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already been pre-qualified, right? That's what I thought, anyway
before. When asked what led to the short sale they explained that they didn't like their neighborhood or the trend it was following. So, they decided to move out of it so their children wouldn't grow up there.
should be advised that short sales are not a "
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145 Comments on Short Sales of Convenience?
We'll take their previous Pre-Qualification with a copy of the letter and a phone call to that lender to make sure they did ask all of the right questions.
Doing this we did wind up finding out more than we had hoped. ;-( Joy
OK - I think there IS hardship here...or there might be. Here is the scenario: You buy a house and suddenly the house is underwater....then because of what is happening to the area, they neighborhood becomes a drug den with squatters everywhere and you are afraid for your kids. but you really can't cough up the $200k loss that you have to bring to the table to sell the house in a normal transaction... So in order for your family to feel safe again without losing your life savings - you do a short sale. I don't know the particulars -but I do think their is a case for hardship here.
The banks defrauded the public. Just because you are not completely destitute does not mean that you don't have hardship. Also - who is going to take care of you and your family when you ARE finally destitute because you continued to pay up until you didn't have a dime left? Often this is a matter of financial preservation.
"Pretty Background"
Wow Mike, I have heard of stategic default for home value reasons, but this takes the cake!
It's frustrating you had to waste your time with this buyer. We do have to trust a lot in this business, it's sad when people blatantly leave out very important information. It's hard to see sellers going the short sale route just to get out of the neighborhood. I wonder how they were able to prove their hardship?
Mike,
This just goes back to the old saying that "Buyers are liars" which I find to be true sometimes. When they use their own lender (someone that I am not familiar with), I always ask for a letter from that lender that contains contact information for the loan officer. I call that person and verify that the letter is not a fake and that the buyers are actually preapproved. I also put this lender on notice that if he/she ever wants to do business with me in the future, my client's deal needs to close and close on time. If I still do not feel confident and "something just does not feel right" then I ask them to call my lender contact that I use on a regular basis. I explain that this is my standard operating procedure and that I do this to keep from breaking their hearts if we did find the perfect house and possibly something happened during the process and they could not close due to qualification. Most people understand and just do it, others won't...so I just chose to not work with them. In the end, it saves me time, money, and wear and tear on my vehicle. I hate that old saying but we all have to be very cautious and work for people that respect us as professionals and appreciate our time and resources.
Hope you have a much better 2012!
Any approval letter a buyer gets hopefully has a credit check behind it as well as some income verificatiion too...the only thing that should interfere with a deal should be home inpection and the appraisal once offer is accepted.
Good post. It really is incredible how some think a short sale for them is no big deal and that the "bank makes enough money anyway." To me it really isn't about the bank, it's about the promise a person makes to pay a debt. I wish you the best!
My son in law John Boles and I have closed over 105 short sales for sellers. We started doing it before there was any certification for short sales. Even a year ago few agents had closed short sales. Now it is a big part of the market.
When we interview a potential short sale client it usually begins on the phone. We send them a short sale package and in it are SEVERAL pages of disclosures, alternatives to short sales and information concerning how it impacts credit. We ALWAYS are upfront about the potential consequences, Idaho is a deficiency judgment state, meaning that after a short sale or a foreclosure the lender(s) my sue them for deficiency. Also, they may ask for a note at closing. So there may be even wort consequences than not being able to get a loan for a few years.
Fannie Mae guidelines do state that they may loan 2 years after a short sale. I have had one couple get approved for a loan 6 months after a short sale.
Last month I called a guy who had called me a few months ealier about doing a short sale. Then I didn't hear from him for months. I emailed to him to ask him how he was. He told me he had just bought a house and now was putting his house that he talked to me about for sale. SHORT SALE! That is happening all over the place! That is one of the reasons that some lenders, like Fannie Mae will not sell to people who own a home without a pretty convincing explanation.
