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Fraudulent Short Sales and Passing the Hardship Test

By
Real Estate Broker/Owner with Anson Properties 3086504
Important Tip: Ensure you have made any misrepresentations on your mortgage application for your original note, home equity line or second notes. If they misrepresented their income in any way, it may be considered a mortgage fraud. If they have done this, advise them to refer to their attorney.

Do not take fraudulent short sale as it will put you, the agent, and your seller at risk. Lenders will eventually require homeowners to submit proof of financial insufficiency, tax returns and wage information.

Fraudulent short sales are rare, but should you be involved in this kind of transaction, make sure to execute a hold harmless agreement. Obtain a draft agreement from your attorney and have the homeowner sign.

Passing the hardship test is the very first part of the qualification process. Evaluate the seller over the phone to determine if the short sale will be viable. Should the homeowner fail the hardship test, the homeowner should agree to take a part of the deficiency or sign a promissory note. But this now depends on the lender.

The Gainesville short sale agents has had strategic short sales approved where cash contributions was not required. But you will not know that first hand, so the seller should agree to help right from the beginning. It’s great if they don’t have to contribute, but what happens when you find out at the end that they are not willing to apportion? It will be a great trouble then.

If unfortunately they don’t qualify and have to leave their home, then there will only be three options available to them: a deed in lieu, foreclosure or a bankruptcy. Ascertain that the seller is not in the middle of a loan modification process while filing a short sale this is because most lenders will not allow these two to be processed at the same time. If the seller’s loan modification has been denied, then you can use some of that document to process for the short sale.

Other Articles to Read:

Bank of America’s Cooperative Short Sale Program

Banks Are Calling Homeowners To Solicit Short Sales

Options To Prevent Gainesville Foreclosure when Unemployed

Do I Have to Pay for the Real Estate Agents Commission?

Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Oh, yes we need to make sure that info (to the best of our ability) is accurate and transparent.

Jul 14, 2012 01:30 AM
Gayle Barton, Forsyth County Real Estate
BERKSHIRE HATHAWAY Georgia Properties - Cumming, GA
Cumming GA Homes For Sale (404) 710-0204

Great information Stephanie. Thanks!  Sadly, I doubt the sellers will be honest with you before you are dragged in...

Jul 14, 2012 01:31 AM
Edward & Celia Maddox
The Celtic Connection Realty - Queen Creek, AZ
EXPERIENCE & INTEGRITY - WE TAKE THE HIGH ROAD

Thanks Stepanie for sharing.  Sometimes the sellers weren't honest with agent as Gayle says.

Jul 14, 2012 01:43 AM
Bas Panch
SCV Home Buyer - Valencia, CA

Hi Stephanie,

Very good advice. It's best to just be upfront and honest to avoid possible complications along the way. Keep up the good work as a top Gainesville short sale agent!

Jul 18, 2012 12:37 PM