Replies to This Discussion

Permalink Reply by Karyl Moore on October 25, 2010 at 7:17am

I've had several successful short sales where the houses were rented so approval isn't the problem - but there are other problems. It does make it difficult as far as showings and notification of when they need to leave. The worst problem I had was the Sellers actually signed a six month lease which ended two weeks AFTER the lender wanted to close. Ended up screwing the whole deal because the renters wouldn't leave and the buyers wouldn't close with people living in their house (who handles rental deposits, etc.). That one was a mess. Just don't sign a long lease.

Permalink Reply by Jennie Blackburn on October 25, 2010 at 8:21am

I'm not an attorney, so I can't tell my clients whether or not to rent out a property on which they are not making the mortgage payment. Even if I did, it's legally still their house to do with as they will. But, aside from the fraud issue, my personal experience is:

1. This ticks off the tenant and they either stop paying the homeowner (they're not paying, so why should I?) or trash the place, or both.
2. The bank has a way of finding out, which ticks them off, so they demand cash at closing -- at or above the amount collected by the homeowner.

Hope this helps...
Jennie Blackburn

Permalink Reply by Wendy Rulnick on October 25, 2010 at 10:31am

Jeanette - I usually haven't had problems with this. Rental income must be disclosed on the financial worksheet for the short sale, so the bank knows about it. There are certain banks that will require the rental income to go to them, Bancorp South is one of them.

Permalink Reply by Jennifer McNitt on October 25, 2010 at 11:41am

How does this work if the sellers are paying the difference between what they get from rent and what the mortgage payment is?

Permalink Reply by Wendy Rulnick on October 25, 2010 at 11:43am

Jennifer, I think that depends on the specific lender. If they are paying the mortgage, what's the problem?

Jennifer McNitt said:

How does this work if the sellers are paying the difference between what they get from rent and what the mortgage payment is?

Permalink Reply by Jeanette Becker on October 26, 2010 at 1:31pm

Thanks to all for your input! This is a great forum to get others' experiences!