Hardship Reasons other than Financial - Help
I am trying to approve a short sale and the bank said the seller has no financial hardship. Seller has never said so and always made full disclosure, in his hardship letter, that he needs to move out of the State due to a family emergency. It turns out that it is taking too long and both parents passed away - absolutely true - the last one two weeks ago. I know that someone can have various types of hardship, not only financial. It is not a reason to do a short sale if you don't like your house, think you did a bad deal or want to buy a condo, for example. But a divorce, death and illness in family are true hardship reasons.
Has anyone got an approval for a short sale where there was a hardship other than financial?
Is it possible that a Judge will order the bank to do a short sale?
Any thoughts on this will be much apreciatted!
Replies to This Discussion
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Permalink Reply by Smitty on
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I don't think a judge can order a bank to approve a short sale or everyone in the country would be doing it, but you're going to have to dig a bit deeper here.
Death in the family is a hardship if that person's income was in some way contributing to the mortgage.
What is teh family emergency? That is where I would start. If he has to leave to take care of someone and the leave is extended, then that would be a hardship because he cannot afford two mortgages or mortgage and rent. You have to keep pressing. I would have gotten this info up front though.
Is he MOVING to where he is living or staying there temporarily. You have to build a case for your client. Show he's paying expenses where he is, and then also where the home is located.
Did the parents leave him money? That may cause an issue. You have to go up the ladder with the lender as well. I had FOUR Wells negotiators close my file and tell me the homeowner was current so they couldn't accept it and I pushed and found the right person and got it approved.
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Permalink Reply by Jeff Payne on
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I am in 100% agreement with Smitty. You need to get more details.
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Permalink Reply by Maria Evans on
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Thank you Smitty,
I have to agree with you and like the idea of building a case. The bank may want to approve the short sale - the other way they will lose much more - but I need to give them very strong reasons. I will try to escalate the file, talk to a different person, etc. I am very persistent.... If anyone has other ideas I really appreciate. Thanks!
Smitty said:I don't think a judge can order a bank to approve a short sale or everyone in the country would be doing it, but you're going to have to dig a bit deeper here.
Death in the family is a hardship if that person's income was in some way contributing to the mortgage.
What is teh family emergency? That is where I would start. If he has to leave to take care of someone and the leave is extended, then that would be a hardship because he cannot afford two mortgages or mortgage and rent. You have to keep pressing. I would have gotten this info up front though.
Is he MOVING to where he is living or staying there temporarily. You have to build a case for your client. Show he's paying expenses where he is, and then also where the home is located.
Did the parents leave him money? That may cause an issue. You have to go up the ladder with the lender as well. I had FOUR Wells negotiators close my file and tell me the homeowner was current so they couldn't accept it and I pushed and found the right person and got it approved.
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Permalink Reply by Lydia Terry on
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Sounds like your clients need to move, or needed to move. There probably is hardship there. They will probably negative cash flow their current house with market rents, and thus be unable to afford their new place.
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Hi Lydia, after some years on a property, anyone may want or need to move. My clients needed. Nobody was ever questioned about this. But today being a homeowener has become a problem for all underwater people. Good to read in NYT today: US is set to sue dozen big banks over mortgages because they failed to perform the due dilligence required under securities law and missed evidence that borrowers incomes were inflated or falsified. They are being sued and everybody else is supposed to give up about their own lives because of their mistakes. Tha'ts immoral! I still would love suggestions on how to proceede wtih a short sale with a hardship other than financial. I am building a case as Smitty suggested. At this point I think Yes a Judge can order banks to do a short sale even if people have no financial hardship. Any ideas pls send to me!!
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Maria, what exactly is the hardship? Why does he need to move? Is the move permanent? If he moves, will he need to pay for housing where he goes? The big question, Can he afford the home even if he moves?
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Exactly. If he can afford the home even if he moves with current market rents, that there is no financial hardship. They will still likely short sale, but ask for a settlement or deficiency. The banks have no obligation to short sale.
You brought up inflated income. Did your borrowers have an ARM that adjusted? That is financial hardship.
The thing is, if your clients can afford their new place and their current mortgage its difficult for the banks to grant a short sale with no help from the borrowers. You are likely looking at a deficiency judgement or the like.
I had a client that could afford their home but they were going through a divorce and neither could afford it on their own. Fannie Mae asked them to contribute to the sale. We were able to negotiate it because we told them they needed their surplus income to find a new home. I have another client who could afford his mortgage, but was relocating due to business. We're not there yet, but expect the bank to ask for a contribution as well, and we will try to negotiate it, but he will likely have to bring in some money. Its all circumstantial. We can help if we know exactly what the hardship was. Saying banks are bad isn't going to help.
Has your client tried to rent the home? That's key here.
I don't think the banks will allow for hardship other than financial, but most hardship is financial. Moving is financially difficult. Death is financially difficult. A mortgage you can't afford it financially difficult. These are all things you have mentioned. You just have to have your clients ask themselves why is it difficult to pay their current mortgage with all that is going on, and then write the letter.
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Hello Lydia, I agree with you, of course nobody can say to the banks it's their fault and I will never do this but we all know it is. That's true, at the end it will be financial hardship since most people will not be able to afford mortgage and rental... I have to go, I will be back... thanks! Maria
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Maria, bank's fault that the borrower has a hardship? Or the banks fault that they gave him a mortgage? Not sure that I follow your logic? Still wondering what the hardship actually is? Can you seller afford the home after he moves? If not then he certainly has a fianancial hardship. If he just doesn't want to deal with it anymore, that is a different story.
So I will ask again.
Maria, what exactly is the hardship? Why does he need to move? Is the move permanent? If he moves, will he need to pay for housing where he goes? The big question, Can he afford the home even if he moves?
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Lets talk about your situation and not "most people" and we may be able to help.
Maria Evans said:Hello Lydia, I agree with you, of course nobody can say to the banks it's their fault and I will never do this but we all know it is. That's true, at the end it will be financial hardship since most people will not be able to afford mortgage and rental... I have to go, I will be back... thanks! Maria
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Here are the checkboxes on the financial statement:
Abandonment of Property
Excessive Obligations
Military Service Other
Business Failure
Fraud
Payment Adjustment
Casualty Loss
Illness in Family
Payment Dispute
Curtailment of Income
Illness of Mortgagor
Property Problems
Death in Family
Inability to Rent Property
Title Problems
Death of Mortgagor
Incarceration
Transferring Property
Distant Employment Transfer
Marital Difficulties
UnemploymentThere is a box for other. Sounds like you have an other, and we will help with that. All you simply have to do is explain why paying the mortgage after the hardship is difficult. That's it. After the death in the family, why did that affect the mortgage? That's all you need to do.
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Most important thing is this. The reason has to be involuntary.
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