House was purchased by husband and wife in 2007 with FHA loan.  Husband and wife divorced in January 2014. Husband filed Ch 7 Bankruptcy February 2014. BK is discharged. Listed it for sale in January. Got offer on it in March.

From January to June 17th it was with M&T Bank's "Review for Retention" department. They came back with a verdict to retain. Wife has a income of $3500 per month and they want her to do a trial Loan Mod with a mortgage payment of $1425 per month.  Supervisor John at M&T tells me wife can write a letter "declining modification and requesting to proceed with short sale." Today we're told because wife's credit score is above 580 she cannot decline to be in the loan mod program. And because the account is delinquent they cannot do an assumption to remove the husband from the account (thereby removing his income). There is no override possible because her score is above 580. 

What on earth does a credit score have to do with affording a payment? Shouldn't income matter? Her loan mod is 50% of her household income. Why would that get approved? 

hey said the only way to get into a short sale is if her credit score falls below 580. And they only pull credit reports every 90 days. So she would have to wreck her credit in order to get the file moved from retention to short sale. Can anyone help me with a work around? 

This is my first FHA since January and I am shaking my head...

Thanks. 

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has she defaulted on the mod payment? have you asked M&T to submit a variance request to HUD?

Same thing happened to a good friend of mine - the only way out for her was to file BK also :-(

I'm in the middle of a short sale like this...the court ordered the short sale since the clients were getting a divorce..if possible could you get the judge that gave them the divorce order a short sale.


Wishing you all the best on this one...

I've been through this revolving door 4 times in the past month on 4 different files.  I'm constantly being fed different answers.  I've been told that if the score exceeds 620, then they are not eligible for a short sale.  Each time, I escalate these issues, first with management with the servicer.  Most times they tell me that they did not request a variance.  When I ask "why not?', they can never give me an intelligent answer.

Each time this happens, I then escalate the file with NSC.  I can tell you first hand that these people with NSC are as worthless as the incompetent bank reps.  Most of the case managers do not understand their own guidelines.  When I ask them why sometimes the servicers request variances and why, at times, they do not, they tell me it's "at the discretion of the servicer".  When I ask which guidelines are open for variance challenges, they say that its up to the variance department.  When I ask to speak with someone in that department, they tell me that the variance department does not accept phone calls. 

In my experience the entire system is a bunch of BS.  When I complained to an upper manager with NSC, she told me to phone my congressman.  Hilarious. 

From what i've been advised if the credit score is above 580 they need to accept the modification as an opt out letter won't suffice. If it was below 580 they likely could write the opt out letter. If they accepted the modification and then couldn't afford the modification payments they would be denied and should be able to get into a pre foreclosure sale program review. If you have any questions in regards to the specific guidelines around this you should speak to a knowledgeable HUD rep.

[email protected]

310-564-6489

www.ishortsalenow.com

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