While my short sale is being reviewed by the lender, should I continue skipping payment or should I keep making payments on the mortgage? I am currently 30-day delinquent (skipped November payment) and approaching 60-day delinquency at the end of December. Should I make a payment or not? What effect will it have on my short sale being approved? I estimate the short sale to take another month or two.

Thanks for your input.
 
Posted by T P on 12/27/2007 05:40 PM   Comments (6)  
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6 Comments on During short sale process, skip mortgage payments or keep paying?

DEC
28
2007

As a real estate professional, one should never advise someone not to make the mortgage payments. That being said, the negotiations do generally proceed better if the account is in arrears. The lender typically feels no sense of urgency on a current account.

When you say you are estimating a month or two for your short sale, do you already have a firm, earnest money in hand offer on the property? If you can give a few details such as the lender involved and the status of your offer, I can get you some advice as to a good strategy from this point forward.

Drew Adams - www.learntoshortsell.com

 
1:00am • #1

I agree with Drew, we should never counsel a buyer to skip payments, but the truth of the matter, most lenders will not even consider a short sale if the loan is not in arrears.

My experience is also the same, without an offer in hand, most will not actually start the short sale process (there are a few exceptions). 

 
5:59am • #2
I have an offer on the table and I already submitted the package to the lenders (Countrywide on the 1st and Chase on the 2nd). The lenders completed their appraisal and BPO last week. The file is currently being reviewed. I already skipped one payment and the lenders know I am 30-day delinquent. Just wondering if I should skip a second payment and go to 60-day delinquency... Thank you for your answers.
1:00pm • #3

Again as a real estate professional I would never advise anyone to not make a payment. I would have to say if you did make a payment at this time the lender(s) would probably be somewhat bewildered. At this juncture they are most likely not expecting any further payments to be made and not making them would probably emphasize the urgency of your situation to them.

Since you are in two sets of negotiations, you have double the work but your negotiations probably are not over once you submit the short sale package for their consideration. If you do not intend to go bankrupt as part of this process, you may wish to consider a strategy for escaping as clean as possible from further actions by the lenders. If you elect not make your current payment, it might be a good move to use those funds to consult a good attorney to make sure you don't end up with a deficiency judgement or if you end up signing a promissary note, to do so under the most favorable terms.

It is considered illegal to use the threat of bankruptcy as leverage in your negotiations. That being said, most people in a short sale situation are insolvent and a call from an attorney to negotiate your final exit details would not be unexpected. The implied pending bankruptcy would generally carry some wait in those negotiations regarding any deficiency judgement or your refusal to sign a promissary note.

You seem pretty prudent. If you do consult with an attorney, grill them well to make sure they have good experience in these matters. If you play your cards right you may escape this hole mess with only minor damage to your credit score.

Good Luck!

Drew Adams - www.learntoshortsell.com

8:06pm • #4
DEC
31
2007
I will most likely skip a 2nd payment and let it go to 60-day delinquent.

There is new development as of today: the first lender (Countrywide) has approved the short sale. They are telling me that they will offer the second lien holder (Chase) $3000 and will not negotiate with them (is that true?). I owe the second lien holder $99K. They tell me that I am to send the offer to Chase and negotiate with them to get their approval.
Can someone with experience with these negotiations advise me on how to negotiate with the second lender?  What should I tell Chase and what should I expect? What if the second lender does not want to accept the $3000 offer from the 1st lender? Thank you for your input.
1:09pm • #5
JAN
06
2008
Ok, I finally got approval from both Countrywide and Chase for the short sale. But I have the following issue:
Countrywide is only approving seller concessions of 3% and does not allow me the seller to assist in closing costs in cash or promissory note, otherwise any money I bring in at closing would have to go to Countrywide. The buyers are insisting on getting 6% concession otherwise they will walk away. I am trying to find a way to get that missing 3% if we can not convince the buyer to lower their demands. We initially thought about reducing my realtor's commission and transfer it to closing costs as realtor's concession. Then I would pay my agent outside but my agent says that is against the law and her realtor will not allow it. So we are stuggling to find ways to get that missing 3%. Some ideas we thought of are:
- ask the buyers to increase the loan amount and roll the extra 3% in there. They don't want to do it.
- ask both realtors to reduce their commissions but the buyers' agent does not want to give up more than $1000. That's too little.

I'm willing to do anything to get this done but I am tied by Countrywide's requirements. If anyone can think of a solution, please let me know.
Thank you for your feedback.
2:39pm • #6


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T P

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