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There is not one answer that fits all situations. Short sales have been approved without missing mortgage payments. Don't know if your bank would in your specific situation.
To build upon what rjrcm says the factors that you need to consider are (in no special order):
#1 Who really holds your mortgage? Most banks have sold off a tremendous numbers of mortgages to Freddie & Fannie. Additionally the loans held by FHA have guidelines for short sales that tend to be a bit less subject to whims than those change as banks see fit...
#2 Why are you selling? If you can prove some very clear hardship (such as relocation for job, loss of income, medical issues) lenders have policies to deal with this. If you want to "get out from under" or even "move up" they tend to deny such reasons.
#3 What is your overall financial picture? What is your household income? What other significant assets do you have? While technically a lender has little ability to get at money you have saved they can and do look differently at borrowers that have solid evidence of assets than those that appear to be scaping by.
#4 What is your credit score and payment history? This is the single biggest wild card. I have seen some folks that have impeccible credit history be denied modest short sale (under $5000) and have seen people that have horrible history of late / no payment be OKed for a short sale of $100,000+++ loss to the lender. I can sorta get my head around this with the rationale of "well the lender knows this borrower didn't stay current on a secured loan so why even bother with a deficiency judgement (which is most like an unsecured debt obligation), it cheaper just to write off. THE WACKY part is I have seen other lenders behave the OPPOSITE, giving the "good customer" a bit of a "free pass" while"sticking it to borrow with a crumy score...
If you do not already have a relationship with a skilled real estate attorney see one that has experience negotiating away any negatives that comefroma short sale. Really very valuable!
Chet there is a health issue involved in this case. Think that will help?
Hate to sound like "magic 8 ball" but back before 2008, when lenders had true protocols for dealing with folks that were forced to sell for less than they owed, health issues were probably the second or third most common reason after death of spouse and divorce.
Of course you will need to have your ducks in a row, be able to provide a fully documented history of how the health issues forced your need to sell and be willing to do a lot of running around / phone tag and / or have your legal representation get jerked around by the labryinth of departments that lenders have added to deal with short sales, but to get out from under a debt that is due to circumstances beyond your control it almost certainly makes sense.
BTW If your attorney is skilled they will also ask that the AMOUNT of the deficiency is NOT sent to to the credit bureaus. The entry should just be coded for "debt settled". The short sale will ding your credit score pretty bad, but instead of $6000 "charge off" (which could result in even your credit card company reducing your available credit) there won't be this "zombie debt" haunting you...
Let's say your house has been on the market a year, you've had 3 people look at it at, one offer and that offer is $6k low of the payoff price.
YES!!! As long as you can prove a financial hardship and work with them, the bank will allow a shortsale. CitiMortgage approved ours and we have never missed a payment.
YES!!! As long as you can prove a financial hardship and work with them, the bank will allow a shortsale. CitiMortgage approved ours and we have never missed a payment.
That's good to hear. Although there is a financial hardship we feel a serious health issue provides way more leverage.
YES!!! As long as you can prove a financial hardship and work with them, the bank will allow a shortsale. CitiMortgage approved ours and we have never missed a payment.
Quote:
Originally Posted by Rich Cabeza
That's good to hear. Although there is a financial hardship we feel a serious health issue provides way more leverage.
Just keep in mind that other banks may or may not cooperate. Kevinm's did for him in his situation, but does not mean yours will. Good luck.
Just keep in mind that other banks may or may not cooperate. Kevinm's did for him in his situation, but does not mean yours will. Good luck.
My wife became very ill. Although everything is fine now with our mortgage we did fall behind at one time. Wells Fargo was absolutely horrible and pounced on our home of 20 years. My congressman helped to put a stop to a accelerated foreclosure. I'll never do business with that bunch ever again.
Just keep in mind that other banks may or may not cooperate. Kevinm's did for him in his situation, but does not mean yours will. Good luck.
Very true. I still need the holder of our SECOND TRUST to agree to the shortsale. They are the ones being stuck with losing the most. They will be eating over $100K. CitiMortage is losing less than $20K. What I hope rules in our favor is that 100% of the second trust was applied to DOWN PAYMENT on the home. It was not used to pay for vacations, other real estate, cars, ..etc.
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It is very likely.
