Do I have to be delinquent to do a short sale?
Should I stop paying my mortgage if I am considering a short sale? Will the bank me more willing to work with me if I am current or behind on my payment?
I would never advise anyone to stop paying the mortgage. Used to be, a lot of banks would not do a short sale or would stonewall you if you were still paying. That pretty much is gone. Remember every month you don’t pay puts a ding on your credit. If it’s achoice between paying the mortgage or putting food on the table then the answer is obvious.
I have closed short sales with no delinquency, it is not a requirement. There needs to be a hardship clearly defined and documented. My sucessfull short sale clients, are now my new buyers! There is life after short sale!
Not always – although Fannie Mae and Freddie Mac often says different when the file hits their desk. The fix is simple – but takes 60 days. We’ve closed them when the borrower has been current. We’ve closed them when the borrower is told they aren’t eligible because they are current, which the borrower “fixes” by being late a couple of times.
No you do not have to be delinquent on conventional Short Sale. I may be different with Fannie & Freddie Short Sales. The number 1 reason to approve a current Short Sale is relocation within 100 miles. I just got one approved and the seller never missed a payment. Saved their credit
It would be foolish to say absolutely yes but in the majority of instances, yes. If the bank does not see a hardship or that the payments will stop in the near future, it is unlikely that a short sale will be granted. However, in extenuating circumstances where there may be a terminal illness or an immenent job loss, it is possible that the loss of income stream in the future, if proven, would be enough to grant the short sale while the property is still current today.
Yes you can do a short sale without being in default. It is harder to accomplish depending on the investor but certainly not impossible.
Bill Gassett – RE/MAX Executive Realty
Each bank is differnt but most will be fine if you are not delinquent on payments. And many banks are actually now offering incentives for sellers to stay in their homes and keep them up, cut the grass, etc. The tides have really turned to the interest in getting these short sales to closing – finally!
If you can make your payments, you should continue to make them. As long as a legitimate hardship can be documented, even if it is one that is upcoming (i.e. job transfer in the future, you have savings to pay the mortgage but it will run out, etc) it is possible to get a short sale accepted. The best piece of advice I have for you is to find a qualified Realtor you trust to help you through the process. Once you stop paying your mortgage other problems arrise, short sales can be stressful enough for a homeowner without adding more stress if it’s not necessary.
The answer is no – it’s not required in every case – but – in many cases – you may be advised by your servicer that the investor (Fannie/Freddie) won’t process the file without you being delinquent. Best to cross that bridge when you come to it.