enter another year of the housing market fiasco, I am reminded on a daily basis
how seldom homeowners are being correctly guided through the short sell process
by their Realtors. I find many Real Estate Agents are more concerned about just
getting the deal closed rather than thinking about the consequences of their
advice. Why do I say this? Simple, as a mortgage lender, I am on the frontlines
of having to help individuals pick up the pieces of the lives after having gone
through a short sale. You can't imagine the horror stories I hear from people every
day and how upset they are to find out that most of what they were told by
their Agents turned out to be not the case at all.
have found is a commonality among these previous homeowners. I see the converging
and intersecting circumstances that these past homeowners all share with one
another. As I hear their stories I often times find myself shaking my head and
wonder how it is still possible with all the information out there, that
people are being misguided by so called Short Sale Specialists? First and
foremost, the main culprit that either prevents or prolongs the possibility of
re-entering the housing market (after going through a short sale) is being
delinquent on their mortgage payment during the preceding 12 months and
especially at the close of escrow.
the recent changes to HUDs 4155.2 as long as a
homeowner brought all delinquent payment current at the time of closing,
regardless of having mortgage late payments, I was able to get those homeowners
wishing to purchase another home into an FHA loan. With pressure from the
current Administration, HUD has recently made it more difficult for homeowners
to purchase after having to short sell their previous home. I just do not
understand the wisdom here, I try to kind in mind that there are people out there who
have deliberately pulled a fast one by doing a buy and bail I get that, but they are the minority.
there are literally millions of homeowners, who have fallen on hard times due to
a loss of a job, failed business, or a divorce that MUST sell their home. It's
not their fault the housing market has tanked. I have seen homeowners who have
been in their homes for 10 or 15 years who are upside down. How could these
homeowners in million years ever predict this? So what do individuals need to
consider in addition to all the other factors while considering short selling
their homes? That answer is quite simply this. If you want to purchase a home
after your short sale, be it now or in the future heed my warnings and try to
follow these rules if humanly possible:
DO NOT BE LATE ON YOUR MORTGAGE
PAYMENTS! If you can pull this off you will
have many more options available to you. Don't fall prey to that ole adage, you need to be behind in payments before we can talk to you is just not true! There
are Realtors and third party facilitation companies who specialize in short
sales whom have teams setup with the sole purpose of handling the negotiation
and communication between homeowner and lender. I have seen it, it can happen. Your
job as a homeowner is to do your research and be diligent in hiring a listing
broker. This can and will make all the difference with regards to your success
Rule #2: If you are currently delinquent
on your mortgage payments either due to circumstances beyond your control or
because you were told to by your Realtor or Lender this was a prerequisite in
order to demonstrate a hardship, try at all costs not to go over 90 days late.
What most people do not realize is, once you cross that 120 day plus late threshold,
your credit report can actually show as a pre-foreclosure or repo and this
alone can trigger an automatic denial through the AUS (automated underwriting
system) that FHA, VA, USDA, and Fannie Mae and Freddie Mac use. This can make
it virtually impossible to get approved for a traditional home loan. Once on
your credit, it can remain for years. The question is can it be removed? Yes it
is possible but it can take several rounds of disputing that tradeline with the
credit bureaus or it can take several hours on the phone pleading with the Bank
to remove it.
Rule#3: Know your options! Did you know
as a homeowner, other than trying to modify your existing home loan, you have
the option of staying in your home by doing a short-pay refinance? There are
several ways to approach and tackle this task, but with proper guidance and a
skilled loan officer, it is possible.
Rule #4: Team up with the Pros! The key
to any successful endeavor is to do business with people whom are at the top of
their profession in a given industry. So finding a Top Realtor is crucial!
These Realtors aligned themselves with other professionals in order to make
this process go more smoothly and that can all the difference in the world.
Remember the principle of cause and effect, what you do today is what will
determine your ability to rise above your circumstances and guide you to success
in the future.
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