Recently I did a blog entitled Boise Certified Short Sale Specialists. I wasn't very nice to so called Certified Short Sale specialists because, 1. They are not specialists unless short sales is all they do. They may be experts. But Specialists specialize in one field. Heart Specialists don't do back surgery! 2. If you research your mls and look at these specialists it is easy to see many have never closed a short sale or very few. Some have listed a lot that have expired or canceled.
Short Sales are not for everyone. They are for people who have no legitimate way out. You are right that strategic short sales or foreclosures are going to come back and bite a lot of people. I also think some of these aggressive Realtors who sell doing short sales are going to get bit someday too. The example I gave above is just fraudulent. Buying a house and then doing a short sale. All as a plan. We to our knowledge have never had a client do that. We have turned down potential clients who have lead us to believe that they have this in mind.
You guys are right that short sales for convenience could turn back and bite sellers. They can also bite the agents. And I think someday a seller just might come back and sue a broker or agent or two for not disclosing the consequences of doing a short sale. I think a lot of these certifications are jokes. It is experience that makes an agent competent. It is knowledge and ethics that agents need to have and exercise. For some people doing a short sale is a necessity and allows them to get out from an elephent and get on with life. I agree with Rob above. But when someone looses a job and has to move to a different town, looses income and has burned up their savings and needs to find a less expensive place to live, like an apartment so they can keep paying their medical bills etc. then a short sale may be the most ethical thing they can do.
Thinking that if they are government guaranteed mortgages it is the tax payer who reimburses the bank for any shortfall in the mortgage that is forgiven.
Oldest story in the book - "Buyers are liars."
Typical story...government gets involved in anything and the crooks come out of the woodwork....hey live with the a house underwater...its still the same home.
WOW, hard to imagine that someone did not advise the buyers about short sale ramifications prior to this search...sorry that thia happened to you.
I always ask who the lender will be and if I can contact them just so we're all on the same page about what I need to look for with regard to price and taxes and location, whether a rehab can be done, if it will be VA or FHA, etc. Been singed a few too many times. First deal when I started actually fell through because a broker had either lied or not done due diligence, told me the borrower was "golden"; when we got a deal accepted, found out the borrower would not be able to get financed (anywhere) and the the broker had charged a large fee for the approval letter.
@ Rob in #135: I agree with you. A promise is a promise. If you have to break it, it should be as a last resort... not, as they used to say, at the drop of a hat. If it's the easy way out, is that what we should do... regardless of how it might IMPACT others ?
What a great world to live in. Screw everyone else... I am doing what's best for me. Sounds like a little too much "Tea" for me to swallow. Sorry, but that's not the way I was brought up.
Interesting situation Mike! DataQuick, CoreLogic and other providers offer Transaction History report which would have tipped you off on their prior short sale. These reports show the entire history of loans and transactions on the property - even NOD's, auction notices, and short sale activity. Having that report would have saved you a headache.
Mike, Great Post. 50% of the contracts written last week in Mt. Pleasant, SC were either foreclosures or short sales. Good comments from everyone. Back to basics.....qualify buyers! http://www.edhunnicutt.com/blog/50-of-last-week-homes-under-contract-in-mt-pleasant-sc-foreclosures-or-short-sales.html
Hiya Mike and Bliz... and whoever else may be reading. There is another side of this that needs to be considered. I am a mortgage banker and I was told by my compliance department 3years that we would not be allowed to participate in any transactions where we knew that the client would be walking away from one home after buying another. Think about it. It is fraudulent. The most common way for a client to qualify to buy another home when they still have a mortgage on the home they are living in, is to tell the lender one their loan application that they will be renting out their current home after they buy their new home. If the buyer/borrower has no intention of actually keeping their current home and renting it out, they are lying to their new lender on their loan application, which is fraud. Be very careful when working with clients who are planning on walking away from their current home, after they buy a new one. You would not want to lose your license or get fined or go to jail if it could be proved that you were aware of the fraud and went along with it.