Short Sale on investment property with Citi. Agent suggests stop making payments to show hardship. Should I?

Hi,


I have an investment property in North Cal and the mortgage is with CitiMortgage. I do not have a second loan on the property so it's just CitiMortgage to deal with. The house is currently leased on a month to month basis and the rent barely covers the monthly mortgage payment but no other expenses. I also have a second house that's my primary house that I currently live in.

 

I initiated the Short Sale on the investment property thru a local agent. The bank assigned the Processor and the bank also did the appraisal (I guess BPO process) recently.

 

We both have jobs and also have little bit of savings. I am bleeding money on the investment property but making payments regularly to avoid other consequences. Now my agent suggests me that I should stop making mortgage payments to show the hardship.

 

Could you please suggest if I should follow my agent's instructions and stop making payments? If I shouldn’t, what should I do? Or is it a standard procedure to do Short Sale?

 

Thanks a lot for your help and feedback.

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Replies to This Discussion

Thanks Thom Colby.

Looks like you all suggest I should NOT stop making payments just because my agent asked me.

But what about, say, if Citi said the loan is not in default so we don't go thru SS.

Should I then can stop making payments? Or you think it's ploy by the bank to get my loan into default so the bank can take other actions of their liking, say, a foreclosure? Or something else that may help them go write it off under a Fed gov plan??

Hi Thom,

I do know that...but I still get lenders that ask. As soon as I ask if it is a condition of the short sale approval they back track quickly and say no...we just have to ask. Just part of the game ~

Always make your mortgage payments until the bank requires in writing that you must be delinquent in order to process a SS. In your case, perhaps you can cut expenses so that you are in the black on this property?

Thanks Pattilynn for your time and suggestion.

I am not sure if I understood the last part regarding the expenses. Could you please elaborate a bit?

One of the requirements for HAFA is that you are an owner occupant so why that topic even came up is beyond me.  HAFA should never have been an issue.

Find out who the investor is on this loan.  If it is Fannie Mae, they have just changed their procedures in that a borrower does not have to be delinquent.   This goes in to effect Nov. 1 of this year.   You, however, must have a legitimate hardship.  They are pretty liberal in what constitutes a hardship. 

If you don't have a legit hardship then it will be rough going. 

Also, I spoke with FHFA and if a Fannie or Freddie short sale is submitted prior to November 1st, it will be handled under the old rules!

Also, HAFA goes away at year-end 2012.

Helpful info. Thanks Thom

On 3 of my sales they got slowed b/c the lender sent HAFA paperwork directly to seller and was waiting on its return- even when the hardship letter and all documents clearly showed owners hadn't lived there in over a year and they were tenant occupied.  Crazy.

Sounds like several things going on here...looks like they tried to submit you into the HAFA program...which, per Citi's HAFA requirements....this property does not qualify for.....  Your agent can still do a traditional short sale...all they have to do is show an IMMINENT DEFAULT....something coming up which could make u default in the future...a medical reason, tenant moving out and therefore not paying any rent during this time or tenant stopped paying.... lots of reasons...or show some type of hardship>>>>>

also the new short sale rulings which take effect Nov 1st 2012 of this year......states that servicers cannot FORCE borrowers to become delinquent in order to approve a short sale....  Check it out....we are already in Sept...this is 8 wks away... lots of things can be done to get this thru...

 

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