How to Do a Wells Fargo Short Sale
Question: How to Do a Wells Fargo Short Sale
A reader says: "We bought a home in San Diego in 2005 with two Wells Fargo loans, which now we have to short sale. My husband was transferred to Charlotte, North Carolina, and we're supposed to move there in 2 months. Our home is underwater. When we called Wells Fargo, they suggested we try to do a short sale. A friend told me I need to join a network called Equator. My agent said she's never heard of Equator. Please help. How do we do a Wells Fargo short sale?"
Answer: A Wells Fargo short sale is near and dear to my heart. My affection goes back to the Northwestern Bank Weather Ball in Minneapolis, a landmark I grew up with that vanished in the 1980s. Northwestern Bank was owned by Banco, which later became Norwest that bought in 1998 Wells Fargo Bank. The Wells Fargo name was more well known, so it's Wells Fargo Bank we know it by today and not Norwest.
Although Wells Fargo has been around for more than 150 years, it was not fast to streamline short sales. Wells Fargo figured out a way to deal with short sales a little bit slower than other banks such as Bank of America. Bank of America was the first bank to adopt the Equator software system, which is an online software program accessed by bank negotiators and real estate agents / lawyers.
In the early days of short sales, from about 2005 to 2009, agents had to fax paperwork to Wells Fargo to do a short sale. This paperwork primarily consisted of:
The chief complaint was the paperwork was often lost, shredded or received by bank negotiators in pieces and incomplete packages. Once the Equator system was implemented and a few kinks worked out, Wells Fargo joined Bank of America as the second bank to endorse Equator.com. This put a stop to missing paperwork. However, that was short lasting and the bad news is after the short sale boom ended, Wells Fargo stopped processing short sales through Equator. Now all paperwork is back to being faxed.
Starting a Wells Fargo Short Sale
The average time frame to complete a Wells Fargo short sale is a little bit under 3 months to close, from start to finish. I close a fair number of Wells Fargo short sales every year. I find the Equator system is somewhat clunky, but it's continually refined and upgraded. Wells Fargo no longer processes any short sales through Equator. You can probably expect your short sale to be approved in about 6 to 8 weeks and then close 30 to 45 days later. A super fast short sale processing time for Wells Fargo is 2 to 4 weeks; also doable.
A traditional Wells Fargo short sale begins with an offer from a qualified buyer. Once the seller and buyer have agreed upon a purchase price and terms, the offer is ready to be submitted to Wells Fargo, along with the seller's completed short sale package.
Uploading the Wells Fargo Short Sale to Equator
Real estate agents, short sale negotiators and real estate lawyers can join Equator.com for free. However, Wells Fargo does not process short sales through Equator any longer. Typically, Equator clients set up a profile page, choose a user name and password to log in. Only that user's individual short sales are visible to the user. In other words, your agent cannot see another agent's short sale in Equator, making your personal information as secure as anywhere else online. This would be helpful information to you if Wells Fargo processed short sales through Equator but it stopped that practice in 2015.
Common Steps for a Wells Fargo Short Sale
- Your agent or lawyer will initiate a short sale package.
- Your agent will be assigned tasks to complete, starting with the third party authorization.
- Your agent will FAX the closing statement information and all associated documents collected by the agent.
- A processor will review and assign the file to a negotiator.
- All parties will be asked to sign an arm's length affidavit and other disclosures / agreements.
- Supplemental documents may be requested.
- If Wells Fargo has delegated authority, the file will be approved or denied. Otherwise, it will go to the investor for final approval.
Wells Fargo Short Sale Approval
Other types of mortgages can also be a Wells Fargo short sale. For example, a loan originally held by World Savings would be a Wachovia short sale that now falls under the Wells Fargo umbrella. America's Servicing Company (ASC) is a division of Wells Fargo. America's Servicing Company services loans for other investors under ASC.
The Wells Fargo short sale approval letter will be issued by the specific division of Wells Fargo. If the loan is a home equity line of credit, that approval letter might come from the Wells Fargo office in Des Moines. I have noticed that when there are 2 Wells Fargo loans, sometimes the first Wells Fargo lender will offer, say, a 6% commission to the listing agent, and the second lender might then demand a 1% contribution from the agents. I suspect they use this tactic because they can't request a contribution from the seller in California due to SB 458 and California Civil Code 580e, or maybe because the first lender is not allowed to directly pay the second Wells Fargo a larger amount, but I could be wrong.
Be sure to read the approval letter and ask a lawyer to interpret if you can't figure out whether deficiency rights are waived. A release of liability is the main reason many sellers opt to do a short sale.
At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.