Unfortunately, successful short sales still require that there must be a “financial hardship”. It’s not enough that the value of the secured property is upside down (the property is worth less than the debt). The borrower also has to be in a financial hardship situation, which includes the requirement that the borrower is behind with their mortgage payments.
Numerous lenders still say they will not consider a short sale until the borrower is at least 60 to 90 days late. This makes no sense, but unfortunately it’s the current system. All a short sale should really mean is that the current value of the home is short of the amount of the current debt. That, especially if you have to sell, should be enough of a hardship. In fact, there are certain lenders who may pull a credit report on the seller to see what other debts their borrower (the Seller) may be behind on.
Most of the time the hardship issue is not a problem as the Seller is or is about to be behind on their payments. But if the Seller plans to stay current, warn the Seller ahead of time that their lender will probably not allow the short sale. It’s unfortunately the system we’re working with now. Hopefully it may change in the future.
Please contact me (Charlottesville Attorney) if you have any questions.William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
www.TGBlaw.com
William D. Tucker, III is an affiliate member of CAAR
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