Wells Fargo 'SS Contract Addendum' Anti FLIPPING language

[DJP]

WELLS FARGO's 'SHORT SALE CONTRACT ADDENDUM' states:
The parties agree that this Short sale transaction will not constitute appraisal fraud, flipping, identity theft and/or straw buying"

My title agent has also advised me that I should amend the Wells Fargo "Short Sale Contract Addendum" and cross off and initial 'flipping' on the 4th bullet point.  Her comment was:
"I have seen this and our attorney has advised our buyers / sellers to cross out the "flipping" part of the form and send it back since the "flipping" phrase is to broad of a term... that could mean anywhere from 1 day to 120 days and since they do not specify the length of time there is no legal way you can agree to that letter."

This is what the LM at Wells told me:
We do not alter these addendums. We do not allow property flipping of our short sales. We do not allow for a "middle man" to make a profit off of our loss.

My response:
If we were to rehab the property and then look to sell with a couple months, having language stating "The parties agree that this Short sale transaction will not constitute appraisal fraud, flipping, identity theft and/or straw buying" would be in violation of the agreement.
As my title agent said, "flipping" phrase is to broad of a term... that could mean anywhere from 1 day to 120 days and since they do not specify the length of time there is no legal way you can agree to that letter."

LM response:
This is an investor requirement and just like our approval letters we do not alter any wells Fargo documents. If you or your title agent are not comfortable with our protocol, please advise so we may proceed with foreclosure. These documents were prepared by our legal team and no one here, including supervisors, etc. have the ability or consent to alter them.

WOULD YOU PROCEED WITH THE SPO and the closing anyways since it is not really enforceable?

 

[Rob in Atlanta]

If I were doing this deal, I would consult with my attorney and get his/her support on buying and placing the property inside of a trust or entity.  Then when you 'flip' the property, just change the beneficiary of the trust, not the title of the property.

Although I don't know of a law prevent any of us from buying a property and reselling it the next day, it doesn't seem like an enforceable provision to disallow the resale.  Sounds like they are attempting to keep their stockholders content by telling them we are losing so no one else can win on this deal.

Get your lawyer to confirm your position and move forward.  If legal says it can't be overcome, then go to the other 50 thousand banks in need of your business.

Rob

[MichaelQuarles]

Good to meet you...

The last wells Short I did, which was some 30 days ago maybe, had a 30 day no transfer included in their acceptance...

Sold it on a concurrent transaction with title insurance same day I bought it... Gotta love this business...

Happy house hunting...

Michael

BTW the title company is America's largest

[shortsalewiz]

Legitimate, fully closed, quick turn resale transactions certainly aren't any of the not-flipping categories. If the contract the buyer provides says they intend to rapidly resell for a profit, then I guess WFB doesn't consider that flipping or they wouldn't have approved the short sale. Here's another case of poorly drafted, form language that is too vauge to make sense.

[MichaelQuarles]

Hello

I guess when you're up front with everyone.... Then it seems to work better.. Two of my contract paragraphs

XV.   RESELL: Seller authorizes the Buyer to enter into a sales agreement to resell the property during this escrow period. Seller is aware that Buyer intends on reselling the property for a HUGE PROFIT. All profits made by Buyer during this transaction relating to the reselling of the property are the sole interest of and solely owned by the Buyer.

XLVII.   MARKETING: Seller authorizes Buyer to market property during escrow for Buyers benefit. Marketing is defined as, but not limited to, placing the property for sale in the Real Estate Multiple Listing Service (MLS), advertising in the Newspaper or other periodical, and placing a for sale sign on the property.

Happy hunting

Michael

[BarryJohnson]

Legitimate, fully closed, quick turn resale transactions certainly aren't any of the not-flipping categories. If the contract the buyer provides says they intend to rapidly resell for a profit, then I guess WFB doesn't consider that flipping or they wouldn't have approved the short sale. Here's another case of poorly drafted, form language that is too vauge to make sense.

I agree completely. The language is way too vague to be enforceable. What is the legal definition for "flipping"? Also, say you did "flip" the property 5 minutes after the closing, is Wells Fargo going to give the money back and take the property back? Are the going to sue you? For what damages? They were not damaged.

If you are worried about it or cannot find a title company to close the transaction you can always do the Trust route. We are starting to do that more and more anyway as it is just getting simpler.

[gman22]

You might consider a couple of things:

a)  Use an addendum, that way you are not modifying their "official" form; or

b)  if that don't work, have the file kicked up to management.

Wells is stupid, and rarely seems to use the logic other banks have considered routine for a long time.

[DJP]

Thanks all!
My title company (and their attorney) is ok with doing the closing so I am too.
I concur that the language is too vague and not enforceable.

btw - I did try to talk to a manager but they would not alter or agree to any amending of the language.