Late one evening I fielded a call from a Connecticut homeowner that had been relocated for employment to Florida in need of a short sale Realtor. When they were relocated, they had their Realtor ( inexperienced in short sales ) do a market analysis and found out there was no way they could ever possibly sell their home for what they owed the bank. So they did what most people try to do first, which was to rent the property so they could continue to meet their financial obligations. This could have proven devastating to them because their loan was an FHA insured loan. More on that in a minute.
You never know what you are going to get when you choose to rent your home. There are too many variables involved, and it's almost guaranteed that something will go wrong or backfire during your stint as a landlord. The 2 big questions to consider:
- What happens when your tenant loses their job, or decides that they are going to stop paying?
- What happens when there is a problem? Leaky roof? Heat stops working? You're 2,000 miles away, how do you know you're not getting hosed?
Now back to the potentially devastaing part. When you purchase your home with an FHA loan, you certify that you will be occupying the property yourself. As far as FHA short sales go, you need to still live in and maintain the home in order to be allowed into the FHA PFSP ( Pre-Foreclosure Sales Program ). EXCEPTION: Lenders are allowed to make an exception for non owner occupied properties provided the property has not been tenant occupied for more than 18 months. Luckily for my clients, they called me 13 months after they vacated, so we had 5 months to get them into the HUD PFSP. With MOST lenders, this timeframe would be easy, but we were dealing with Bank of America FHA here. Completing a BOA FHA short sale is slow and tedious at best, and they always try to push the homeowner into a modification, even when they are relocated!
Once our initial interview was complete, I was able to determine that we would have a high liklihood of success and we listed quickly. We found a buyer that met the terms of the FHA approval to participate in just under 90 days. SNAG - 30 days later the buyer was declined for conventional financing by their local bank. The buyer's attorney had a couple of financing referrals for their client, and let me tell you, we were quite concerned at this point. Actually, we were sweating bullets. They asked for an extension, which we granted, because the buyer had secured a pre approval from another mortgage broker. Shortly thereafter I received communication from the buyer's new mortgage broker, and let me tell you this guy was amazing. Leo Naimot from Envoy mortgage. He assured our side that their client was well qualified for financing with an FHA loan, that they could close in about 3.5 weeks and he came through as promised. All the while, providing timely email and VIDEO status updates a couple of times a week. Impeccable communication on the mortgage broker's part to me and my clients regarding the status of their loan. I would highly recommend him to anyone looking for a mortgage to purchase a home, or refinance their existing loan.
Here are the details of the sale:
Sale Price: $78,000
Closing costs allowed: $6,000
Net to Bank of America - $72,000
Amount owed to Bank of America - $175,000
Deficiency forgiven by FHA - $103,000
Time frame list to close : 6 months
Patrick
Why settle for less than 5 stars?
Featured in Connecticut Magazine's March 2011 and March 2012 issues as a top real estate agent in overall satisfaction. Contact me for more information about attempting a short sale in Connecticut.
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