Replies to This Discussion

Permalink Reply by Graylon J. Prophet on August 20, 2012 at 12:44pm

Gary,

The first question is, Is the wife on the mortgage? if she is then they both have to fill out the Short sale paper work.

If she isn't then he has to fill out the short sale Paperwork.

the Warranty Deed is not a mortgage. That would mean that the bank was owner of the property, that is not correct

the bank only has a lien against it. there are two main instruments recorded the Deed and the Mortgage, they are two 

separate items and not to be confused with each other.  Based on what you said in your post, she owns the property and can sell it to anyone she wants or give it away just by signing the deed over to them, but loan will stay in the husbands name.  Ownership starts as soon as deed is passed then is official once it recorded at the court house. 

Permalink Reply by Gary Scott on August 20, 2012 at 1:44pm

Your right, the warranty deed is not the mortgage, but it is tied to the mortgage in the form of a lien. Both parties are on it, so I think both parties will have to fill out the short sale package. I am not sure how HAFA would work in this case.

Permalink Reply by Graylon J. Prophet on August 20, 2012 at 2:15pm

If you call the HAFA department of the bank you are dealing with they should assist you in this matter

Permalink Reply by joe beauchamp on August 20, 2012 at 3:10pm

You are in an area where you can get bogus "facts" from bank personal, so anything not going the way you want, research it until you are sure you aren't getting some puff talk through some bank employee's hat.

Also, FNMA HAFA is not Freddie HAFA is not non-GSE HAFA and they all have their own guidelines, so your HAFA varies.

The bank will require those listed on the deed to sign off for the sale because they legally own the property regardless of who signed the note and mortgage (foreclosure is different in that the mortgage trumps who is on the deed). Sometimes they ignore quitclaim's, you can probably force them to obey one. But usually that is not where the problems are (unless the name on the deed is uncooperative - I had one).

A quitclaim has nothing to do with a mortgage or a note so whoever is on both is responsible to the bank for the debt, therefore both need to separately supply their own hardship and financials. Say the Ex is worth $10MM, the house worth $100K, mortgage is $400K, wife makes $30K/yr and both are on the note. Why shouldn't the bank say that they want the full $400K (from the Ex)? He has no hardship and can afford it and he has a signed promise (note) that either he/wife/both will pay off the bank. So far as the bank is concerned, the couple made a bad investment but promised to pay the bank back.

I make this simple example to make it easy to follow why a bank won't just let someone off the hook because he signed a piece of paper saying he doesn't want to be associated with the property/debt. No other approach makes sense and both people will have their credit affected by the short sale/foreclosure because both took the money and signed the obligation.

Be careful about including new spouses - the bank is not supposed to take into account people not "involved", but they are human (OK, more or less human??) and will see a joint account that the Ex has and his new wife seems to be flowing a $1MM/yr income through the account. Why wouldn't they try to put the bite on the Ex? Since they know they shouldn't, you might get false reasons for money needed at closing, etc. Things you can't prove are because they saw $$ that are not for them.  Try to stay out of their sights if you can. They don't get business accounts which are LLC/Incorporated, etc., only personal accounts. (You often have problems with this because people often have their corp incorrectly entangled with personal money/accounts/name.)

If you have cooperative sellers, you should be fine.