Howdy Folks -

 

Just curious if anyone is seeing short sale approvals when the seller isn't delinquent.  We just did one, but the seller was military and being transferred out of country.  Most however, the seller has been delinquent.  We are seeing more and more people needing to sell due to job transfer and moving...and they are upside down.

So please share who lender was and any special circumstances.

 

Thanks

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January 1, 2011, a new law went into effect that essentially states that if a lender agrees to approve a short sale they cannot come after the borrower for deficiency thereafter.  It also states that the lender cannot require the seller to put in additional money.  This only applied to 1st lien holders.  In July 2011, the law was amended to include all junior lien holders. 

 

There have been many here in California who fought the inclusion of the junior lien holders into the law, as they were convinced that if they couldn't come after the deficiency they wouldn't approve anymore short sales.  I have not seen, nor heard of any indication of that.  I will agree with Harry that I have dealt with some juniors (usually servicers and glorified collection company's like Real Time Resolution) that are requiring substantially more money to give approval, but for the most part it has not changed much other than not having to fight to have the deficiency language taken out of the approvals.

Around 40% of my sellers are not delinquent.  Foreclosure or delinquency is not synonymous with short sales.  The true definition of a short sale is simply: A seller who must sell for any reason, and their property is worth less than what they owe."  That's it.

www.ssprocessors.com

How are you overcoming investor 'requirements' that they be delinquent?

Kevin, very, very few investors require it.  In the handful of cases that I've come across, we have either gotten an exception, or had to have the seller make a decision.

Thank you for this statement.  We aren't delinquent but we make our mortgage payment priority one and have had to use creative financing to make ends meet.

I didn't think it was true when Everhome told me Fannie Mae requires they are at least 30 days behind, but I called Fannie and they confirmed that was correct. I'm sure it will be a different story next week.

Indy mac told me that fannie required 60 days delinguent, this was about 60 days ago.

IndyMac is simply lying to you.  Who knew?

I experienced a half dozen short sale denials in 2010-2011 when the seller was not delinquent.

Those sellers chose what to do about it on a case by case basis.

Those that chose to become delinquent got approved with a second full package submission and about 45-60 day delay and eventually closed.

I have recently received news from one of those that was forced to become strategically deliquent that his entire mortgage entry and history for that specific lender account was removed from his credit reports for lender violation of the FCRA.

I can't tell you the number of times folks who wanted to do a loan mod were told to go delinquent by the bank and then were denied and then were faced with foreclosure.  Interesting - maybe a way to get it removed from thier credit.

A Few years ago it seemed there was no way to get these done without the borrower being behind.  However, more resently we have successfully negotiated without deficiency on "non-default" loans for homeowners and investors as well.  Bank of America and Chase have participated with us on those as well as Wells fargo and some others.  It is all in the hardship and if they can show they are upside down on their monthly cash flow for the ones we have negotiated.

I'm doing one transaction now that would mirror your program, it's called HAP - The Department of Defense (DOD) has offered the Homeowners Assistance Program (HAP) to eligible service members and federal civilian, including non-appropriated fund, employees. The program is authorized by law, and administered by the US Army Corps of Engineers (USACE) to assist eligible homeowners who face financial loss when selling their primary residence homes in areas where real estate values have declined because of a base closure or realignment announcement.

The American Recovery and Reinvestment Act of 2009 (ARRA) temporarily expands the HAP to assist service members and DOD employees who are wounded, injured or become ill when deployed, surviving spouses of service members or DOD employees killed or died of wounds while deployed, service member and civilian employees assigned to BRAC 05 organizations, and service members required to permanently relocate during the home mortgage crisis.

I do believe that the member must be current on his mortgage.

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