I will appreciate anyone's input to my situation.  We are currently working an IndyMac second-home short sale with FNMA as the decision maker.  Two partners are on the deed, but only one on the mortgage.

 

FNMA has requested the financials from both sellers, and the seller not on the mortgage is furious and refuses to produce his financials.

 

Anyone with experience in this situation?

Jim Pitts

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The seller not on the mortgage can be as furious as he/she wants but their refusal to submit financials will likely result in FNMA's refusal to approve the short sale.  Understand that FNMA is under no obligation to approve the short sale - you are asking for a favor and as such you need to follow their rules.

 

FNMA is concerned about the finances of the household not the just the people on the mortgage.  There are a good many circumstances where the household can afford the house based on the "other" partner's or spouses income.  Consider if only one person were on a mortgage and they lost their job.  Their financial situation would likely fairly bleak to the bank and a short sale would likely be approved.  Now lets assume that person is married to a doctor and with the dual income they have no problem making the mortgage each month - changes the short sale.

 

The only hope that you have to get this put through with one person's income is to somehow exhaustively prove that the other partner does not contirbute anything to the first partner's expenses.  Sadly the only way to do this is to produce an even more exhaustive financial review than is being requested.  The spirit of the challenge however would be that the short sale would be considered only based on the first partner's financial situation.  Remember that one $10 payment/transfer/depost between the two will nullify this argument so be very careful.  In the end you will be pleading your case to the negotiator whose hands are likely tied by a FNMA.

 

Moral of the story - produce the financials or quit the sale.

 

Cameron Piper

Coldwell Banker Burnet

Good answer Cameron.

I have also had a situation where a husband and wife divorced - husband got remarried, and didn't want to produce bank statements from his new marriage because he was a joint account holder with his new wife and "her income was none of their business".

Some answer:  Produce the documents or quit the short sale.

Good answer Cameron.  Produce the docs or go to Trustee Deed Sale and get over it.  Rules are Rules..

We ran into this... one partner on title not on mortgage, no longer together... had them quit claim their interest to the partner on the mortgage and write a notarized affidavit stating they were not a contributor to the household income of the mortgage holder and why and they backed off.... however, I agree with the previous post that if both partners are still together and contributing to the household income, then they both need to produce documents.  FNMA needs to be assured this not a strategic short sale and that there is truly a hardship.  Since it is a second home they most likely want to assess what the finances will bear in terms of a cash contribution or prom note.  Good Luck!

As I am reading this, I am looking at a financial worksheet.  the married borrower filled out the financial worksheet..wife did not.  The worksheet columns are for 'borrower' and 'co-borrower'...not spouse and spouse.  They listed the number in household, and provided taxes for both etc., but the worksheet did not ask for total household income, it asks for borrower and co borrower.  so..not splitting hairs, but ?...

reading on the national real estate law group..this is their answer to the question

The only parties needing to supply financial data to the banks are those on the actual loan papers. As for the sale of the home and based on local jurisdiction all parties on the deed will need to sign the listing papers and contract for sale.

Victoria, with all due respect, National Real Estate Law Group can have whatever opinion they want but the fact of the matter is they are not the one asking for the fincials, the investor on the loan is.   If there is a true hardship, why would the spouse have any problem with it?   It is Fannies decision and you may not have any way to change their mind.

Not trying to change anyones mind...if the financial statement reads 'co borrower' and the other person is not on the loan, they are not a co borrower.  if the financial statement reads spouse..they are a spouse and spousal income is included.  if the financial statement says total household income..they get that.  all in the wording.  they also will generally ask for taxes, where both spouses, if filing jointly are included...the information is not withheld.  Financial statements are worded differently, my attorney has always said, never offer more than is asked for.

 

I am working a loan now, and have done several, where only one name is on the mortgage with married couples, yet both names are on the deed. Also, had this with children on the deed, not the mortgage. I've never received a request for a party's financials who is on the deed only. I don't understand why the investor wants that. If there were a foreclosure, would the mortgage holder go after the deed holder or the mortgagor? The mortgagor, correct? Attorney comments welcome.
Personally I would strongly object to producing anyone's financials for a Short Sale who is not obligated to re-pay the loan, period.

If you have a husband and wife who have separated and are now maintaining separate households they should complete two separate financial worksheets and provide their separate bank statements and tax returns if they have them. They should not complete the same financial worksheet with the second party completing the co-borrower section unless both parties are still residing in the home and splitting the bills. But in response to providing financials for a party who is not on the mortgage, I see little reason not to provide such as this party cannot be held responsible for the mortgage and as Cameron has suggested the investor is simply seeking to confirm the household is in fact experiencing a hardship. The banks and investors are offering homeowners who are experiencing a verifiable hardship an alternative to foreclosure and the request for the spouse's/partner's financial is simply a means to preventing fraud and strategic defaults. We as agents obviously want to protect our clients and their best interest but it is also are job to protect the banks and our industry from fraud.

My experience is similar to Wendys.  I have never had a short sale lender request more financials then provided at the onset of the package, financial statement, bank accounts and taxes should pretty well cover what is coming in and out of a household if you have married partnters.  The hardship letters my clients write will usually also reference their spouse, such as 'my husband and I" or 'my wife and I" .. it is not as if they are trying to hide  the fact that they are married.  Now, you also have the added 'HUD interview' phone process. I have never had a short sale declined for anything to do with the seller..only buyers offer.

 

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