Hello,
My fiance and I both own a home. We can afford both mortgages right now, but would like to sell her condo so we can consolidate bills, start a family, etc. We met with a real estate agent yesterday who said that our situation was not a valid reason for a short sale. We still have all our money separate, so it would just be her financials they look at (I assume)
The biggest issue we have is if we have to come up with say $10K that might be doable, but if the shortfall ends up being more than that, not sure we could swing that kind of money
I could have sworn I read were our situation was a valid one, but the agent seemed to say unless we could prove that we couldn't make the payments, there was no way we would even be considered for a short sale.
FYI- the mortgage is through Mass Housing if that makes any difference
Thank you everyone in advance!
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Lilibeth- Our mortgage payments are the same, but I have a decent size house in a nice town, she has a small condo in a city
Thom- Is she allowed to talk directly with Mass Housing? She did call and get the paperwork, but from talking to the realtor they stated that they were the only ones to have contact?
A Borrower can speak wih their Lender anytime they want ! The borrower is the one who authorizes the agent to speak with the lender.
Has she already signed a Listing Agreement with an Agent?
Anthony -
Have your fiance contact her lender's Loss Mitigation Department (MA Housing) and ask to chat with someone about doing a short sale. Explain it's not something she wants to do but she needs to do for all the appropriate and truthful reasons. Ask them if she cooperates with MA Housing and minimizes the loss through great marketing and working with an experienced Short Sale REALTOR would they consider it....... Depending on what the Unpaid Balance is, and what percentage the $15 - 25K loss is of that amount, MA Housing might be happy to work with her !
Also, engage a Realtor who will work this short sale with your fiance's best interest in mind and with an attitude that they will get this done. Try to find a Realtor who has worked with MA Housing in the past on short sales. You might start with the Loan Officer that got her into this loan - it is very likely he/she has already been down this road.
Best of luck,
(Originally from Dorchester, now)
Newport Beach and Palm Desert CA
Thom Colby
Broker
First I want to make clear we are not just trying to sell because the condo is underwater, nor have we missed or even been late on a single payment. Also just because we can afford both properties (We both lived in our own places before we started dating, so thats my basis on saying we can afford both places) But we have a very thin line, and even giving us 12-18 more months to save would only give a us a couple of thousand more tops.
Right now I would say best case, we could probably sell for $15K less then the mortgage(after agent fees) most likely we are looking at $25K or more. As I stated we could go to the closing with $10K, but I seriously doubt the lender is going to lend us the remaing money with no collateral.
I even though about taking out equity in my house, but I was laid off last summer and only have been able to find temporary work, so I can't even do that
Wayne- you mentioned something about $250K deducatble, I would hope that she wouldn't be taxed on the sale as she would lose money
Keep in mind that the Mortgage Debt Releif Act of 2007, which protects you against tax liability if the short sale is/was a primary residence, expires at the end of this year.
Anthony,
You seem to be the one having the hardship ( being laid off work and working only temporarily ) Why don't you sell yours as a short sale? You probably qualify for a short sale but not your fiance. Why don't you take that approach instead?
Wayne is talking about a completely different subject...$250,00 deductibles are with your profit when you sell- we are talking about short selling - meaning Negative money. No equity.
Yours is not unusual question. I get it all the time. Here's some thoughts and roadblocks I have encountered on this same situation;
1) It is a strategic short sale / default and the lender will recognize that as soon as they see the paperwork. The listing Agent needs to be upfront with the lender and not hide that fact.
2) Your fiance's credit will take a hit - how big depends on how many payments are missed and what the final outcome may be. Question for both of you - Although we hope this never occurs, but, what happens if her credit is trashed because of this strategy and the two of you break-up. You will be ok and she will be in real trouble going forward. Something to think about.
3) Lenders will not see this as a hardship -
Real example: I had a file recently where a couple with their 2 children were in a 2 bed 2 bath very small condo and severely upside down. She was expecting baby #3. They could afford the mortgage but needed more room with a new baby on the way. Lender said - so sorry, "having another baby was their choice - they shoudl have thought about it". No hardship exists - file declined. File escalated to Senior Management - same response with "when borrowers make choices to short a lender even though their income can support it, we will always decline the file".
Lenders are addressing true hardships and a choice to consolidate your expenses, shed some debt and live happily ever after will not be seen as a hardship in a lender's mind.
My bigger concern is puposefully trashing her credit. Is there no way you can cut expenses and rent the property and lose less per month. If that were possible, you may be able to recover the small monthly loss in a couple of years especially as rents continue to increase.
just my .02
I know it's not the place of a real estate agent to be judgemental, but choosing a 'strategic default' to help you move on with your life without unnecessary pain is also an ethical decision each and every homeowner SHOULD consider before listing and selling as a short sale. Everybody wants to get what they want right now, rather than wait. Just how desperate are you to make your wishes and dreams come through that you couldn't, in good faith, save some extra money over the next year or 18 months to avoid the short sale process, which might well also diminish your finace's credit enough to make that new housing purchase difficult right now. You might well be able to craft a short sale package with you that would imply more hardship than just wishing you could sell now in order to buy a house, have kids, live the good life. But even in the best of circumstances, short sales are hard to do for all involved, so I would just say to review all the FACTS carefully before putting everybody, including yourselves and your trusty agent, through the process. What other options might you have right now, like renting that condo?
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