I have clients who are considering a short sale since:

1) Seller's have to move-in to take care of their aging parents (they are the caretakers);
2) Seller's pension fund is potentially going bankrupt (YRC);
3) House is underwater in our market.

Right now they are up to date with payments, but shortly:
1) The parents will go bankrupt if they are not removed from assisted living asap due to reduced medical/financial coverage;
2) If YRC pension fund does go bust, they will be unable to make payments immediately.

Lender is MorEquity. I have never dealt with them.

I would appreciate your input. Do you think this will be acceptable as a short sale?

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Dawn, I think the pension fund is not a strong argument (something "migh" happen some day), negative equity is not considered a hardship, either. The parents going bankrupt has nothing to do with the borrowers. But, the borrowers extra expenses and relocation (?) to care for the parents is a hardship. Bottom line, if the borrowers expenses are or are about to be more than than monthly net income, there is the hardship. However, if the borrowers have other liquid savings, high credit scores and other properties they are paying on time and have equity, it might weigh against lenient approval terms. Good luck!
Thanks Wendy - the borrowers do have high credit scores, but no other properties. However, the parent's Social Security income has the borrower's name on the account (typical for a elderly parent situation). Additionally, the borrower has retirement accounts which he cannot access until age 59 1/2 and 60, and he is not there yet. His pension fund has been in the news, so that is a material fact.

And the borrowers would have to move to SC and move in with parents - parents own a house there, and the climate works better for them.

FYI I have asked the client if I could post this question, in case anyone wonders.
We are starting to see lenders consider short sales without being behind in payments. As one of my short sale mentors said, we must just convince them that the track is out ahead and the train wreck is going to happen. Don't know about this particular lender but I would definitely pursue the short sale option if they will listen to reason.

Best wishes,

Steele
Thanks Steele! I'm leaning toward this, since their lender appears to be open to a short sale under these circumstances. I don't know that we will succeed, but I am willing to try since they are.
Hi Dawn,
I have a seller with a similar story I am working with now and will be listing his home in a couple of weeks. I too, am not sure whether his lender is going to accept his hardship.
But, I wonder if you should address in your hardship letter the possibility of renting the property. In my seller's case I have addressed in the hardship letter that if he did rent the property it still would not be enough to cover the PITI.

I think it is good to cover all bases up front in the hardship letter. I would think that would be the first thing the negotiator would ask is....why not rent the property?
I think you have a good point to make. It is better to cover all possible scenarios and still have them turn it down then not cover a basic one like this and find out later that this was a reason for the turndown.

My opinion of course.

Tammy Davis said:
Hi Dawn,
I have a seller with a similar story I am working with now and will be listing his home in a couple of weeks. I too, am not sure whether his lender is going to accept his hardship.
But, I wonder if you should address in your hardship letter the possibility of renting the property. In my seller's case I have addressed in the hardship letter that if he did rent the property it still would not be enough to cover the PITI.

I think it is good to cover all bases up front in the hardship letter. I would think that would be the first thing the negotiator would ask is....why not rent the property?
Good thoughts Tammy & Steele!
I had a first mortage lender approve a short sale, but the second mortage lender wold not approve it without additional money from the owners. The owners were not in a hardship situation at that time, but according to their hardship letter they would be in the near future. They were current on their payments at the time.
Follow up: I took this, the lender allowed the short sale and it was the fastest short sale transaction ever. I sold it in a week, the lender, MorEquity, was fabulously cooperative. We just closed on April 1st (haha) about a month after submitting the offer!!!!

I'm glad I took the risk! Everyone came out a winner - the sellers, the buyer, the bank and the agents.

Thanks for the advice everyone!!
Who did you talk to at Morequity the person that I have wantes a full pay off and I can not get anyone else on the phone

Dawn Maloney said:
Follow up: I took this, the lender allowed the short sale and it was the fastest short sale transaction ever. I sold it in a week, the lender, MorEquity, was fabulously cooperative. We just closed on April 1st (haha) about a month after submitting the offer!!!!

I'm glad I took the risk! Everyone came out a winner - the sellers, the buyer, the bank and the agents.

Thanks for the advice everyone!!
Donna. [email protected]
This was one of the fastest short sales I have done.
I hope that helps you.

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