Tip 13-2012: Short Sales -- What are Hardships?
In order to have a successful "Short Sale" the property needs to be
upside down and the Seller needs to have a "hardship." But what does
the Short Sale Lender consider to be a "hardship?"
Normally, the Seller's "hardship" is not too hard to figure out.
Examples include lost jobs, divorce, medical issues, reduced income and
relocation. But what happens when a Seller is trying to do the right
thing?
In other words, the hardship Seller is still trying to keep their
mortgage payments current. They're taking money from retirement,
getting credit card advances or borrowing from relatives just to stay
current. Unfortunately this may be a bad idea if you want a successful
Short Sale.
Most lenders still take the position that there is no hardship if the
Borrower is staying current on their mortgage. It does not matter that
they have a real hardship and the Borrower has negative cash flow every
month. It does not matter that the Borrower should have received a loan
modification, as long as the payments are current. All they care about
is whether they receive the mortgage payments.
Unfortunately, Borrowers are still told by their lenders that they need
to "miss a few payments" before the bank will consider a Short Sale.
This is really pitiful: By trying to do the right thing the lender will
not allow a Short Sale. Hopefully sometime in the future our
government and/or various lenders will become more enlightened and allow
a Short Sale even if the payments are current.
PS: Fortunately there are a handful of smart lenders who will allow a
Borrower who is current to complete a Short Sale (for example, VHDA,
local community banks and credit unions.)
Contact me at 434-951-0858 or Tucker@TGBLaw.com if you have questions. Thanks for allowing us to send you this email.
Please feel free to share this tip on your social media sites (buttons above.)
William D. Tucker, III
Charlottesville 434-973-7474 | Lake Monticello 434-589-3636
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