Questions about getting started with possible Short Sale
Hi, I have a few questions regarding the short sale process. Scenario: Lived in Ohio in 2006-2009 (military), bought a house for around $225K. Received orders back to Virginia in Jan/Feb 2009, put house on market - our Realtor told us that we would have to try and do a short sale because the houses were only selling around $190K in and around our area. We had someone drive by the house, asked if we would be willing to rent and we took it off the market and rented for 2 years (they covered our $1800/mth mortgage). The tenants could not afford that payment anymore after 2 years and were going to move - we got our mortgage refinanced - payment went down to $1450/mth, we lowered the rent for the tenants and they signed another lease for 2 years - this will end in May 2013. In the meantime, we have rented in VA for 3 years and have now received orders to Illinois. Although we were really lucky to find good renters for the last 3 1/2 years, we can't afford to keep the house once they leave...or to keep refinancing to accomodate the market/renters, travel back and forth to make repairs or anything else the tenants may need and rent another place in another state that has so far been more expensive. My question is can we put our house on the market in January 2013, ask for what we owe..$210K, if we are not able to sell it within a month or two, start the Short Sale process? Or do we actually have to wait until May when we will not be able to afford to pay the mortgage to be able to do this...BY THE WAY...this would not make any sense to me that a bank would wait that long before trying to be proactive about helping their customers. We are financially responsible, however we will never move back to OH as it's not a predominant place to have to transfer to for Navy, nor will they send us back to OH at our request. Any help would be appreciated. I have a ton more questions, but if someone can offer help/answers, this forum might not be the best place to put all this and they can contact me through email. Thanks!
Replies to This Discussion
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Permalink Reply by Jim McCormack on
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Hi Tammie. The first question is: What type of loan do you have (i.e. VA, FHA, Fannie Mae, Freddie Mac, etc.)? The second questions: Will your expenses exceed your income when the property becomes vacant?
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Permalink Reply by Tammie Cornitius on
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Hi Jim,
It is a VA loan. Yes, our expenses will exceed our income when it becomes vacant unless I an find a good job between Feb (when we transfer) and May (when it becomes vacant).
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You can try a short sale now. The new FHFA Short Sale Guidelines will not apply. Please use these guidelines: http://www.benefits.va.gov/roanoke/RLC/forms/COMP-SALEProgramTraini.... You should list the home as a short sale for its current market value, not what is was worth before and make sure the contract is subject to short sale approval. I recommend contacting your servicer (the lender you pay the mortgage payment to) and request a short sale package and begin working on those documents. Once you get a suitable contract form a qualified and committed buyer your Realtor should submit that to the servicer who will then review and make sure you meet the VA's guidelines. If they believe you do they will seek approval of the short sale. The worst that can happen is that you are declined. There is no cost to do this and your Realtor should not require any up-front money so a decline won't cost you anything. You can then try again after the tenant moves out when the financials are worse.
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Thank you for the information. I will read through it and figure out what to do. Our lender is Wells Fargo - so I will start with them.
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Permalink Reply by Tammy Davis on
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Tammie ~ if you want to email me I will try to answer your questions as much as possible.
My email is [email protected]
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Thank you, I will!
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Permalink Reply by Brenda L Wood on
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Hi Tammie,
Sorry that you are going through this, but how fortuitous to pick up a renter driving by!
In June, the Federal Housing Finance Agency (FHFA) announced changes to short sale policies that make it easier for military homeowners with Fannie Mae and Freddie Mac loans to honor their financial commitments when they are required to move as part of their duty. An excerpt from that press release, "Under the new policy Fannie Mae and Freddie Mac will not pursue a deficiency judgment or any cash contribution or promissory note from members of the military with a change in duty station for any property purchased on or before June 30, 2012. Service members must have a Fannie Mae or Freddie Mac loan to be eligible." http://www.fhfa.gov/webfiles/24026/CFPBFinalwFS.pdf
If your loan is with Fannie or Freddie the above would apply to you. If so, another good website to explore is http://www.knowyouroptions.com/find-resources/government-programs/m....
You will need an experienced short sale agent. Where are you in Ohio? Perhaps one of our highly trained agents in that area will respond. Or, you could go to ShortSaleSuperstars group for referrals - check out the map and see if one of us is in your area. All of your questions for your particular situation is best answered by a specialist in your area.Brenda Wood, ABR, SFR, CDPE
Serving Northern & Central Virginia
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Thank you Brenda. Yes, we were very lucky to have renters find us. Our loan is a VA loan, so I guess that wouldn't apply. Our house in Ohio is in the Liberty Township area (45011). We have been in Virginia for almost 3 years now.
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Are you in Northern Virginia?
Good luck!
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A VA Guaranteed Loan cannot be owned by Fannie or Freddie. Since the FHFA is the overseer of Fannie and Freddie and has no control over the VA, nothing in the FHFA Short Sale Guidelines will apply to a VA Compromise Sale.
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Thank you for the information. I will be reading through all of this! No, we are currently in Virginia Beach.
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