Short Sale Questions ???

[ledgeway]

I have never completed a short and I am considering the possibility of trying on a home I currently own and can no longer afford. These are a couple questions I have.

1. Does a bank, lender, or servicing company ever accept a short sale package on a loan that is not in default or even late yet? Or do you have to stop making payments for a lender to realize your situation?

2. Which situation is Ideal, or more likely in completion of a short sale?

A. two liens.... 560k first 140k 2nd short the 2nd lender in selling the house submit an offer of 630k, and hope the 2nd accepts a pay off of 70k(a fifty percent discount)

B. one lien.....700k short the lien holder in selling the house submit the same offer of 630k, and hope the lien holder accepts the reduced pay off of 630k ( a 10% discount)

I realize that in the first scenario the discount is much greater.....but in the instance of foreclosure wouldn't the 2nd lien holder stand to lose much more if not everything? Would that logic not bring the 2nd lien holder to possibly a much greater reduction percentage wise than the sole lien holder in example B?

[power broker]

Your lenders will do a short sale under the conditions that you can no longer afford to make the mortgage payments. thats the reason a short sale takes place. your property goes in to default which will eventually turn into a foreclosure statues. once this happens your going to have to find a buyer, there will be plenty of investors and real estate agents knocking on your door to do a short sale with you. your lender in turn will need from you a hardship letter,pay check stubs, bank statements, and a offer from your buyer on a purchase contract with a HUD1.The reason for your documentation is to show you can no longer afford the home. once the lender in the first position excepts and gives you and approval on your offer, then you have to submit everything again to the 2nd lender with the approval letter. it's important to know the 2nd can hold up your sale if they choose not to agree with what the 1st has excepted.Nine times out of ten this situation works in your favor. the banks want money, not REO's. good luck!

[bn3342]

Answer about Short sales
This answer is how it is done in Texas ,that is where I do mine but a lot of the same rules apply in other states only their time frames are different . Texas has a very very short time frame on getting it done.
I will try to answer your questions but I will also tell you the process.
First yes you do have to be in default by 30 days (your payment is due on the first and late on the 15th so the 15 of the next month you are in default.)
It is better to have a short sale on your record (ding you about 80 points and about 1 or 2 years on your record where a foreclosure will ding you about 250 points and 10 years on your record)give or take.
First you have to get a Realtor (Me)and fill out the hardship packet in full and submit it to the lender if it is not complete you will go in a very tall stack and get forgotten about but they love Realtors that cross all T and dot all i.(ME) then you get their attention and the process goes smooth .once they get your packet they will say we need an offer and that gives the Realtor(ME) the go ahead to list the property in the sites to get it sold, because in most cases when they say get us an offer they are saying they accept you.
The lender will not deal in most cases (For sure Conv.)until you have an offer and a pre Qualed buyer. The more the merrier that way you have a back up.
You have to have a for-real hardship. little or no equity in your property.
You also have to except that you walk away without a dime but you also do not pay a dime. 0 on the seller side on the Hud 1.You can not pay anything of the buyers closing cost. 0 is 0
Yes on a second note we go after them first and try to go as low as posible 50% or better because if it goes to foreclosure they get nothing so they most of the time will deal. If you have only a first (the easiest ones to do) They in most cases will require 80% (I am doing one now at 82%) depends on the lender.The way it works is the home is put on the market at below market value and lowered if no bites in a couple of weeks .The goal is to get a reasonable offer and your Realtor (ME) can tell you what that should be .The lender gets their price by getting it appraised and then timesing(x) the appraisal by 80% then they add on about 8% more to cover seller closing cost 2%and realtor fees 6%. (700K x 8% /.92%) is what you have to get and not a dime lower ,the more over this you get the happer the lender will be. There is a lot of work in making one of these work so you for sure want someone that doesn't mind the work and that knows what they are doing to work it for you (ME)It takes time so the earlier you start the better your chance .If you have any other questions e mail me at bn3342@sbcglobal.net

[waynelong]

Excellent answer on short sales. I went to a class on VA short sales yesterday. Every lender or in the case of the VA - guarantor - has different rules and criteria but I thought your answer was a very concise answer of the ballpark terms required to get the short sale done.

[bn3342]

Thank you
Yes VA is a little different they will not go lower then 82% and you have to work with a VA rep.but that can be good if the lender gives you trouble just report them.VA guarantees the loan so when the lender insists on 90% + you cry to VA (just kidding) but what ever works to save your seller. Lenders are lenders if you go on Monster.com they have jobs by the dozens for Mitigators and you only need a high school dipolma and no experance . Are they desperate or what . Example Tarrant county Tx 2006 897 foreclosures 2007 1,348 scary what will 2008 bring. FHA requires 2 extra forms be filled out and a counselling session.The one I am working now the file has been all over the country ,east coast ,west coast 2 states up north. till I finally got assigned a mitigator.

[Micheal Pannell Realtor]

Way to go mother, I am going to adjust your signature for you

Now when you post it will have your contact info in your signature.

[waynelong]

Yes VA is a little different they will not go lower then 82%

The VA rep at our meeting said their requirement was 88%.

[waynelong]

you have to work with a VA rep.but that can be good if the lender gives you trouble just report them.VA guarantees the loan so when the lender insists on 90% + you cry to VA (just kidding) but what ever works to save your seller.

The VA rep can help you get extra time and help get the lender moving along as well.

[bn3342]

my bubu you are right I was quoiting FHA and their max is 82% VA is 88 to 91% so sorry

[waynelong]

Thanks for the FHA info. It is good to know the numbers. That way we can structure the deals so they will happen which makes us look like we are professionals. Maybe we we are professionals.