Make too much for Short Sale

Its John P again, one more question but on the opposite side, We of course have a house that is underwater, but current on the payments, and if the inevitable happens-not being able to secure a renter, Is there a "formula" per se that Wells Fargo in this case uses to determine that we make too much money to Short Sale, is there a percentage they use to see your debt to liquid assets. My loan with Wells Fargo is currently with JennyMae, which did not know existed until I called to inquire.

 

Thanks for any assistance.

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Permalink Reply by Jeff Payne on October 4, 2012 at 9:49am

Can u afford to make the payment without a tenant in the house?

Permalink Reply by Bryant Tutas on October 4, 2012 at 10:11am

If the investor is GinnieMae then you probably have a FHA or USDA Rural housing loan?

If so both will require a financial hardship. These are also owner occupied loans so if you vacate you will need a good explanation as to why.

Permalink Reply by John P on October 4, 2012 at 10:58am
On paper we can afford it... But it would not be a comfortable situation financially
Permalink Reply by Jeff Payne on October 4, 2012 at 11:29am

SO put yourself in the banks shoes, they look at your financials and see that you can afford the house, why would they grant a short sale?  Why are you moving?  

Permalink Reply by John P on October 4, 2012 at 1:03pm
Safety reasons...the house has been almost broken into twice... The next door neighbors house has been broken into... Gas siphoned out of cars.. Cars keyed... It's not a good area... I've researched and "safety" is not considered a hardship
Permalink Reply by Jeff Payne on October 5, 2012 at 2:09am

John P, safety is not a hardship most likely.  How much underwater are you?  You may just have to bite the bullet and  either rent it out and keep paying or sell it and find a way to make up the difference. 

Permalink Reply by John P on October 5, 2012 at 2:28am

I WANT to rent it, but I just want to know worst case scenario, We owe $168k, and houses are selling for $90k (foreclosures) and that is the only activity around here.

I wish there was an answer to clarify if we "make too much" If there is a % for debt to income to clarify if we make too much.

Also, the home is located in GA, and I did a lot of reading last night on forclosing, like I said I am looking at "worst case scenario" and I want to rent it, and could not get clarification on deficiency judgements in GA, most everything I read noted they are rare, but the deficit from my loan to fair market value is high in my opinion so I have the feeling we would be the exception to the rarity.

Permalink Reply by Jeff Payne on October 5, 2012 at 3:48am

I dont know anything about GA and deficiency judgements.   

About the make too much....  At the end of the month, after all of your bills are paid, do you have a surplus or a deficit?

If you are purchasing another home and intend to short sale or let this one go to foreclosure, be very careful, the new lender is probably going to ask what you intend to do with the old home... 

Permalink Reply by Tammy Davis on October 5, 2012 at 6:39am

I just closed a short sale last week with BofA, FHA loan...sellers hardship was that he was a police officer and was receiving death threats from a local gang. Wife was a stay at home mom with 2 kids.

Lender approved the hardship...no questions asked.

Just never know these days what is a "qualified" hardship until you submit it.

Permalink Reply by John P on October 5, 2012 at 9:06am

Thanks Tammy for your reply good to know there is a gray area for "hardships" I guess if it came to Short Sale avenue and unable to rent the house, I could request for our county police to provide the history of the  calls out to the house and surrounding houses as proof, like I said I would LOVE to rent the house with good tenants of course to potentially sell it when the market ever makes a turn for the better.

In reference to Making too Much, I would like to know if the bank(wells fargo in this case)  use a % based upon Debt to Income to consider if we make too much, Heck we may not from everything I have been reading, we don't have the funds in savings or any other source to cover the short fall, just our month to month income could cover it, not comfortably though.

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on October 7, 2012 at 3:22am

John - get your hands on a Wells Fargo "Borrower Financial Statement" and complete it honestly.  If your income and assets exceed your liabilities, there's no hardship.

As for the "Safety issue", you must disclose that to any new buyer or renter, so that almost guarantees you won't rent or sell it.

Find a Realtor with experience in Short Sales and start the process.  You will be told quickly whether you will qualify or not.

Good luck!

Permalink Reply by Donna McClelland on October 7, 2012 at 7:45am

Hi John,

Wells Fargo runs a credit report and relies heavily on that in addition to considering your hardship.  If your credit score is good to excellent and you are showing no financial hardship, chances are you will not be granted a short sale.  If you can find a realtor willing to give it a try for you, it can't hurt (except for the fact that you will have revealed all of your financial info to Wells Fargo for nothing).  Good luck!

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