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Wednesday, October 24, 2012

When it is a valid short sale?


I own and operate a web site called MIShort Sales.net which one can get to using .net or .com at the end. It is an informational site that explains the short sale process and hopefully answers a bunch of common questions. It has lots of links to very good articles on various topics, such as the impact on your credit of a short sale and comparisons of the consequences of a short sale vs. a foreclosure vs. a bankruptcy.  It also gives the reader a good idea of the timeline and processes that one must expect to go through in order to do a short sale.

One of the key ideas behind the short sale process is that of the “hardship” that the homeowner faces that has caused the need to sell. There are many valid reasons that will justify the lender granting the mortgage holder relief – a layoff, illness, divorce, and more. All of them somehow point back to a loss of income by one or both of the homeowners involved. I get those stories of life’s travails all the time. You can read a more complete list of justifiable reasons for a short sale at the web site. Something as common as a loss of overtime at work can become a hardship justification.

I also get a lot of calls from people who have already made other life decisions to move on, whether that was required or not, and who now just don’t want to continue paying for the mortgage on the old homestead that they’ve left. Some are retirees who’ve moved to their retirement home (usually in some warm clime) and just don’t want to keep paying for their old home. Some are people who’ve accepted new jobs somewhere else and moved, initially renting out the old home because they were underwater on it. Now they’ve tired of the whole absentee landlord routine and perhaps the monthly drain that the old home still has on their finances. They have very marginal cases (if any) for justifying a short sale. In many cases they have already been turned down for a short sale by their lenders.

In those cases, I have the would-be sellers talk to my short sale partners at Nationwide Loan Help. I don’t do the lender negotiation and legal side of the short sale, that’s what I use Nationwide for. They have a staff of negotiators and more importantly they have lawyers on staff. It’s my feeling (and the feeling of my company’s legal counsel) that short sale negotiations quite often cross into the territory of giving legal advice, which I am not qualified to render. It may well be that trying to negotiate a deed-in-lieu is the best path for some of those homeowners; or it may just be that they need to find a way to bring some money to closing. They really need to look at whether they are in a “I don’t want to” or “I can’t afford to” situation. We can explore the” I can’t afford to” cases for possible hardship justification. The “I don’t want to” situation just isn’t going to get any sympathy from the lender or from us.

So, before you call about a shot sale, go read the material at the MI Short Sales Web site and take a good honest look at your situation. If life has dealt you an unexpected blow that has really left you unable to continue to make your payments, give us a call. I can help you.  However, if you’ve made conscious decisions to move on and abandon your obligations, because it just isn’t convenient to keep paying anymore, I probably can’t help.  Call your attorney and your financial advisor and get ready for the credit impact of a foreclosure.

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