What Happens If Short Sale Fails?
What happens if you get the deed to the place and you try and do a short sale but the bank won't deal at all?
I know that the bank will end up foreclosing on the house but since you have the deed, does anything happen with you?
Why, specifically, was the mortgagor's application, and your Proposal rejected?
Learn from the experience. Identify what was missing in the preliminary stages, and you'll be better able to complete future short attempts.
Not all situations indicate short sale. Learn to prequalify the candidate, and you'll save yourself a lot of time.
It han't happened as I am just starting to work the short sale but I am curious about what happens.
House is in very bad shape. Needs about $15,000 to make it sellable. Owed on mortgage, $63,000. House in current shape is not even worth this amount.
Owner bought the house for her kids and they are to make payments. Kids can't make paymets any longer to to loss of work and the rest of the story. 5 months behind on loan and it has no seconds on it. Owner has her own place in another city and is the one being called on by the bank as she is the mortgage holder.
Seeing that the kids have job issues and can't make payments, she wants out and with the shape of the she will have a hard time selling. [ Edited by schallerp on Date 06/27/2003 ]
as a follow up:
I reject 50% of all short sale candidates that are presented to me by Clients who are seeking to acquire a property via short sale.
For example, a Client called and said that he had located a property whose owners simply wanted to walk away. In fact, the young, soon to be divorced couple had vacated the home and each are living with their respective parents. There was a delinquent first, and a current second mortgage with balances that exceeded the value of the property.
Perfect, right? Cooperative Sellers, and upside down mortgages, and a home that needed repairs.
I asked him to send me all documents regarding the deal.
Upon review, I learned that the first mortgage loan was an FHA insured loan, with a recent, $10,000 second mortgage loan, too.
I made general inquiries as to the as-is, FMV, cost of anticipated repairs, and an estimated after repaired value.
Long story short, the FHA loan could possibly be discounted, but I woulkd have to show good cause as to why the home has been vacates (FHA require owner-occupied as a precondition for ss consideration). The second would probably not discount too much (another FHA precondition is that junior mortgages receive a maximum of $1,000 or in some cases, $2,000 as payment in full) and would have to purchased via an assignment by my Client to become junior mortgagee.
If the transaction went smoothly, there was room for profit, but would be problematic.
I gave it a 50/50 chance of success, and recommended that my Client pass on the deal.
I'm no expert but when that happend to me and I knew the deal was dead I just deaded the property back to the seller. Can't say that was correct or not so you should probably get other's feedback.
Good luck.
Sorry my typing/spelling is so bad. I meant deed not dead. Might mean the same????