Foreclosure in Temecula>Question Details

Julie Myers, Both Buyer and Seller in Temecula, CA

Can I short sale my home even though I'm not late on my mortgage payment?

Asked by Julie Myers, Temecula, CA Tue Oct 26, 2010

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Good morning Julie, that is a great question. This is probably the #1 misconception out there with short sales. To answer your question, yes you can short sale your home without being late on your mortgage. I have associates that have closed these deals and I have as well. People that are current on their mortgage, credit cards, car payments and have a perfect credit profile are able to short sale their home.

The important thing to remember is you MUST show a valid hardship. You will need to demonstrate that even if a hardship doesn't exist now, one will in the near future. This impending hardship will force you to become late and you are trying to head this off before the fact.

Your hardship can be a job transfer, medical issues, divorce, loss of job, rate adjustment or that your monthly debts exceed your income and your savings will be used up by a certain date.

I hope this helps answer your question. Let me know if I can be of any further assistance.

All the best!

Ryan Smith
Lic # 01334440
2 votes Thank Flag Link Tue Oct 26, 2010
Yes you can. I have done it more than once but it also depends on which bank you are working with. It also will depend on your hardship and how that is presented. No matter how you slice it, a short sale is going to damage your credit. But several late payments also do additional damage to your credit.

I would recommend you meet with a couple agents that are short sale specialists. Not ones that just advertise but have been doing short sales since the beginning. I would be glad to go over your situation and let you know what I think. I just am seeing a lot of agents that have NO CLUE what they are doing with short sales or ones that try to outsource bank negotiations. That is not a good strategy as I have seen so many homeowners lose out that way.

Sincerely,

Stefan West - 951-894-6199
Web Reference: http://www.stefanwest.com
2 votes Thank Flag Link Tue Oct 26, 2010
Julie you can do this. In fact it is preferred by your lender and you can buy again quickly because you have not missed any payments! The key is to be sure to communicate your hardship to the lender in your hardship letter that you submit with your short sale package. You need to prove that you will have curtailed income in the near future or explain what the circumstances you will be facing are and how it will effect your ability to pay your mortgage. But yes this can be done.

Jesse Madison
Madison Realty
Certified Distressed Property Expert
0 votes Thank Flag Link Wed Nov 24, 2010
I appreciate all the answers everyone has posted. One thing is for sure, we will not proceed with a loan modification. We will more than likely sale our home via a short sale.
0 votes Thank Flag Link Tue Oct 26, 2010
Wow so many great answers already! Yes, you can but it really depends on the lender and if they want to approve it or not. I did have a client who never missed a payment and short sold his home. In the end his credit score only dropped 40 points! Each situation is different, consult a Realtor in your area who deals with short sales and they will be happy to help!

Good Luck Julie!
Chris Blasic
0 votes Thank Flag Link Tue Oct 26, 2010
Julie, if you've decided that you no longer want to own your home, then a short sale is possible but only your lender can make that decision.
I would recommend you apply for a HAMP loan modification first. A denial of a HAMP modification gives you an automatic short sale approval under HAFA. You want to make sure that your short sale is approved under HAFA because it eliminates most of the contingent liability you may have for taxes etc.
Not all of the lenders are playing by the HAMP/HAFA rules, so make sure you hire an agent who is thoroughly familiar with your options under the program.
Web Reference: http://firsttimehome.us
0 votes Thank Flag Link Tue Oct 26, 2010
The first thing you need to do is call your lender, tell them you want to do a short sale and do you qualify for the HAFA program. I have heard many different things some clients tell me their bank said they have to be late to be considered for a short sale. I also heard it is up to the individual investor.
I closed a short sale earlier this year where the seller was current up until the date escrow closed.
Web Reference: http://www.edsellsre.com
0 votes Thank Flag Link Tue Oct 26, 2010
Julie,

You have got some great advise here. Now where to go from here. Most of the info you are looking for can be found at the U.S Department of Housing and Urban Development (HUD) http://portal.hud.gov/portal/page/portal/HUD They can answer most of you questions and this is free advise. After you speak to one of there rep's Then you can make some clear decisions.

Good luck with your agent interviews, If you need anything or have additional questions feel free to contact me.
0 votes Thank Flag Link Tue Oct 26, 2010
Julie:

As many have said, YES you can short sell a home where the owner is current on the mortgage. Short sales are based on either current or impending hardships.

Here are a few of points not previously presented:
1. If you have an FHA loan, guidelines used to be that you had to be 31 days delinquent on your payments to qualify. Recently the wording has been changed to "Borrower must be delinquent or default is reasonably foreseeable." Unfortunately, not all servicers are staying on top of the changes, so you have to have a realtor who is. You must also have the home listed with a licensed real estate agent to qualify.
2. If you have a Freddie Mac loan, you MUST BE 60 days delinquent to be considered for a short sale.
3. A job forced move, more than 100 miles away from your current address, is a sufficient hardship to qualify for a Short Sale.

I would be happy to discuss your particular situation with you, and help guide you through your options. Feel free to call me at 424-2HELP12 (424-243-5712). Dare to Dream.

Shel-lee Davis, QSC®
Certified Distressed Property Expert – CDPE®
Short Sale & Foreclosure Resource – SFR®
Certified HAFA Specialist – CHS®
SSG Pro®
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
http://shel-lee.listingbook.com
0 votes Thank Flag Link Tue Oct 26, 2010
In order to best protect yourself and any other assets you may have, do consult with an attorney who specializes in real estate beforehand--otherwise, yes, a short sale can be done.
0 votes Thank Flag Link Tue Oct 26, 2010
Hi Julie,
For the most part yes you can.
If you are able to show proof that you are running out of funds and see no way to pay in the near future, They are usually responsive.
It is good to see that you are responsible, and be proactive, by trying to do the right thing as you can in the beginning.

Harold Sharpe - Broker
So Cal Homes Realty
(951) 821-8211
harold@socalhomesrealestate.com
http://www.socalhomesrealestate.com
California Department of Real Estate License # 01312992
0 votes Thank Flag Link Tue Oct 26, 2010
Hi Julie,

I can appreciate your question, becuase it is asked all the time. In the past two years my team has closed over 100 short sales. In all those short sales the only one we were able to get approved was a client who was in the financial industry and by missing payments and damaging his credit he could lose his job. The bank saw this as a further hardship and approved his short sale without being delinquent. If you have any further questions, please feel free to call or email. Have a great day.
0 votes Thank Flag Link Tue Oct 26, 2010
Thank you all for the quick responses. I will be in touch.
0 votes Thank Flag Link Tue Oct 26, 2010
Wachovia and litton will almost certainly. You have to show you are exhausting your retirement or savings and it's unsustainable. It's case by case though.
0 votes Thank Flag Link Tue Oct 26, 2010
Hi Julie,
It all depends on your bank and the rest of your financial situation. I just short sold a home with the same scenario in three months that closed yesterday. I need more specifics on your situation to really help. Contact me when you can. Good luck!

Alex Saavedra
Century 21
619.519.0683
alex@buysdhomes.com
Web Reference: http://www.buysdhomes.com
0 votes Thank Flag Link Tue Oct 26, 2010
Some lenders will consider it. Others won't. For those who might, it depends on what hardship you're facing.

Check with a Realtor in Temecula for more details.
0 votes Thank Flag Link Tue Oct 26, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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