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.
{ 4 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