USAA is facing a tough challenge with current market short sales. In the past The Quincy Cove has documented the clash between USAA distressed homeowners and the lender. The USAA short sale processing team is taking a tough stance on short sales according to several sources.

Truth be told no matter what USAA short sale processors tell you about their pay off demands they operate just like every other bank. When interviewed USAA specifically told The Quincy Cove that they base short sale pay off demands on the deficiency of the loan.

This may very well be true to homeowners attempting a short sale that have means to prevent foreclosure. However, for many USAA patrons who are unable to generate enough resources to stop the foreclosure on their home USAA will most likely settle for less than the amount owed.

For those that are able to generate enough resources to stop the foreclosure USAA will likely request that a new note with a lower interest rate be signed. Actually, USAA requests this from all patrons whether they are cash strapped or not.

Truth be told, USAA will most likely settle with any homeowner if they get that 80-100% of FMV (Fair Market Value) from the sale. The thing with USAA is that according to the short sale processor who was interviewed management plays hardball with short sale negotiations.

This is not to say that things may change in the future as the economy starts to recover. For the time being it just takes a little bit of tough negotiations with USAA to get your short sale approved.

In terms of USAA as a second lien holder on a short sale be prepared for them to demand enough that it would put the 1st lien holder at a 80-85% FMV asset recoup threshold. USAA is strict (as a second lien holder) with regards to the 80-85% first lien holder threshold.

This does not stop USAA from demanding that 80% of the second lien deficiency be repaid or that a new note be signed. They will in fact strongly demand that the home buyer make this type of reconciliation. They might even send the file to management 2-3 times with offers that would put the 1st lien holder at the 80-85% threshold only for the USAA processor to be denied by management.

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