Foreberance Or Short Sale
Two weeks ago, I started to work a short sale with a family on their mothers’ house because she was in the hospital and thought not to be coming home. The property is behind on the mortgage by two payments and they didn’t pay taxes last year. The mother is coming home from the hospital and wants to go back to her house to live.
The current mortgage is at 13.6% interest and it increases every 6 months.
My question is if I try to assist in doing a forbearance instead of a short sale right now would I still have the option to short sale the house later. Will the bank deal with me on both issues or will they sour to changing terms twice?
Thanks,
Robert
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I do not believe that having done a forebearance interferes with a later short sell. The bank should be making the best decision for the bank, not trying to get revenge on the customer. So if a forebearance is the best route for the bank now, then they will take it. If later the short sell is the best route, they will take it, even if previously a forebearance was done. BTW - when you work the forebearance, you need to tell them how the financial problem is now resolved. OK, so grandma is out of the hospital and now wants to come home. But the bank wants to hear about how her financial situation is now improved. Is she able to now work to get extra income, will her expenses be lower now that she is out of the hospital, etc. She was unable to make her payments, how is she now able to make her payments plus the extra forebearance amount?
submission criteria will coincide...updated financials, letter of hardship, etc. If the application for a FB is rejected, it paves the path for preforeclosure sale, or preforeclosure short sale.
Then it becomes a matter of a preparing a fact based, compelling business proposal.
I would not try a forbearance and a shortsale later down the road. For a forbearance you are going to try to convince the lender that the homeowner has enough income now to make their regular monthly payment plus part of the arrears to get them caught www.up.This agreement will be documented with the lender. Then a couple months down the road when things fall apart with the forbearance you are going to go back to the lender and provide them with the homeowners financial hardships for a possible shortsale. You better be a super salesman. Evaluate the present financial condition of the homeowner and make the decision forbearance or shortsale.
Steve makes a good point. But, my practice has been to do everything possible to help save the home for the distressed family.... but test the waters for marketability. Then, if the best effort fails, they will be more resigned to a preforeclosure sale, or preforeclosure short sale.
Thanks for the great information...
I want to show them the realtiy of the situation and help them come to the correct decision.
I would not worry about a forebearance then a short sell. I do not know the number of forebearance agreements that fail - but 70% would not surprise me. Those loss mitigation reps have seen it all and heard it all. The loss mitigation repsl know that everyone in foreclosure wants to save their house and will agree to anything but they also realize that many of these people will be in foreclosure again soon. Also, there is a good chance you will not even get the same loss mit rep plus the files roll off the system is about 6 weeks.