We've had a number of people calling us regarding listing their homes as a short sale. They've heard the expression "jingle mail" and assume all they have to do is get the house listed at an artificially low price, call an agent and list it, mail a set of keys to the bank and live in the house till it settles which could be a year from now and somehow move into something affordable. Wrong. I can't just pull a number out of my hat, you have to have missed payments because of a financial or documented medical hardship. Your credit score is lowered to a point where you can't purchase another more affordable home. If you're unable to pay your mortgage now, why would a bank lend you money even for a smaller house with smaller payments? You'll be directed to someone who should be able to lower your payments until your circumstances change. I'm only at the tip of the iceberg.
Here's a blurb from HAMP dated 11/2009:
In Supplemental Directive 09-01, the Treasury Department (Treasury) announced the eligibility, underwriting and servicing requirements for the Home Affordable Modification Program(HAMP). Under HAMP, the servicers apply a uniform loan modification process to provide eligible borrowers with sustainable monthly payments for their first lien mortgage loans. While HAMP program guidelines are intended to reach a broad range of at-risk borrowers, it is expected that servicers will encounter situations where they are unable to approve a HAMP modification request, a HAMP modification is offered and not accepted by the borrower, or the borrower falls out of a HAMP modification. In these instances, the borrower may benefit from an alternative that helps the borrower transition to more affordable housing and avoid the stigma of a foreclosure.
If I pull a price out of my hat to induce multiple contracts to present to the bank, isn't that false advertising? Once you've established in writing with a bank that you'll be going into short sale, the bank is going to send out an appraiser to determine price. If you've borrowed 100% on the loan and the house was purchased at $100,000 but the house is now worth $90,000 and that number has been established via certified appraisal and market analysis, who pays that $10,000 deficit and when? Should you just throw in the towel and file bankruptcy? Consult an attorney, not your REALTOR! I cannot practice law! How much information do I give other agents who have buyers interested in putting in offers? What tax consequences are there? Do you the seller sign the offer before the bank accepts terms? Will a special stipulation in the contract fully protect you? When is the contract binding? Can you get to the closing table and the sale fall through? What happens if the bank wants you to sign a promissory note at closing for any shortfalls? What are the buyers options at closing and the seller won't or can't close? Providing a property is a good value, why wouldn't buyers prefer a full foreclosure so they don't have to wait months for a short sale to be approved?
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