Situational success factors are the factors that can change how successful you are at getting a short sale completed. Now this doesn’t have to do with you, but it has to do with your own situation. Like what kind of loans do you have? Are there any extra leans? Who owns the loans? Who services them? Are there any back taxes? Do you have a true hardship? Are your payments current? All these things make a difference.
One of the biggest things that can make a difference is the investor on your mortgage. Most people think that when they went to their bank and got a loan that they got it their bank, for example, Bank of America. Maybe their loan was sold and a new company is their bank. Seems straight forward enough right? However, most of the time, it’s not quite that simple. The company that sends you out the statement every month and makes collection calls is not the owner of the mortgage. They are simply the servicer. This means they answer the calls, and manage the loans for somebody else (or another company), that actually owns the loan(s). Normally another large bank or institution like, Freddie Mac or Fannie Mae, will actually own the loan. This person that owns the loan is called the investor and the investor will typically make the final decision regarding doing a short sale. At the very least the investor will create rules and policy for the servicer to follow in negotiating and accepting a short sale offer. Article continues below.
If you have a Freddie Mac or Fannie Mae loan then you have a leg up because they publish their short sale guidelines and you can read those and figure out what is possible on your loan. The way you would figure out who actually owns the loan is to ask your servicer. You can also go to FreddieMac.com or FannieMae.com and look up your loan. The government has given Freddie Mac and Fannie Mae extra incentive with all their bailouts to work with you on a short sale, and that’s a good thing.
If a loan is an FHA loan that is very important to know. The Federal Housing Administration (FHA) is not an investor however they insure the loss on the loans they back and if they foreclose they end up having to buy the house back. FHA has a published set of guidelines as well which you can google. All sorts of rules apply but in general their rules make it easier to do a short sale. If you have a FHA loan often times they’ll give you an extra 90 days, even if it’s right before the sheriff sale to go ahead and get your house sold. Even if you don’t have an offer they’ll come out and work with you which is rare for most other banks. Most banks with non FHA loans require you to have an offer before they will even talk to you about a short sale. Lenders tend to be annul about all of the official FHA paperwork required to do an FHA short sale because if they fail to comply with all of FHA’s many requirements they won’t get their losses reimbursed.
There is a good chance your loan has PMI or MI (stands for Private Mortgage Insurance or just Mortgage Insurance). These are companies that have helped to reduce the risk of loss to the investors that purchased your loan. Typically you would only have PMI or MI if you had a loan that was for more than 80% of the value of your house when you purchased it. So if you purchased your house for $100,000 and you got a loan for $90,000, $10,000, the difference between $90,000 and 80 percent of the value of the home, was insured by a mortgage insurance company. The investor or servicer will make a claim on the PMI or MI when they start the process for the short sale. Since the PMI or MI will be reimbursing for the loss they will have to O.K. the short sale and sometimes they’ll be a little hard to deal with. I’ve seen PMI companies try to work extra hard at getting you to pay something back. That’s just something to keep in mind. Usually you don’t have to pay anything back. Working with PMI is one more thing that can make the short sale process take longer.
Other than the servicer, the investor, and the MI company who guarantees it, there’s also the junior lending and the second mortgage that come into play big time. Do you have judgments? Did you take out a second mortgage or line of credit against your house? These things complicate a short sale and you have to take them into consideration as you negotiate because every extra lien will want at least some money to be released and/or satisfied.
Do you have a true hardship? This is another question you need to ask yourself. If you’re just walking away from your house because it has negative equity and you can indefinitely make payments, it may be asked why you don’t continue to make the payments. Your bank is going to ask that question. They will force you to prove your hardship. If you can’t prove it and you can’t show hard documentation for the hardship you claim, it is going to make it harder to do a short sale. Also if you do still manage to convince your lender to do a short sale in spite of a lack of hardship they are much more likely to want you to pay the difference back. If your payments are current that same question will to come up. “Well if you need so much help why are your payments current?” That goes for payments on other loans as well. If you’re making payments on other loans the bank may ask you, “Why don’t you stop making payments on those loans and make payments on the loan for the home you are living in?” and you have to have a truthful answer for those things.
You also want to look at the differences in if you are an investor or homeowner occupant. As an investor, lenders do not have the same incentive to work a solution for you. This is especially true now with the current bail out plans that incent servicers to work out loss mitigation plans with homeowner occupants. Also if you are an investor you have a much higher likelihood of having to pay tax on any loss the lender incurs.
How upside down are you? That’s another question to ask yourself. If you owe way too much, like if your property has gone way down in value as in it’s 30% of the original mortgage amount, that may make you so upside down that some lenders will not do a short sale no matter what. Or they will simply delay in working with those low offers. You may want to ask your lender, if market values have dropped X amount, can I still do a short sale, even if I’m going to get an offer for X amount? Lenders will sometimes take 10 percent or less for a loan amount but it is much harder to get that kind of discount on a first mortgage.
Those are situational success factors to consider. Very few of them will make or break your deal as long as you have time to work out a short sale, present offers, and negotiate with all the parties involved.
Visit http://estopforeclosure.com/HAFA to find out immediately if you meet the guidelines for a HAFA sale. The best way and most legal way to get paid at closing is to use the Obama HAFA incentive when you sell.
The strategies in this course are for educational purposes only. This information does not constitute legal advice. Some or all of the strategies to get paid via a short sale may not be legal depending on your situation. Always check with your legal counsel regarding your specific situation before implementing this information for yourself. If you have to hide anything from your lender in order to do complete a specific short sale with that lender you are likely committing fraud. Always disclose all aspects of your sale with your lender.
Next segment in the e-course: Why should you be able to collect money if your bank is taking a loss… why not!
Article: http://estopforeclosure.com/2010/09/sscourse_segment4/
Video: http://www.youtube.com/watch?v=GEwoAz6gK94
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