CalHFA Debacle with San Jose Short Sale
My client requested a loan modification from CalHFA and was denied.
The reason stated was “large surplus of funds.”
Client contacted me to assist with a San Jose short sale. Value of property is $180,000.
Loans on property:
- 1st with CalHFA in the amount of $309,000
- 2nd with CalHFA in the amount of $15,000
- 3rd with CalHFA in the amount of $15,000
- 4th with the City of San Jose in the amount of $65,000
- 5th with the Housing Trust of Santa Clara County in the amount of $6,500
- Total Loans = $410,500
Property was listed and short sale package submitted. Short sale DENIED. Reason: “large surplus of funds.”
I don’t know what financial documents the person was looking at because the package I submitted clearly shows a shortage of funds.
The clown said to me, and I quote: “Often times borrowers overstate their financials. We go by the bank statements. The borrower over stated food costs.” Huh?
My response: Really. If there is a large surplus of funds, and you go by the bank statements, then why are there numerous over draft fees showing on the bank statements?
The more questions I asked the more I realized I was speaking with an idiot!
Not uncommon when working with lenders and servicers. The problem is the people working the files don’t have a clue what they are doing. San Jose short sale agents know more than the people assigned to work the files.
After twenty plus minutes going over the financial documents I uncovered the fact that he failed to factor in $1,210.00 which was listed on the financial statement under credit cards/loans. The borrower has been paying this amount on a debt consolidation for nearly one year.
Drum roll please! This amount clearly shows on the bank statements, which “they go by.” However, because Mr. Bright One did not see it on the credit report, he unilaterally decided it was “overstated” and denied the short sale.
After sending him more “proof” of the debt consolidation he reopened the file and sent it to the loan modification department (again)!
Now that they are factoring in the $1,210 payment for debt consolidation, the borrower qualifies for a loan modification.
They recommend that the borrower work with Keep Your Home California to get a $50,000 principal reduction.
CalHFA states that they will not approve a short sale if a borrower qualifies for a loan modification. If the borrower does not want a loan modification they will foreclose.
I was told by another Bright One at CalHFA “we are human and we make mistakes.”
Yes, indeed you do. You made two of them back to back and you were paid to do it! You had all the documentation in your possession and you still could not connect the dots. Adding insult to injury, rather than picking up the phone and asking a few questions, you simply DENY and close the file.
The bottom line: I have spun my wheels working a short sale only to discover that the two people who have touched my clients file can’t find their ass with both hands.
The borrower did all the right things. The San Jose short sale agent did all the right things. Is it any wonder why some people simply walk away and let their home foreclose? It’s no wonder in this case. CalHFA left the homeowners with no viable option other than the forced foreclosure which CalHFA will proceed with.
CalHFA Debacle with San Jose Short Sale – CalHFA opts to foreclose rather than cooperate with a San Jose short sale!
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