Falling further and further behind on your mortgage payments can have devastating effects on your credit... this can even keep you from renting a home or an apartment in some cases.
In many ways... when you say you skipped your November payment asking if you should skip more makes is appear that you have the money and can afford the home. That you are choosing to skip and not forces to skip due to financial hardships.
Regardless, if the banks feel that you will let the house go into foreclosure then they are more likely to work with you on a short sale.
Franches Schnell, REALTOR SFR
Future Home Realty
HOW MUCH IS IT?
They don't want the notes or you to assist because technically you are cash poor and that is why you are doing the short. Very common that lenders will require excess cash to go to them...not the buyer, realtor, or anyone else.
The buyer theoretically should be getting a good deal without the 3%...and possibly I would be negotiating more with them to take it or lose it...if there is enough equity, they won't want to lose it. However, I would be negotiating more on Countrywide to pay the extra 3%. They stand to lose a lot more than 3% if they kill the deal and have to carry the house through foreclosure. Depends a lot on their sense of urgency.
Countrywide is giving us up to 10% for closing costs (5% realtor fees, 3% buyer's closing costs, 2% seller's closing costs). As you can see, they are only approving seller concessions/buyer's closing costs of 3% and does not allow me the seller to assist in closing costs in cash or promissory note, otherwise any money I bring in at closing would have to go to Countrywide. The buyers are insisting on getting 6% concession otherwise they will walk away. I am trying to find a way to get that missing 3% if we can not convince the buyer to lower their demands. We initially thought about reducing my realtor's commission and transfer it to closing costs as realtor's concession. Then I would pay my agent outside but my agent says that is against the law and her realtor will not allow it. So we are stuggling to find ways to get that missing 3%. Some ideas we thought of are:
- ask the buyers to increase the loan amount and roll the extra 3% in there. They don't want to do it.
- ask both realtors to reduce their commissions but the buyers' agent does not want to give up more than $1000. That's too little.
I'm willing to do anything to get this done but I am tied by Countrywide's requirements. If anyone can think of a solution, please let me know.
Thank you for your feedback.
If you are a homeowner doing this kind of stuff yourself, you have to swallow your pride, educate yourself, ask, and be reasonable.
If Chase declines Countrywides offer then you can go back to Countrywide to see if they can offer addiitonal money. An agreement has to be reached with both of your mortgage companies for a short sale to close. You could also try to seek additional money from the buyer.
There are options here that you could take depending on th numbers...
What is your home listed for? At what price are houses like yours selling for when they finally sell? What is your current mortgage balance with Countrywide and what short sale amount are they agreeing to?
There is new development as of today: the first lender (Countrywide) has approved the short sale. They are telling me that they will offer the second lien holder (Chase) $3000 and will not negotiate with them (is that true?). I owe the second lien holder $99K. They tell me that I am to send the offer to Chase and negotiate with them to get their approval.
Can someone with experience with these negotiations advise me on how to negotiate with the second lender? What should I tell Chase and what should I expect? What if the second lender does not want to accept the $3000 offer from the 1st lender? Thank you for your input.
Evaluation #1: do you want to stay in the house, or do you care if you have to move?
If you want to stay, you should try to make other payment arrangements with your lender(s). For example if you have a conventional loan, ask to make interest only payments for a period of time...the payment is lower, and can help you get on your feet... and still keep your loan current because of the new terms you worked out...
Evaluation #2: Could you afford any financing alternatives by the lender to keep your loan current? If NO due to financial, physical or employment hardships, you should stop making any payments because you are probably throwing any money you may need for survival (e.g. medical bills) down the drain...Comes down to priorities...it is easier to rebuild wealth than to rebuild your health!
Evaluation #3: Has someone explained all possible alternative besides a short sale solution? If you are considering making payments, I question how well you understand the process and how it could impact you depending on the action you are taking. Making payments after you've missed one will likely keep your case in collections vs. loss mitigation where you need it to go if negotiating a short sale. I advise my clients to first convince me of the hardship they are facing to determine the best course of action...including the other professionals (tax or bankruptcy attorney, CPAs, etc) they should consult with.
Evaluation #4: Do you have savings or checking accounts with the same lender that holds your mortgage?
If YES, you should consider closing the accounts immediately if pursuing a short sale..they will likely begin debiting your account for missed payments...and you may need that money to live on through the hardship you are facing. Also, if you have automatic payroll payments going into these accounts, you might want to consider changing that.
Evaluation #5: Are you prepared for the alternatives if the short sale is not accepted by the lender?
This could mean being foreclosed and kicked out of the home, being pursued for the deficiency amount after the sheriff's sale, etc. You should also consult with an attorney about possibly filing for bankruptcy.
All of this means your credit WILL have serious dings on it. The short sale can also produce minor dings on your credit, but nothing you can't overcome with some credit repair tactics - and certainly nothing as bad as showing foreclosure.
Evaluation #6: Are you prepared for the financial outcome if the short sale is approved? The relieved amount would be considered income, and thus income taxes would be due. Although, there are exceptions to paying income taxes following a short sale depending on the severity of the hardship. Whether you receive a 1099 for the relieved amount or not, you should pay the tax...Also, while I make my short sale packages contingent on waiving any deficiency judgements against my clients, there are no guarantees. I always insist on seeing a written acknowledgement from the loss mitigation negotiator that the short sale acceptance is considered full settlement, with no deficiency judgements for the relieved amount.
If you have specific questions in reply to this post, don't hesitate to email me directly at firstname.lastname@example.org
1. Actively market the property for 3-6 months
2. Personal financial information for analysis (In depth Interview)
3. BPO or full appraisal
4. Listing agreement, contract, and estimated HUD settlement statement.
Tuan, have you completed the above listed items ????