No hardship seller? Just upside down.

I have a seller that can clearly afford to make his payment but is so upside down, he wants to short sale it and be done with it. I have always had a hardship with my past clients, so am not sure how to compose this one. What kind of "hardship" letter do they do when there isn't one?  They have vacated the property and are now renting so they didn't go out and buy another home.. Any suggestions on how I should proceed?

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Permalink Reply by Jeff Payne on September 29, 2011 at 6:41am
It can be done, be sure that your seller understands that they will be asked to contribute to the sale.   It is easy enough to make anything into a hardship on paper. 
Permalink Reply by Jeff Payne on September 29, 2011 at 6:41am
How far upside down?
Permalink Reply by Kimberly Azzam on September 29, 2011 at 6:42am
$100K
Permalink Reply by Jeff Payne on September 29, 2011 at 6:51am
Just a stretch, not sure of the mortgage amount but what if the seller found a way to pay the difference? even if they had to take out a loan to pay it.  It would do a few things, it would eliminate the higher mortgage payment with a smaller payment and it would save his credit.
Permalink Reply by Kimberly Azzam on September 29, 2011 at 7:16am
Ummm. This is sure something I would entertain discussing with him. It sounds like his wife and himself have no emotional ties left in this house and just want to start over. I am meeting with them today for the first time, so I will dig a little deeper with their situation and thoughts. I sure appreciate all your replies though. If you think of anything else, send it my way. I will post later after I meet with them. Thanks again Jeff :)
Permalink Reply by Sarah Davis on September 29, 2011 at 11:25am

Hi Kimberly!

 Good luck @ the appointment! I think it also depends on the lender if they'll accept it or not. Some lenders are a more strict than others, for example I'm dealing with CalHFA and they've told me multiple times that their interpretation of a hardship is much more specific than other lenders and that they won't approve any SS without a hardship. I am trying to get CalHFA to agree that an increase in expenses and decrease in income is a hardship, but so far they don't think that's enough! Just an example.

Permalink Reply by Smitty on September 30, 2011 at 1:14am

Kimberly, I would approach it in a way to show them he cannot afford to pay rent AND a mortgage.  Show listing history and price drops and SHOW that you've made an attempt to sell it. 

 

I worked on a GMAC sale earlier this year where the seller moved to a rental closer to his job, although it was only 45 minutes closer, I was able to show he couldn't pay both rent and a mortgage.  I showed listing history.  We got it approved.

Permalink Reply by Kimberly Azzam on September 30, 2011 at 4:31am
This is good and exactly where my thoughts were. This might not be as bad as I thought, as I just found out the husband is not on the loan, just the wife. So not showing his income is going to definitely show a hardship for her trying to pay rent and the mortgage. Mortgage is also scheduled to reset interest rate very soon and payment will be going up another $250 a month. So I am hopeful we are good to go! Thanks to everyone that has responded. I love this sight!!!!
Permalink Reply by Brent Innocenzi on September 30, 2011 at 9:26am

It can be done. Just an example of one, I did a Suntrust 1st n 2nd S.S. where the sole hardship was divorce. The Mrs. last 2 years of tax returns & pay stubs showed her making $350k+. She could easily afford mortgage payment and all other bills. She paid just under $10k at closing, which actually was not a requirement by the lender, but was to make up the difference in value. Obviously this doesn't happen every time, but they can be done. Just like stated before advise them it can be done, but to be expected to contribute to the loss.

Permalink Reply by William F Griffin Jr on September 30, 2011 at 9:50am

I have a customer whos Hardship is divorce and relocation for employment.  Lender is Well Fargo and they approved the short sale and sent me the approval with the only condition that the seller contribute $5,000.  He has not missed one payment and is current on the loan.   He wrote the hardship letter and I had him call his lender and explain his situation so they agreed to short sale and he agreed to bring $5,000 CTL.

Permalink Reply by Rochelle Castro on September 30, 2011 at 2:30pm
I am curious to find out.  If your client has not missed any payments, and contributing towards the short sale, how will this show up on his credit report, after closing on this transaction? 
Permalink Reply by Kimberly Azzam on September 30, 2011 at 3:07pm
Oh no, my client has missed seven payments. Her credit is dinged. I believe if they do not miss any payments and close with a contribution, there shouldn't be any ding on the credit.

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