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Will lenders consider a short sale when the seller isn't in default?

Posted by Alex Krumm on July 4, 2011 at 6:35am in Short Sale Discussions

I have two separate customers who are way upside down in their mortgages, but they're current on their payments and can likely stay that way.  If we were to begin offers for sale to the lenders (one is Chase and the other is BOA, and both are single-lien situations) would they consider our offer?

 

 

Alex Krumm

Re/Max Alliance Group

Broker Associate

GRI, Certified Distressed Property Expert

Winner, Five Star® Best In Customer Satisfaction: 2010, 2011

 

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Replies

  • Rhonda Duffy January 29, 2012 at 2:46am

    The best thing to do with ANY lender is to have a package that is precise, detailed and PROVES facts.  The more that you add that is factual, the better the chance that it will be approved with no hassle.  The next thing to watch after proving the facts is to make sure that everything is easily legible to the lender.  We spend a lot of time increasing the size of the writing with our copier and making sure that the borders are not being cut-off.  If you get one stall from a lender that they can not read something or they are skeptical about what has been written because you didn't PROVE the fact, you are off their radar for the next few weeks.  So, moral is, spend a lot of time proofing and re-proofing the package and asking the question, how can I prove that?  If it takes waiting to get something like a police report or a divorce decree or employment or unemployment letter, then wait before you send in the package.  It will be worth it in the long run.

  • Daniel Sandoval August 1, 2011 at 12:32pm
    They will accept the short sale but sometimes will ask for a contribution. I have one where the owner is current and there asking up to $25k for closing...That is with indymac...
  • Cliff Stanwick July 31, 2011 at 2:47am
    Still need a hardship and a real good one. Try having a CPA or tax professional prepare the financial statement of the short sale package, and IMO if you go the "eminent default" route it does work better with the attorney contacting the Servicer. Depends a lot on who is the beneficiary/investor and whether the master loan servicing agreement allows them to negotiate with the owner if the owner is current.
  • Kimberley Kelly July 31, 2011 at 2:12am
    Good luck with Chase John.  Chase is the ONLY lender that turned down one of my Shorts last year and another this year..b both for the same reason..hardship.  Both homes are still standing vacant and falling in disrepair.  Both my Sellers were willing to bring large amounts of cash to COE to get the Short Sales..but ended up letting them go to Foreclosure.  I have found Chase to be insanely HIGH when it comes to their BPO's..
  • Tni LeBlanc (805) 878-9879 July 31, 2011 at 2:08am
    Just got an approval from BofA for a current borrower.  Closed a Wells/Fannie one the month before.  And last week, got an invite for s streamlined processfor a current borrower.  Yes, it can be done.  Not every file -- but many more than people would have you believe.  What is the hardship claim?
  • Bryant Tutas July 30, 2011 at 3:09am

    Short sales on investment properties where the seller is current on payments do get approved. However my experience has been that the seller had to participate in the loss with a cash contribution, prom note or both.

     

    On primary properties there is usually not an issue. Especially if there is a hardship. Medical issues and death of a spouse trump just about any short sale guidelines. A divorce decree is also a good one for overcoming the "must be delinquent" that some lenders throw at you.

  • Jeff Payne July 30, 2011 at 1:49am
    We have done many that were not owner occupied, have a wells approval right now for an investment property that is current
  • Shari P July 29, 2011 at 4:08am
    I just got one approved and the seller was not late. Although he had moved out of state for a job so maybe that was part of the reason it was approved. He had savings but not very much outside his 401k. The only way the banks would go for it was with prom notes, so be prepared for that. They were approved prior to a new law that does not allow prom notes, so I'm not sure if banks are going to be so willing to approve without them.
  • Jeff Payne July 28, 2011 at 9:08am
    Thom, once again you hit the nail right on the head.  If she can pay, why will they consider a short sale?

    Thom Colby Newport Beach CA said:

    Gena and John -  

     

    In both of your examples, you said the seller / borrower was using "savings".  I think that's the reason both are being declined.  If a borrower has money in savings, why would the lender take the hit?

     

    Thom Colby

    Broker

    Newport Beach CA

    Gena pasquini said:

    HI....For those of you who replied that you CAN get a short sale closed when the seller is not delinquent, can you please share if there is anything in particular that will help get it done!?!  I have an Indymac/one west deal but actually owned by deutche bank and we have resubmitted 5 times already and they keep denying because owner is not late.  She can't carry the 1500 negative anymore (non-owner) which has been coming from her savings.

    Any ideas/suggestions? 

    Thanks.

    John P Cadman said:

    I have a Chase first and Chase second short sale with a seller that is current.  They gave us a sales price they would consider that was higher than the buyer was offering, so we re-marketed and found a buyer willing to offer what Chase indicated they would accept only to have the short sale denied.   The excuse was "hardship".  They believed the seller was not in an eminent default situation.  The seller has been digging into savings to make the payments and decided to stop doing that now that he was denied.  It has been a month since the first missed payment.  We will re-submit and probably have to get a new buyer in a month or two when Chase realizes that people will not destroy their financial futures for a roof today.
  • Thom Colby CA Brkr 888-391-5245 July 28, 2011 at 8:50am

    Gena and John -  

     

    In both of your examples, you said the seller / borrower was using "savings".  I think that's the reason both are being declined.  If a borrower has money in savings, why would the lender take the hit?

     

    Thom Colby

    Broker

    Newport Beach CA

    Gena pasquini said:

    HI....For those of you who replied that you CAN get a short sale closed when the seller is not delinquent, can you please share if there is anything in particular that will help get it done!?!  I have an Indymac/one west deal but actually owned by deutche bank and we have resubmitted 5 times already and they keep denying because owner is not late.  She can't carry the 1500 negative anymore (non-owner) which has been coming from her savings.

    Any ideas/suggestions? 

    Thanks.

    John P Cadman said:

    I have a Chase first and Chase second short sale with a seller that is current.  They gave us a sales price they would consider that was higher than the buyer was offering, so we re-marketed and found a buyer willing to offer what Chase indicated they would accept only to have the short sale denied.   The excuse was "hardship".  They believed the seller was not in an eminent default situation.  The seller has been digging into savings to make the payments and decided to stop doing that now that he was denied.  It has been a month since the first missed payment.  We will re-submit and probably have to get a new buyer in a month or two when Chase realizes that people will not destroy their financial futures for a roof today.
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