NO Late Payments Short Sale! Can it be done? YES!

Real Estate Broker/Owner with Cathy Ashley McAlister, GRI CDPE - Broker / Sacramento

NO LATE Payments Short Sale!  Can it be done?  YES!


For one of our seller's - it was a wish come true.    They had done their homework and believed they could complete a short sale on their home without missing a single payment.  They had gone online and wanted an agent who would understand their view and help them successfully work a NO-Late Short Sale.  They found this Realtor online and knew we specialized in short sales.


In this transaction, the sellers had already attempted to work through a modification scenario and were declined.  It was helpful that they had their HAMP denial letter as that allowed us to immediately list the property and move into a HAFA short sale process.  You might ask why someone would bother since a short sale is already damaging to your credit.   Yes, that is true.  And, in the month that the Short Sale closes it is almost as damaging to a credit score as foreclosure.  But, here is the kicker; the true credit damage of a short sale, is short sale PLUS multiple late payments.   If you have six months of late payments and then the short sale completes - the sum is quite extensive and delays the credit recovery time.


Understandably, not all sellers can make their payments.  For those they want, there are situations that will allow the loan to be current and still successfully close on a short sale.    A knowledgeable Short Sale Agent in your area will understand the nuance of a No-late Short Sale.    In a No-Late short sale, the credit recovery time will be quicker.  Additionally some seller's are much more satisfied to end ownership of their home on a positive note.    Making payments on time still matter to many seller's.


It is my opinion that prior to HAMP, the investors/lenders made this request as the most direct way to prove hardship.    In the process the lenders allowed additional wholesale decimation of homeowners credit all in the name of "helping" the owners through a short sale.  Yeah... right!  If seller's have been using IRA's, savings and credit cards to stay current, that should be sufficient to be considered a hardship.   


Do not listen any further to the ongoing chant of "must be late to qualify".  This may apply to some situations but not all.   In the last year we had noticed a change in lenders allowing short sale approvals even though the sellers were not late on payments.  Short Sales are changing all the time and what you have heard over the seven years may no longer be true.   For this particular seller, the escrow closed in under three months.  They received their $3,000.00 HAFA incentive,  and have no future deficiency issues.  All in all, a very good ending to a difficult situation.










Comments (12)

John McCormack, CRS
Albuquerque Homes Realty - Albuquerque, NM
Honesty, Integrity, Results, Experienced. HIRE Me!

Cathy what an excellent and positive story.  I like to hear when people want to keep making payments, keeping good credit and rising above adversity!  Suggested -


Jan 09, 2012 03:54 AM
Anna Banana Kruchten CRS, CRB, Phoenix Broker
HomeSmart Real Estate BR030809000 - Phoenix, AZ

Cathy yes they did 'chant' no lates - no short sale, for awhile.  We have had a few that have gone through with no lates.  Taking on another one this week and I'm not sure what the stance is with this lender. Great post and thanks for sharing this important information.

Jan 09, 2012 03:55 AM
Cathy McAlister
Cathy Ashley McAlister, GRI CDPE - Broker / Sacramento - Sacramento, CA
Sacramento DRE#00648507

John:  Me Too!  For this seller, it was about having the ability to exit with dignity. 


Anna:  Chant no more, I say.   We need to let seller's know this.  Spread the word.    How many homeowners have marched on through to foreclosure in the mistaken belief that you must be late.   

Jan 09, 2012 04:58 AM
Steven Cook
No Longer Processing Mortgages. - Tacoma, WA

Cathy -- Thanks for this example of something that is truly beneficial to the client, even when things are not as rosy as they could be.  John referred me to your site, with his reblog.

May you and yours be blessed this New Year!

Jan 10, 2012 12:22 PM
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate

Cathy, Indeed this short sale was a good ending to a difficult situation.  I’m curious, one lender or two? Who are the lender(s) involved with this short sale.  Things are changing all the time in the short sale world!


Jan 10, 2012 01:10 PM
Cathy McAlister
Cathy Ashley McAlister, GRI CDPE - Broker / Sacramento - Sacramento, CA
Sacramento DRE#00648507

Hi Steven:  I believe there are many more short sales that could go this way if we get more information out to property owners.  Thank you for coming by.

Kathleen:  This was a BofA - one loan.     I am certain the HAMP decline was part of reason it went so smoothly.  Plus we processed from the beginning with the intent to stay current.   It was never an issue and we hope to do more.

Jan 10, 2012 05:01 PM
Todd Clark
eXp Realty LLC - Tigard, OR
Principle Broker Oregon

The best part about doing this type of short sale is that a day after the sale, there are some lenders that will lend to these clients.


Jan 10, 2012 06:06 PM
Cathy McAlister
Cathy Ashley McAlister, GRI CDPE - Broker / Sacramento - Sacramento, CA
Sacramento DRE#00648507

Todd, we have honestly not heard much of that in our Sacramento area - but I would LOVE to see it! 

Jan 10, 2012 06:17 PM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

I am sure many sellers in hardship who don't know this.  Great news indeed.  I did not know that a short sale plus late payments would make the credit drop even more.

Jan 19, 2012 05:15 PM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA


Glad you posted this. Some realtors and their clients may have thought that one has to be late to qualify becuase of prior experience with short sale negotiators who turned down short sales because the borrowers were never late. Fortunately, this has changed, and we can guide our clients accordingly.


Jan 23, 2012 05:37 PM
Sharon Lee
Sharon Lee's Virtual Assistance - Jonesborough, TN
Retired and loving life

Cathy-Not knowing everything about the short sale process I was under the impression that a seller has a short sale because they can't afford to still make payments and that is why they are doing a short sale. Must be that isn't always the case. Could you clarify for me? Thank you

Jan 26, 2012 01:24 AM
Mary Douglas
United Country Ponderosa Realty, Red Feather Lakes, Colorado - Red Feather Lakes, CO
REALTOR, Red Feather Lakes, Colorado

Hi Cathy, I love the ferris wheel photo....It seems short sale information/rules/regs are constantly changing, it's good to get this kind of news out there to sellers who need to know.

Feb 07, 2012 04:23 PM