I just got denied by Aurora for a Short Sale (surprise, surprise). The denial was due to the fact that the seller is still performing. He can barely make his monthly mortgage payment. DTI is at 80%. We've proven a hardship, loss of income and an ill mother (mother is on tax returns as a dependent). Any ideas? short of stopping payments. The loan is a Neg Am he makes the min monthly payments.
I know that when I've done Freddie Mac or Fannie Mae sales, the borrower must be 60 days delinquent. If you find out that the investor is one of those, unfortunately, the borrower would need to miss two payments so get classified as a distressed asset and get the short sale approved. I've had many homeowners who really did not want to take the credit hit of the missed payments, but when push comes to shove, often missing a couple of payments and doing a short sale is a better remedy than not. The borrower can start making the payments after getting two behind if they want their credit score to take the smallest hit possible.
Thanks Ron, the loan is a Neg Am. The borrower is prepared to stop paying.