How can a Short Sales be rejected?

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Real Estate Agent

I have been doing short sales for about 3 years, I have seen a lot but I am still learning. I known that banks sometimes might denied a short sale in the following cases:

  • 80/20 they can agree on how much each one is getting, sometimes the 2nd mortgage wants more than what the first mortgage is willing to approve.
  • Contract price is too low or property is so ugly and has to many issues that no one is interested to pay what the bank has approved.
  • Too many liens on the property and bank wants seller to pay for all or some of them and seller doesn't have the money to do it.
  • Strategic short sale, the homeowner is comfortable making payments but because they are upside down they want to sell, but there is no real hardship.

 

This is the new one. Homeowner bough property with FHA loan back in 2007, got married and move out of the house and rented the property from 2008 to 2009. Husband loss his job and they moved back to the house in 2010. She was denied a loan modification, Wells Fargo send her a letter advising her to short sale the house. Then when I sent the concent for the bank to release information to me, they told me that FHA rejected the short sale because she used the house as a rental for a period of time and that she can't even do a deed in leiu.

We learn something new everyday.

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Topic:
Real Estate Market Trends
Location:
Maryland Baltimore City
Groups:
Baltimore REO Foreclosures and Short Sales Market
Maryland Real Estate and Mortgage Group
Short Sale
Short Sales and Forclosures ONLY
Short Sales Specialists
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Ambassador
942,701
Suzanne McLaughlin
Sabinske & Associates, Inc. (Albertville, St. Michael) - Saint Michael, MN
Sabinske & Associates, Realtor

Is Fannie Mae or Freddie Mac the underwriter?  Check it out.  And, if one of them underwrote the loan, you might be back in business.

Aug 10, 2011 10:31 AM #1
Rainmaker
716,246
Pat Champion
John Roberts Realty - Eustis, FL
Call the "CHAMPION" for all your real estate needs

Wow great information to know I never heard of this before. Thanks for passing along this valuable information.

Aug 10, 2011 10:34 AM #2
Rainmaker
28,535
Cathy Meyers
HomeSource Lamareaux Residential Realty - Apple Valley, CA

Jose,

Thanks for the insight, I am curious did you look at the hud website for their written guidelines. I have had

some success in using written guidelines against spoken over the phone, "we don't do that"

 

All The best

Aug 10, 2011 11:16 AM #3
Rainer
37,846
Jose Rivas
Nottingham, MD

Suzanne the loan is an FHA loan.

Pat, yes now it another thing I have to get aware before listing the next short sale.

Cathy, I call HUD and this is part of the guidelines: " Subject property was not purchase as rental investment of used as rental for more than 18 months" 

Aug 10, 2011 02:49 PM #4
Rainer
31,959
Karl Falk
Summit Mitigation Services - Monument, CO
Summit Mitigation Services

Jose, how did FHA know the property was a rental?

Aug 11, 2011 10:13 PM #5
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Rainer
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Jose Rivas

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