m going through a similar situation; Im being relocated for work and Im wondering if Wells Fargo will work with me on a short sale due to the relocation constraint.
my e-mail is hdroadking05@gmail.com
Thanks,
Matt
Im currently in the process of a Short Sales with WFB. On New Years Eve, my realtor advised me that my first loan (w/ WFB Mort) is asking for me to sign a $20k promise note or provide $10k. My second (w/ WFB Equity Line) is asking for 10% of the lost (Approx. $8350.00). Per the buyer’s contract, they set aside approx. $3300.oo for the second loan. I dont have anything else to give! Should I tell them take it or leave it? Any help will do!
The traditional realtor short sale business model is broken. It works only about 25% of the time. You need to cancel your listing agreement and work with an ethical investor who knows how to overcome the lenders request for promissory notes. I know how to do this. Most realtors are poorly trained when it comes to short sales. If I can help contact me at jnspk2@yahoo.com
Hey Lucy. Did WF request documentation of your husband’s relocation? I am planning to relocate due to the employment situation here in GA, however, I am not sure if they will ask for any employment information since I do not have one there as of yet. I am employed as a contractor here in GA but am looking for a permanent position which I believe I could obtain up north. Thanks
We’ve studied the process and watched the results. There seems to be very few reasons why an owner would want to get involved with a short sale. Others have done studies on the effects to credit records and there is almost no difference. My advice — live in the house until you get evicted and save your cash. A FC in California leaves you legally clean and done with the affair while a short sale can leave the lender with rights to deficiency payments. My wife has a good friend that went through the SS process and closed without a lawyer. Now she has no house but the bank managed to reserve their rights to collect — who knows if they will but this is always hanging. She would have been much better off living for free instead of wasting time with open houses — then leave with the stove and dishwasher.
Those that delayed the FC may now have a new problem to contend with — the phantom income from a forgiven debt. The tax relief law expired on December 31st. I’d guess it will be extended for 2009 but it hasn’t yet.
I love wells fargo short sales. They are typically prompt and do their due diligence and are even somewhat reasonable. Most wells fargo negotiators are even somewhat professional!
Hey look! A Wells Fargo rep!
My husband and I are divorcing, somewhat amicably and are struggling to find a way to keep our home. We are upside down in like most other people and neither will be able to afford it post divorce. This is the only website that I have heard positive feedback regarding wells Fargo and dealng with them. We are current on our payments with no outstanding debt. We have a traditional 30 yr fixed at 6.25% and both have credit scores over 800. What are the chances that wells will work with us on a short sale, and being Michigan is a recourse state that they will not go for a deficiency judgement? In addition, would the difference be covered by the debt relief act so we would not have to pay taxes on it? I’m waiting on an appraisal, but I’m figuring the minimal loss will be 60-70k. Any input would be greatly appreciated!
I have been in the process of doing a short sale for a few months on a house that I purchased to live in but have moved out and have been renting it for a couple of years, losing about $300 per month. I have taken 50% cuts to income since 2007, which means that I made less than 25% of what I did in 07. My current mortgages are Citi 1st, and Wells 2nd. Citi came through and approved the deal, then Wells told my attorneys office that everything had been approved, without deficiency, about 3 weeks ago. So I moved forward did the rest of everything that I needed to do and had the buyer order the appraisal at my attorneys direction. Yesterday, I received a call from Wells stating that they would pursue a deficiency judgment against me. This kills the deal. I was ready to move forward with my life without this house that I have lost money on every month in hopes of the economy turning around at some point, but after living off my savings for the better part of 2 years I am compelled to go through BK per my attorney. I can’t believe that Wells, being 2nd lien holder, on a home that is 80k upside down is doing this when Citi, the 1st lender approved the deal. The way the deal was set up was to have Wells receive about 5800. I just sent in my cancellation for auto pay for Wells, now they won’t get a thing.
Follow Doug’s advice. Stay in the house as long as you can and save up your money for a deposit on a rental, be it another house, duplex, apartment, etc..5-7 years down the road, if you can put money away within that time and depending on what the housing market is doing you may be able to buy again. That is if you want to play that “American dream” game again. I found out that home ownership is not all what it’s cracked up to be. The tax right off is not all that great unless you’re raking in the big $$$$$$ and you can’t just up and move if you have some lousy neighbors. Oh wait, there is a plus…you can paint the walls of your home any color you’d like! I’m going on month 3 of default.
We bid on a short sale in December. Three weeks ago, Wells asked us for an updated pre approval, and we have been told by our realtor that the bank and the seller have reached an agreement. We are obviously in the final stages of the short sale. How long does it normally take Wells to present the written contract of sale to the buyer? My realtor and the seller have been calling Wells daily, only to be told repeatedly that Wells is “working on it.”
We are trying to get a short sale on a house and wells fargo is the lender. We dont know how much to offer house is assessed at 409,000 but does have some water damage in kitchen/and up stairs bathroom and cracked tile all through out the house and the house was never winterized. For people who have gotten approved how much lower was your offer then the asking price??
We made an offer on a short sale house on October 25. The house was originally listed in June for $375K & the price was reduced a month later to $350K. Apparently, there had been a lot of interest in the house, but no offers until ours. We offered the original asking price, thinking that would put us in a better position to get the sellers’ lender’s approval (Wells Fargo).
In our offer we asked for bank approval within 30 days & the sellers countered with 60 days. Three weeks later the bank comes back & says they need 120 days. I don’t know how they count 120 days, but the new deadline was February 28. By my count, that was 124 days since we accepted the sellers’ counter offer. Come February 28, they (sellers/bank?) asked for another 45 days. We countered with 30 days with the decision to be delivered by March 30 (I know how to count!). The sellers accepted that. We got word last week from our agent that the coordinator says the bank has finally ordered the BPO. We assume that means Wells Fargo & the sellers have come to an agreement.
We need to move to a one-level house & are not just trying to buy a short sale because it’s at a “bargain price.” We’re still actively looking at other houses, but there are very few in our target area & price range with the square footage of house & land we need. I guess if they want another extension we’ll give it to them.