Whether it 'tis nobler in the mind to suffer the slings and arrows of outrageous fortune or to take arms against a sea of troubles. As a Sacramento short sale agent, I get asked a particular question all the time. Not necessarily in that format, but it means the same thing. There is a lot of conflicting information online. In fact, it's almost as diverse as each short sale is unique.
Throw the lender into the mix, and you've got a real quandary. This is where you've got to stop and think. As a potential seller and responsible home owner, think about this. What does a lender want you to do? Does a lender want you to stop making your payments? Would the lender be happy if you continued to make your payments throughout your 25-year remaining term on that loan, even though you may own an underwater home?
If you ask your lender if you should stop making your mortgage payments, what is the lender likely to say to you?
Now, what the lender says to your short sale agent and what the representative may say to you is often two different things. The lender might tell your real estate agent that it won't approve your short sale because your are not delinquent. The lender can get into big trouble with its investors if it tells you to stop paying. Instead, the lender will tell you that your hardship letter does not indicate a financial hardship and to come back when you get run-over by a bus.
This does not mean what you think it means. It does not mean wait until you lose a job. It means you must be delinquent or the lender won't consider your short sale. Why should the lender consider it? What's in it for the lender except to be shorted? As long the lender keeps receiving your payments, you and the lender have little to discuss.
Of course, I would never demand that a seller stop making her payments. I would tell her if the lender told me that, though. And I have closed short sales in which the seller was current. But those sellers had a reason they were current -- such as they borrowed the money to make the mortgage payment. Or they are doing a Bank of America Cooperative Short Sale, in which you can be current. But most lenders are not in the business of granting short sales to sellers who continue to pay them.
You can be that seller who goes to the bank and says: Hey, I tell you what. Instead of making my payments on time to you every month, what do you say we just give you 50 cents on the dollar and you go away? How does that sound to you? The bank might say no, we'd like you to continue making your payments, thank you, very much.
The truth is a short sale affects credit. You're not "saving" it by staying current. There is no such thing as "saving" your credit in a short sale. Do get legal and tax advice so you thoroughly understand the consequences if you stop making your mortgage payments. There is a risk. You could lose your home.
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Certified HAFA Specialist
My Sacramento Real Estate Listings
Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.
The Short Sale Savior, by Elizabeth Weintraub, available at Amazon.com.
Lyon Real Estate is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.
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The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate.
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