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Short Sale: Do you have to be in default to get a short sale approved?

If you are current on your mortgage, will your lender consider a Short Sale?

The answer is maybe. Some lenders will accept a Short Sale file for approval on loans that are not delinquent. Not that many are documented. Other lenders will not accept the file until the loan is delinquent. The best way to find out is to put together your short sale package (do it right away) and see if the lender will approve it with it being current.

Keeping in mind that being in default is on the list of things that a lender looks at to consider a short sale. But...I would never say NEVER.

And as the old saying goes, it never hurts to ask. Just be sure you have all the documents that they require: Financial, hardship, comparables and a reasonable offer. If you do not feel comfortable doing this ask a real estate agent for help with the negotiation with the lender.

Each lender is different and it is hard to say what they will or will not do --- since they are not be upfront with us on what they definitely will not approve. Just be prepared to get turned down, but be hopeful that they will consider your request and approve it.

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Check out: Real Estate Terms/Definitions. And take a look at Mother and Daughter Blog for other tips for Sellers and Buyers. I work with my daughter as the Mother and Daughter Real Estate Team at Perfect Financial Solutions and we also focus in Short Sales and the Pre-Foreclosure process. Our consultations are free. Our aggressive marketing plan includes on-listing advertising. If you are thinking of selling or buying a home in Northern California's Central Valley (San Joaquin County CA - includes Stockton, Manteca, Tracy, Lathrop) plus Stanislaus County CA - includes Modesto, Salida, Riverbank) & the East Bay (Alameda County CA - includes Hayward, Fremont, Newark, Union City & Oakland) and surrounding areas. If you would like a FREE Home Seller or Home Buyer Handbook, please call us at 866-750-8282 or email at US.

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Rosemary Brooks

Patrick Williams & Associates

Mother and Daughter Realty Team

PH: 866-543-0461

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Posted by Rosemary Brooks -Mother & Daughter (866)-750-8282 on 01/26/2008 09:27 PM

Comments (11)

short sale, foreclosure, default, stockton

Originally posted at: Mother & Daughter Blog: Short Sale: Do you have to be in default to get a short sale approved?

This post has been included in California Information San Joaquin County, CA Information

11 Comments on Short Sale: Do you have to be in default to get a short sale approved?

JAN

2008

My experience is that it varies with each lender. I know Countrywide won't even discuss a short sale until you are at least six months delinquest on your mortgage.

Gary: I have had some agents say no way and some say yes way! I have spoken to lenders that say they would consider a short sale if all the other components are in tack and it is an offer they can agree to.

JAN

2008

Rosemary - I have not yet to get a lender tell me that they can qualify for a short sale without being behind on the payment. Maybe that will change because I do have clients that are trying their best to stay current but still want to short sale because they are borrowing from Peter to pay Paul.

Stella ~ This is exactly right. The point here is that those that try prior to getting in default are at least letting the lender know their situation ahead of time and when it comes to them being in default... well they won't be surprised that they are. It also gives the homeowner more time to find a good offer in case they fail at the first round. Say the first one is turned down... then the homeowner is in default, they just may have the buyer already or at least they will know what to take to the table for the lender to accept. And if they list early... they will have the MLS listing history all ready to go. Anything is worth the try.

Great move on your part. I did do that with one of my clients. I told them to stop paying after the offer came in because they were borrowing from other creditor to keep up payments.

I agree that it never hurts to ask, but I recommend that you ask before making a client complete the entire short sale packet. Every lender I have ever dealt with has specific requirements that they are willing to share if you ask. Completion of the entire Short Sale packet is a lot of paperwork to have someone go through only to get a "no" answer because they do not meet that lender's criteria for consideration of a short sale.

Short Sales are a great option and alternative for many people, but for many others it simply isn't and we as REALTORS need to advise clients of the options with all the pros and cons and allow the clients to make an informed decision that best meets their needs. I am seeing more and more agents trying to push sellers into a Short Sale solution when based on the seller's or lender's specifics it is like trying to put a square peg in a round hole.

Stella ~ I never tell the borrowers to stop paying, that way they can never blame anything that happens on me. They are in hardship whether at the beginning of it or what, so they will have to stop paying because they cannot keep it up.

Steve ~ Asking is not a bad idea but usually they will not tell you if they are going to do it until you present them with a completed package. So its up to the borrower at that point if they want to TRY or if they just want to wait until they are in the default situation and then try. I agree that we let them know about the options that is why I send in a reguest for information on the account and I directly ask what owner assist programs or options they have for the owner. If they say they could not workout anything and that short sale is their best option, then that is the option that they have.

But asking for options and workout plans and whateve else is soemthing that should be done with each client.

FEB

2008

I so stressed for the past month because I had to deal with my second lender in requesting for a short pay off. We are not delinquent in our mortgage and i know that the chances were slim for a short pay off approval. But my 1st mortgage was resetting and it will go up to $1000 more. I was already thinking of walking away. I was declined of conventional refinancing and loan modification. My only hope was a short pay off, or else, we have to walk away.

To make the story short, I got an approval last Monday from my second lender, which was Ocwen. Rosemary is right. Patience and persistance. I called them twice a week. I woke up at 5:30 in the morning just to call them. I am in California and they are in Florida. If I call in the middle of the day, I will be on hold for 2 hours. If youcall them early in the morning, the hold time will only be 1 hour. Yes, 1 hour.

But everything is fine now. I got my approval letter and I am trying to get my refinancing loan done by the end of the month. God is good.

FEB

2008

Charisse ~ great news! Thank you for sharing and I wish you and your family the very best. You got the right spirit..... God is good! Stay blessed.

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