The Hard Decline (aka the Short Sale Mulligan)

I currently represent the buyer in a short sale transaction, and the lender is Wells Fargo.  Within a couple of weeks of submitting our purchase contract to the lender, the list agent received a “hard decline” from Wells.

A hard decline is short sale lingo for starting over.  The frustrating thing is that there is usually no clear reason for why the process must start over.  In my experience, it can be anything from a computer glitch within Wells’ Equator online short sale system to the expiration of some non-written deadline that only Wells is aware of.  And in most cases, the Realtor and the homeowner will never know the actual reason.  But it means that the Equator system essentially kicks everything out, and all the borrower’s documents, purchase contract, short sale addenda, buyer’s proof of funds, and third party authorization forms must be re-submitted.  From the bank’s perspective, this is like a mulligan…whatever the bank’s reasons, they have decided that this file needs to be started fresh from the beginning.

The good news is that the re-start should take less time than the original short sale attempt, as all the paperwork should be ready to go in the listing agent’s files.

In looking for a good way to explain this seemingly ridiculous duplication of efforts to my buyer client, I found this article by Elizabeth Weintraub, a short sale expert in California.  She compares the hard decline to eating in a restaurant, finishing dinner, and then having the waiter forget who you are when you try to order apple pie.  In order to get the dessert, the waiter wants you to start over and eat another entree!apple-pie

It makes for an entertaining read!  Here is the article:

http://activerain.com/blogsview/3289423/the-apple-pie-of-sacramento-short-sales-is-no-dessert

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