Short Sale Uncertainty
Do you remember the Mattel® Magic 8-Ball? Maybe you have one? You ask a question and you shake the 8-Ball; then you view a response (often uncertain or vague) to your question on a floating die.
With short sales, there are also a lot of questions that can also elicit uncertain responses much like the old Magic 8-Ball. And, since short sales are still a great source of listing income in 2012, it’s important that you are aware of the answers (or non-answers) to these common questions:
How long will it take a short sale lender to approve the short sale?
Reply hazy. Try again. The time frame for short sale approval varies, depending upon the number of liens and the lending institutions involved in the transaction. Additionally, just like any other real estate transaction, you are only as good as the weakest link on your team. If that weak link is the short sale lender, you will need to be very, very patient.
Will the seller qualify for short sale relocation assistance?
Ask again later. Despite the fact that certain lenders are listed as participating in programs such as HAFA, know that not all investors for every servicer will participate in the short sale relocation assistance and incentive programs. The best way to know with certainty whether your client will qualify for HAFA or any other incentive program is to submit the short sale package and request review by the short sale lender.
Can a short sale seller continue to make mortgage payments and still qualify for a short sale?
Maybe yes. Maybe no. Whether a short sale seller can remain current on mortgage payments during the process depends upon the client’s unique situation, the hardship (whether there is one), and also the investor that owns the loan. Certain investors have specific guidelines that preclude accepting short sales for sellers who are current on their mortgage. Other lenders are fine with it. (Also, remember that it’s not a good idea to advise a borrower to stop making payments on their mortgage.)
Will the lender postpone the foreclosure auction?
Answer uncertain. There are many, many scenarios whereby the lender will postpone the foreclosure auction in order to continue processing the short sale. Yet there are certain borrowers that have missed so many payments that the mortgage lender opts to foreclose on the scheduled date. While there may be certain legal remedies that aid in postponing a foreclosure auction, it’s important for sellers to be pro-active and cooperative with the lender when faced with a looming auction date.