Hardship Reasons other than Financial - Help - Forum

joe beauchamp September 7, 2011 at 4:34am

The bank has an agreement to be paid, your owner can pay regardless of where he lives, why would the bank want to voluntarily lose money? Isn't that what you are asking for? If your seller can live in Hawaii and keep paying the mortgage on a vacant property, that is not a hardship to throw out his obligation to pay. If he owed you the money, would you think it is OK if he simply decided to stop paying you and could continue to do so? Any hardship that the bank is going to consider comes down to $$ - that is all that they care about. These hardship reasons are reasons why there is no money to continue to pay the loan.

The bank will reconsider if your owner can show a hardship created by paying the loan - like he has no money for health insurance now, he cannot pay for medicine, etc. This is similar to the banks which say "talk to us if you have a problem" and won't do a think UNTIL you fall behind. Why should they? They have a good loan and have to voluntarily take a hit "for nothing"? No one should tell you to stop making payments even though that is needed to get the bank to consider a short sale, etc. (Don't tell your seller to stop making payments - he can sue you for the results - being foreclosed upon, bad credit, etc. - yet, it is the way to get the bank to deal with your owner...) So, if your hardship does not eventually turn into obvious bank dollars, it isn't a hardship..

Cameron Piper - Keller Williams September 6, 2011 at 9:01am

Maria,

I'll take a little different spin on this and say who cares about hardship, no hardship, or even what is a valid hardship. The bank has a binding contract with your seller and they will define the terms under which they will voluntarily extinguish the obligations under said contract. We can talk all day long about what we feel is valid but the only opinion in that conversation that matter's is the bank's.

So where does that leave us as short sale negotiators and agents? In my humble opinion it is our job to convince the bank that our short sale is a better option (typically financially) than the bank's other remedies to default in the contract, and that left unchanged the loan will end up in default. The best evidence of this is a short sale that close without the seller missing a single payment. In these cases the bank believes that taking the short is better than the eventual foreclosure. Where is the "financial hardship" when a seller can still make the payment all the way to the end?

Moral: Stop discussing what is and is not a valid hardship with the bank and start proving two things to them. If they don't take the short sale they will get the house back through foreclosure. And second, that the foreclosure is less financially beneficial to the bank than the short sale. The rest will be up to the bank.

Cameron Piper

Coldwell Banker Burnet

Licensed MN Broker

Elizabeth Meyer September 4, 2011 at 6:32pm

I just got a short sale approved for a doctor. He had good income,so it was tough. I was denied twice and finally got it approved. I had to explain to them how he lost his contract with the hospital and switched to another which required him to live within a certain boundary. I always stay polite but firm and I did have to escalate it to management.

Maria Evans > Elizabeth Meyer September 5, 2011 at 3:41am

Hi Elizabeth, that's what I want to hear... thanks! I am closing my 39th short sale next week, one that was first denied as well. I like the chalenge of short sales and love this site because we can talk, help & support each other. I also appreciate all Lydia's comments and I know exactly what she means. When doing short sales our job should be try and try until we get it approved. Like Jimmy Cliff’s song:

♫ You can get it if you really want …But you must try, try and try Try and try, you'll succeed at last ♫
- Lydia Terry > Maria Evans September 5, 2011 at 10:15am
  
  Our system punishes the honest. That's my only issue.
  - Richard > Lydia Terry September 5, 2011 at 11:30am
    
    I agree with you Lydia. It sure seems that way. And, it's sad that the honest is caught in between and bailing everyone else out. The system needs to be cleaned up. There's no doubt about it. I would like to see the hard working honest get a break for a change!
    - Lydia Terry > Richard September 6, 2011 at 7:47am
      
      Richard, When this all first started, I was appalled when I heard people say they were going to let their home go when they were upside down even when they were still making the same amount of money.
      
      I paid my mortgage about 5 months longer than I could afford it. I am not in a financial situation that a good job (short sale specialist) isn't helping me get out from underneath. I see clients all the time deplete their savings, even spending their children's college savings. When I reflect, had I short sold my house a year earlier, I would have another year behind me for the ding on my credit, and would have already started rebuilding my life. When we can't afford our lives, the sooner we get out from them, the better. We have to collectively agree that the value in the home must be there for just about everyone to pay a debt obligation that high. When we do this, appraisals will be more accurate, loan approvals will be based on real income, loans will made to be affordable.
      
      We have to be able to get the hardworking families, the ones who pay their mortgages, a way to get out of their situation just as much as the people who aren't. I am sick of seeing homes destroyed so a family can pay their mortgage 6 months longer.
      
      I can empathize with the bank. I really can. I do, I have to all the time. I talk to them everyday. I still feel the same.
Thom Colby CA Brkr 888-391-5245 > Elizabeth Meyer September 5, 2011 at 3:19am

Elizabeth - I know what you mean ! I had one last year for a Dentist. He "had" made a very good income until the VA and Medicare/Medicaid stopped paying him in a timely manner (part of their payment strategy). After they delayed payment for months on end, his practice failed purely because the government owed him so much money in back payments. It was interesting trying to convince the lender that the Gov't was putting this gentleman into BK !

Congrats to you !

Best of luck,

Thom Colby

Broker

Newport Beach CA

Richard September 4, 2011 at 2:36pm

Lydia,

I don't buy your example. In your case, one half of the country would qualify for a hardship. There are tons of people out there that wants education for there kids. I wanted the same for my kids, however they had to earn athletics and academic scholarships. They earned them and they attended and graduated. It was a lot of hard work for them (PAC 10), but now they know nothing comes easy.

Lydia wrote:

Lets say that it is $50k they are upside down. That's a college education for their children, the grandchildren of the deceased. There is a hardship here, and its just your job Maria to try to convince the bank that its in their best interest to short sale.

Lydia Terry September 4, 2011 at 12:25pm

This is clearly not a case where someone is trying to take advantage of the system. Nobody, even with money, wants to pay the loss of equity. There are very few credit scores that are worth the amount your clients are upside down, when you look at your family's future. Lets say that it is $50k they are upside down. That's a college education for their children, the grandchildren of the deceased. There is a hardship here, and its just your job Maria to try to convince the bank that its in their best interest to short sale. Simply tell the bank they are not going to be paying for the house for the reasons you have said, and you as a licensed real estate agent will try to find them the best deal so they don't have to go through the foreclosure process. Nobody can afford a equity loss like we have had to. You just have to find a way to show that on the financial sheet.

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