I negotiate short sales for other Realtors in my area and I was just asked by an agent if the bank can deny a short sale for "no imminent default" He bought the property at the height of the market and its not in a good area of town. He owes way more than the home could ever be worth up-side-down about $100k. He is being threatened and harassed by neighborhood kids weekly and has his property stolen as well. Since he is not behind in payments and is not in a financial hardship City has denied the short sale twice stating there is no eminent default. The agent has repackaged and resubmitted already and got the same answer. Any help would be appreciated.
I have done numerous short sales where the seller was not behind in payments and there was not a financial hardship like loss of job or death of borrower. I do not understand why they would deny him this short sale for these reasons.
I'm interested to hear what other Brokers has to say on this topic. The fact the owner bought in a less than desirable area at the top of the market and can well-afford to make the payments with no finacial hardship is certainly not a reason for a short sale (in my humble opinion).
If it were the case to get a short sale approved for this reason, then why wouldn't everyone who wants to move ask to sell their house for less than what they owe and have the debt forgiven?
I've had a lender decline a short sale because "having children is a choice" when the homeowner recently had healthy triplets but could no longer afford to support the new babies and the mortgage too.
The neighborhood was not that bad when he bought the home. Its was a new home track in a location of town that was being built up. Since the market crash and following economy slow down "especially in our city where Oil and Ag are the biggest economic boosters" the majority of the homes are now tenant occupies or have been selling to a completely different class of people and the neighborhood has gone totally down hill. He did not buy in a crappy neighborhood and pay 100k over value for this home. He unfortunately ended up in the situation and is in fear of vandalism and physical violence and needs to get out but cannot sell for what he owes. How is that not a hardship?
Borrowers get denied for being to afford the property all the time. Being current on the loan is a red flag in the short sale world and holds more validity with some investors over others. Banks are in the business of lending money and getting paid. If you loaned someone money and they were paying you would you take a loss? For example: not being able to prove imminent default on Fannie Mae and Freddie Mac files when a borrower is current on their mortgage results often in a denial.
I thought there was guidelines pass and regulation on the banks that said they could not require a homeowner to be late on payments in order to do a short sale. Is that not correct? If he wants to be able to purchase again right away he cant be late on his payments either to qualify for the programs offered by the lenders.
We negotiate for Agents all over the country as well, Ben@ShortSaleShop.net.
For this one, I would:
1) Reach out to the Investor on the loan directly, they are the actual decision makers (contact me if you don't know how to do that).
2) Try one of my FAVORITE lines by telling the negotiator
".....great, so the Seller needs to be behind on payments before you will work with them? That is FANTASTIC NEWS!!! So I can tell the Seller to ust stop paying you for a few months and THEN we can proceed? So the Seller can just sit and live in the home for free WITHOUT PAYING YOU and then we can move forward? That is the best news I have heard all day...."
Lay the sarcasm on THICK and see how they respond.
I would also have a no BS conversation with the Seller about missing payments.
Best of luck!