Do you have to be delinquent or past due to short sale your home?

Do you have to be delinquent or past due to short sale your home?  The answer to that question is NO, but you better be able to prove your hardship in a very clear way to your lender.

Allow me to expand on this topic by giving you a recent experience I had with a client.  First, I am proud to say that I was able to get a short sale approval with Bank of America on a loan that was 100% current and never past due.

I speak to homeowners almost daily that ask about short sales and as an experienced real estate in performing short sales I start every consultation by asking questions.  One of the first questions...more less is, "Can you please explain to me your hardship"?  When I asked this particular client that was never delinquent she told me that she had a family medical hardship and needed to move closer to her child's doctors.  So, as we discussed the sellers hardship we gathered all the facts and documentations for the medical hardship (i.e. medical bills, letter from doctors explaining frequent doctor visits, etc).  I believe that when dealing with a hardship that is not specifically related to a financial situation...your "hardship letter" is the most important document you can provide to the lender.  Most times sellers just quickly write down why they are delinquent and do not put to much thought into the letter, but when dealing medical hardship you have to specific and provide additional documentation.

As with any short sales the process is not quick...you have to be persistent and follow-up often with the lender (at least once a week).  Be sure to do your research to see what the criteria is for short sale approval.  On this particular deal we new that the borrower did not have to be delinquent but had to be able to prove "imminent default".  We were able to document that to the lender by expressing the increased cost of travel, time off work, inability to work extra hours, etc.

The short sale was approved in just over 4 months from start to finish.  We lost around 30-45 due to lender requiring the borrower go through the HAFA program.  Which the seller did not qualify and forced us to go down just the traditional short sale avenue.  This turned out to be fine, since soon after that the short sale was approved with a "Full Release of Deficiency".  There was no promissory note requested by the lender.  The only requirement was that the lender required a $500 cash contribution from the seller at closing!  The HOA payments were current and never an issue.

The BEST news about this short sale being approved is that according to FHA guidelines as long as the potential buyer was never late on a payment and has a documented hardship, which our hardship letter was very precise...the buyer could be approved immediately!  Yes, now that same buyer that short sold their home a month ago is now home shopping for a new house in West Palm Beach, FL!!  After all the short sale process frustrations...They were able to get closer to their family doctors and avoid lengthy travel to work and medical appointments.  Now, they will be in the area that will be better suited for their family.

I believe more short sale programs should be made available for homeowner's that are facing similar circumstances like my client's to allow them selling alternatives.  Hopefully, this is a sign that more lenders are taking notice that the old days of being told only delinquent mortgages will be approved for a short sale will be a thing of the past.  There are definitely buyers out ready to buy up the distressed properties and those buyers don't care if the seller is current or not as long as the price reflects today's market value.

 

Ryan Jennings, P.A.

Keller Williams Realty

12008 South Shore Blvd. Suite 201, Wellington, FL 33414

(561) 313-2627 Direct

ryan@WPBhomes4sale.com

www.WPBhomes4sale.com