Myth: The Seller must be delinquent in their payments to qualify for a short sale.
Answer: Yes and No.
Answer: Yes and No.
Many people claim to be experts on real estate short sales. At a recent seminar I attended on real estate short sales the presenter claimed to be an “expert”, actually the presenter went ahead and labeled himself a “genius”. There was this slide in his presentation where he began to tell a story: “You better start saving all your cash, because you are going to need it.” He continued his story saying: “Your credit is going to be screwed and so are you, no landlord is going to touch you so you better get at least $10,000 behind you.” He also had an example showing four payments of approximately $2,400 per month totaling around $9,200 or so. He then said: “Even though I am not telling you to stop making your payments…”, are you kidding me? He is not telling them but he is showing the people at his presentation what to do. The important thing is that he doesn’t seem to understand the potential liability and exposure he is subjecting his audience to? He is demonstrating how to target upside down homeowners who are not behind in their payments and talk them in to selling. As a broker I was upset, and worried about the naive agents who are going to expose their brokers to all these problems and liabilities. A licensee who makes an improper recommendation may face civil liability. Along with this outline there I can provide you if requested a copy of the Fannie Mae (FNMA) servicing guidelines and they clearly state that the property must be three months arrears in order to qualify for a short sale.
The truth to “the seller must be delinquent” is that it depends on what type of loan it is. Freddie Mac, Fannie Mae, VA, FHA, Jumbo, Hard Money, Private Money Loans with PMI insurance all have different servicing requirements. If the servicer modifies the terms and conditions of the loan that servicer may no longer qualify for the insurance tied to that loan. For example, in a FHA loan, if a servicer (collector and/or manager of the mortgage, not necessarily the lender) changes the terms and condition of the loan without the investors permission, the servicer may be liable for the losses and may not get restitution for losses, that is why FHA loans have MI, from the Federal Housing Administration (FHA) for losses that are associated with that loan.
Please call us if you have any questions about short sales. Carlos Aguilar handles real estate short sales in San Diego County. Several area's in San Diego are experiencing a high percentage in short sales because of the loss in value in their home values. Chula Vista is one area that has experienced tremendous growth over the last 10 years. Other areas in San Diego such as Downtown San Diego area are also experiencing large growth over the last few years but the downtown area has not experienced a huge drop in values but that depends on the building or area that you live in the Downtown area of San Diego.
Carlos
