To be or not to be (Current) that is the question?

By
Real Estate Broker/Owner with The Short Sales Group, LLC

We have two deals that Citi has countered our offers on and we thought would be approved within days.  They all of the sudden we get the dreaded email.  We can't approve the short sale because the clients are current.  Mind you I told the clients that if they wanted to keep their credit intact keep up the payments.  One of them had been out if the home with a job transfer for almost a year.  Crazy I know but some people still care about their credit.  So the mitigator told us that we can get it approved when they are 30 days late.  I said "So since they just made this month's payment and it is the beginning of the month that we have to wait another 60 days?"  She said "Yes."  Oh Boy!  I can't believe it.  I with a clean conscious have told people we have done many short sales with people who are current so don't worry.  What do I tell them now?  It depends on your lender? Oh you have Citi?  Then don't make your payments.  I can't do that. 

The other loan it was the PMI Company that said the same thing.  Unless they are behind we won't approve it.   

I would love to hear others comments on this subject. 

Comments (4)

Heather Peck
Las Vegas, NV
Las Vegas Nevada Real Estate

I had heard that lenders were no longer playing that game but apparently some are. What a ridiculous thing.  I would escalate this deal over the heads of the negotiators to the next level. If your sellers meet one of the 5 criteria to qualify for a short sale, a job change out of the area is one of them, then you need to start pushing the buttons of the higher ups.

Good luck and let me know if I can help.

Jul 19, 2009 11:47 AM
Sidney Jimenez
Keller Williams - Miramar, FL
CDPE, Short Sale Expert, 954-665-9449,

JASON,

We always need to remember that lenders are in it for the money. Do they know your client is not living in the home and they just want to make good with the lender but that good will is not going to last too much longer? They need to feel that the alternative for them is worse and they have something to lose (the lender)

Never tell the lender the clients are hoping to save their credit and that is why they continue to pay, that is the perfect scenario for the lender to pressure the homeowners. That conversation should go like this. "The homeowners understand their obligation to make payments for the loan they took. Unfortunately for all parties involved they can no longer sustain that because of "their hardship" They hope that you can understand the situation and respect the fact they are trying to be responsible, but that is a two way street and if they sense that you are not being open to their situation solely because of the old mighty dollar then they are prepared to walk away. Not only from the house but from this sale also. Their family is more important than anything, and you can see how they act towards their responsibilities. They hold this home, their credit and their loses in second place to their family. So let's see if we can close this before they change their minds and we all lose out." It might work or it might not, but that is the psychology needed to deal with the lenders.

Lender will take Short Sales without the homeowner being behind but you must show that they will shortly be behind, their are using other monies other than their current income or they have a situation that will cause them to walk away (a job transfer out of the area).

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Jul 21, 2009 03:23 AM
Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

I'd say that it would be best not to advise someone to stop making payments--leave that for an attorney or an accountant.

If people ask about whether they can do a "clean" short sale, I say that it really depends upon the bank. And, even then, it also depends upon the investor on the note. Two files at Countrywide (B of A) could be very unique transactions because they each have a different investor.

If clients get stressed out, I put a huge smile on my face and welcome them to the wonderful world of short sales!

Jul 22, 2009 03:12 PM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

What Sidney says is correct. To add to it, I let the lender know if the lender is unwilling to approve the short sale then the owner will just in the home rent free for 7-8 months and then file bankruptcy before the foreclosure where the lender will lose 7-10 months of collected money and a depreciated value in a declining market. With what Sidney stated along with this realization, I got two approved after they denied it because the homeowner was current.

Focus on the hardship and the alternative of not accepting a short sale.

Good Luck!

Jul 25, 2009 03:38 AM