Lenders' View On Short Sales
I am contemplating about a short sale on one of my properties. When lenders see a short sale on a credit report that has an overall good credit history, how is it viewed? (reason: property is worth less than what is owed) Is it a negative mark and will it drop a credit score? Will it ruin my chances of investment property in the future? Do lenders look at it as a Red Flag?
A prime criteria for short sale consideration is owner occupancy. If the subject property is non owner occupied... it will impact how they'll structure their approval.
Once the lender learns that you have other property, and/or other assets... they'll likely approach your short sale request a bit differently...
While they may agree to release their lien, accepting proceeds from the sale allowing you to sell, they may not agree to forgive the remaining debt. They'll ask to place a mortgage against your other property... provided the property has equity.
You may be rid of the property... but you still may have the debt. and monthly repayment responsibility
[addsig]
SSPro - you say ' A prime criteria for short sale consideration is owner occupancy. If the subject property is non owner occupied... it will impact how they'll structure their approval. ' In what way is this so? Is the alternate structure you mention only applicable to non owner occupied props where the HO has other property? What if they are renting elsewhere and do not own any other props?
Without simply repeating my last answer... the short answer is that it depends... lenders are under no obligation to agree to a short sale, or even consider a shortsale (except in FHA PFS scenarios). If the mortgagor requesting short sale consideration isn't the owner/occupant... it raises a red flag.
[addsig]