Transferred sellers are upside down. What should they do?

It might be best to try to get the new mortgage for the new house before they get the short sale situation. So if they can afford it, they might want to do that before getting the credit bruised.

Another suggestion would be to have them talk to their current lender and see about a loan modification as a possiblility

Bryan Schroeder

Ahh Colleen, I wish there was an easy answer:)

If they go FNMA/FHLMC on their new home, they won't be able to use any rental income from their old home to quaify for the new mortgage,  They would have to qualify with both mortgage payments.

FHA is not much better, but they may be able to get an exception due to the move required by their job.

Their best bet maybe to find a tenancious person to work on a short sale (SS) for them.  That may be you if you're experienced with SS or you may need to partner up with an agent with more SS experience.  You could also have sellers hire one of the myriad of short sale negotiators out there, but be forewarned, many are incompetent at best.

The company reloaction can be spun as a hardship, the challenge will be getting someone at the lender to care enough to listen.  I know of an agent that was able to negotiate an SS fore her seller without affecting his credit.  She showed the lender that he was "robbing Peter to pay Paul" which would eventually lead to foreclosure, but that she had a buyer.

You should show that they have to move, have little liquid assets (hopefully) and get comparables on rental properties for where they're moving, to show they can't afford rent + mortgage payment.

Hope this helps, good luck & good cheer for New Years!

Buying something first and then asking for a short sale is, in all essense, playing the system, and many lenders are seeing right through it and denying short sales when they do that. They need to suck it up and realize real estate is an investment, and just like any investment, it could go up or down, and theirs went down.

Would his new employer be willing to help them?  Financially, the shortage.

Definitely get a new mortgage if possible before they enter short sale arena. Otherwise they may never get a loan at all.Our 2 cents.

I had a similar situation awhile back. The client desperately wanted to move, but had negative 20k equity. She was going to rent the old place ( at a small loss for a few years) and move now, but the banks wouldn't consider the rental income. After much thought the best solution we came up with was for her to rent the old place out and buy the new home on a lease purchase for 1-2 years. That way she was locked in to buy at todays prices, and she was buying herself two years for a: the tenancy to become established so she could qualify for financing with the rental income, or b: the market to rebound some so she could sell without such a big loss and then get into new financing for her lease purchase property. Make sense?

It's up to the bank to decide on the short sale approval, I would give it a shot.

I would try the short sale also.  Better than going into foreclosure.

The short sale will work, if they're willing to kiss goodbye to their credit for a few years. However if they need their credit to buy a new home, they need an alternate solution.

If they are willing to let their credit go, a short sale is very possible. If they can prove market value, and their inability to pay the difference or the payment going forward, that is their best solution. Most banks are very willing right now to do a short right now instead of having to foreclose.