Hi, I am looking for some guidance. At each stage of negotiations with Wells Fargo, we keep meeting their demands and then I am told that we will get an approval. Well, we are at what I think is the final stage and now the investor wants to see the sellers 401k statements.
That does not see m right. I have never been asked for that before–ever! Why should my clients purge their life savings when the bank has already technically approved the price, short sale payoff, terms etc. Everything is in line. Does anyone have an answer or some advice for me on this.
Thank you
Elise Fay
John Hall & Assoc. Glendale AZ
www.homesByElise.com
{ 2 comments… read them below or add one }
Hi Elise,
I am opinionated on the short sale and 401k subject. The borrower typically writes ‘survives bankruptcy’ on the financial statement rather than entering an amount.
Paul Jerome
A 401K is a protected asset it can not attached by a creditor. The lender can request copies of it, they can even request that you take funds from it, but any withdrawal is volontary. If the short sale file was set up by requesting in writing the loss mitigation package and the loss mitigation package was released in writing and it failed to request savings and checking statments you may be able to get them to relent. If the loss mitigation package was complied from oral or web based stipulations you are likely in a much weaker situation. If the loss mitigation package stipulated that the borrower is to provide checking and savings info or a financial application including assets you are again in a weak position. Note that if the property is located in a state that does not allow for deficiency collections (like CA on a purchase money mortgage)than you would be in a better position. Provide the 401K statements but put them under a cover leter from the borrower that indicates they have no intentions of tapping the protected asset even if it kills the deal. Also indicate on the letter that the short sale with out 401K proceeds is the highest recovery they are going to get. I find that if the borrowers make written proposals to the lender stipulating the terms that are best for them than the lender can, accept, reject or counter offer. You would not orally negotiate a purchase of real estate and you should not orally negotiate short sale terms with a lender.