My client bought a property in 2005 with 100% financing for $326,000. The method of holding title is married as a sole and separate property. The first is OCWEN, the second is HSBC. OCWEN modified the loan in 2009 and the seller has not missed a payment or been late.
The owner wishes to sell to move closer to a job (37 miles away) The owner is self employed and has seen a decrease in income which might show a hardship.
Here's the rub. The spouse who is not on title or the loan still files a joint tax return. So my client has very little income while the spouse makes good money. Given there are no late or missed payments and a spouse who is not on title or the note does make adequate money would the banks approve a short sale?
The value of the property today is approximately $120,000 to $140,000.
My concerns are the hardship may be "weak" and the value has fallen precipitously. If a negotiator comes back and looks at a budget sheet the family income will show the modified payment is well within the 31% federal guidelines. Looking at OCWEN's guidelines it states a borrower must be 2 or payments behind to be considered for a short sale.
Has anyone had experience with OCWEN approving a short sale without a borrower being behind in payments?
I am new to the site. I've been reviewing topics but haven't seen this scenario. Any feedback would be appreciated.
Chino/Chino Hills, Ca
Beth. I have done many short sales where there was no hardship. I have also done short sales where the seller was current on their payments. My experience is that as long as the seller is willing to make a cash contribution, sign a note or both them chances are you can get the short sale approved.
I'm closing on a short sale this week on an investment property and the borrower has almost $1mil liquid. He agreed to bring $20,000 to closing on a wells fargo short sale and is getting a full waiver of deficiency for about a $300,000 short fall. Thats a real good deal.
So yes. I would take the short sale as long as the seller is agreeable to participate in the loss if it's within reason.
Beth - Your client's spouse's income should not be used nor counted on the financial worksheet, or in the financial picture, since she is not on the loan. Of course, you have to provide the tax returns filed jointly and bank accounts that are joint. That will make any hardship more evident.
Depends on which state as to whether Seller can contribute..however, I don't see why the spouse's income would matter..they're not on the loan. Your client is the one with the Hardship..go for it!
Thanks, Bryant, Wendy, Kimberly and Brian,
I have taken the listing and here's the update. OCWEN has said they will work with the client even though they are current. OCWEN ordered a BPO immediately which was done within 48 hours. We had an investor who now disagrees with my list price based on 2 new comps . I am listed at $135K, the new comps are $77K and $125K respectively. Both are excellent comps. I have advised OCWEN of the need for a price reduction which they seem to have no problem with. Their answer is go back to the investor and have them write the offer they feel is right for the property. Unfortunately, the investor is not returning calls. My seller wants a deal done and we will adjust the price to reflect the new comps.
So on we go.
Thanks for your input and support.
You're welcome, Beth! Good luck and thank you for updating us about Ocwen. Maybe you can sum it up in the OCWEN group when you close!
I thought you all might enjoy an update on this file. After receiving no offers at the initial list price we did an appropriate reduction and received 4 offers in the second week. Seller chose an offer which has been submitted to the banks. OCWEN after saying the client could do a short sale while being current on the loan now says she does not qualify for HAFA because she is current but may qualify for OCWEN's own short sale package.
I countered their reasoning with current HAFA guidelines that states a seller may be current " if eminently at risk or likely to default in the near future." I noted in the opening package I stated the borrower had funds to pay them 2-4 months. OCWEN agreed a, then promptly changed the reason for the denial. Now it is because she defaulted on a HAMP loan modification.
I find this interesting because she has not defaulted on her HAMP trial modification since she remains current on her loan. Do any of you have experience with this? Do I need to initiate a short sale under HAMP? Does anyone have any details on what OCWEN's short sale is or entails? I have asked for details twice this week but the folks in India say they have no information on it.