Negotiating and the HUD

Hey guys, just a few things I have experienced here recently with Short Sale negotiation and getting things approved.

First off, no matter who you get to do your negotiations it will pay to know the HUD-1 and what fees & commissions will and will not be excepted by the lender. First of all I encourage everyone to watch the HUD video from Josh, he does a great job explaining it, and is very knowledgeable. Josh likes to load up the HUD with as many fees as possible, which in one respect makes sense. After all, if you don't ask you don't receive, right? But I am starting to think otherwise, lemme explain:

One of the deals I am working on is with Wells Fargo (1st) and Ocwen (2nd). The Wells Fargo negotiator has completely removed all  my negotiating fees I put under the 1300's on the HUD. This is the first time I've had this happen, out of at least 15 payoff approvals so far.

Then just today I was on the phone with a different deal for Bank of America (a fannie mae backed loan) the negotiator also denied me my negotiating fees. What the heck is going on here lately??

My personal opinion is that the banks are getting their feet back under them with the bailouts and time gone by since this crisis begun, now they are seemingly not as disorganized or desperate. I believe this continuing saga has many more bumps in the road for them and our economy, but that is a whole separate blog entry.

Getting back to the first deal here; the negotiator removed all my fees + the water hold (which goes on line 508, and is usually $300 to $500) this is an Old School Title co. policy because for some reason the water utility has the same priority as the property taxes to be paid before the property can be transferred to the buyer. 

Basically the negotiator said that if it is not a realtor commission or not A CURRENT BILL that needs to be paid, it will not be excepted. And she was only allowing 4% for the realtor commissions because there's only one agent, that's still not bad though. Some lenders only allow 3% for one agent. This is where I will always start with 6% on my initial offer.

The other deal I mentioned with Bank of America gave me some insight on what lenders may except for fees without question (at least for now).

I started whining about not allowing for negotiating fees for me. You know; how am I gonna pay my heating bill, the kids won't have a Christmas this year, etc.... She wouldn't buy it! But then she came back with "are there any seller concessions, you can have up to 3% seller concessions."

Seller Concessions! This may be the answer to the fee problem. Seller concessions can go on line 507. They reduce the amount of net to the lender, and the overall amount needed to close the A to B transaction. Money in our pocket!

So the Wells Fargo deal; the negotiator took all of the extra fees I loaded onto the HUD and added them to the banks NET amount. Instantly she gave the bank a $10,000 raise, and sent me the approval accordingly. This makes it harder for me to counter, and apparently as long as it does not increase the gross offer, they will try and increase their net anyway they can.

Think about it this way, if there is NO room on the HUD for the lender to move stuff around, they have to come back to you in order to counter, and they cannot just write themselves in a raise.

I spoke with a title co. agent and he confirmed what I am talking about here; that it's not a good idea to screw around with loading up the HUD with too many things. The HUD should be CLEAN and SIMPLE, this also increases the likely hood of lenders wanting to work our deals instead of the next guys.

Hope this helps everyone....