Superstars,
If only the husband is on title for a short sale property and he got married after he purchased the property, would his spouse's finances matter when the bank reviews the short sale file? I am assuming not, but I thought I'd check with the experts.
What is your personal experience under the circumstances?
Thank you for sharing!
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Replies
Martin,
I have had this situation several times. One key is to understand your state property laws. I am in Minnesota and in your scenerio the wife would be placed onto title via the "marital interest clause" so she would have to sign on the listing contract, purchase contract etc... I have always handled the financial piece like Kevin and Mike, whoever is on the mortgage needs to disclose their financial pictures.
Ever once in a while I will get a bank saying who is "Mary" and why is her financials not included. I then explain the martial interest clause and that I need to include her on the contract documents but she is not part of the mortgage. They usually accept that and move on.
I agree with Kevin. If the wife is not on the loan, her financials are irrelevant. At least, that is the way I would position it to the lender if her income documents are requested. Questions to be explored for further analysis: how many loans? What state? If CA, are the loans recourse? If so, beware of the second. If anly one loan, what is the loan amount in relation to the amount of the loss? etc.
In my experience, the answer is yes, the wife's financials matter. If she makes $100K and has $500K in investments, it is probably going to matter, even if she is neither on title nor on the note, and even if she is not legally liable for the debt.
In general, I would try with the husband's financials, only, and wait for the Servicer to ask. I just complete one like this. I used his financials, only. And provdided joint returns. Was not asked for income/asset verification for her. He was required to make a small cash payment, but it worked.
The Servicer may required financials from both husband and wife. I would, if I were the Investor or the Insurer.
The only financials that should matter for the Short Sale situation is the finances of the one obligated to repay the debt.
I would speak with an Attorney prior to adding anyone else on title as they may subject the Property to liens and/or Judgments. I can't think of a reason why that would be needed in this case as well.