“Our investor looks at the funds available to the home owner. Takes into consideration the mortgage not being paid, the investor losing money and the allocation of available funds. With the owners making a $2000 contribution, that action alerts the investor that everything possible is being done to get this transaction approved. Often times, this contribution adds stability to the offer.”
Is this the biggest crock of crap anybody has ever heard?? :flush “Often times” I have never heard of any short-sale requiring a “contribution” to get it approved. On top of that, we all know that no investor gets to invest and/or fund with mortgage companies on individual, hand picked loans. Even accredited investors. No investor that bought mortgage backed securities has any input nor even knowledge about single individual mortgages inside that security. In fact, it may be illegal for an investor to have any management authority outside of share-holder voting. And on top of all that, we know that the current economic mess is partly due to all these mortgage backed securities getting chopped up and reassembled so much that even seasoned CPA’s can barely make heads of tails of things. As if an investor is going to have specific direct knowledge of any single mortgage. :rolleyes
My thought process on this is that the lender is trying to play me the fool and pocket that $2000 for themselves. The “investor” will never see, nor even know about that $2000 “contribution”.
Has anybody ever come across this? The lender requiring a contribution to approve the transaction?
I would imagine the 2K will get applied towards the arrearages. The amount was probably what they figurered the person would stand still for. Lenders are desperate and will do almost anything so they don’t look too bad in the investors eyes. You just have to tell them to forget and move on.
donrock
If the borrower has a FICO above 600 you should always expect that the bank will request a prom note or cash contribution unless they (or one of the borrowers) are dead, dying, or bankrupt.
If FICO is in the 700’s or up if the borrower won’t contribute, I kill the deal. No investor or mortgage insurance company will approve the deal no matter how great their hardship letter is.
I spend 75% of my day sorting through files trying to find a legitimate hardship- guidelines have really tightened up lately as more and more people out there try to do a short sale. (weird fact/note- 9 months ago most borrowers had fico’s of high 300’s to low 500’s. Now a days I get excited if I see below 600 because they’re so rare.)
No one get contribution from my client unless we are closing. If they want contribution towards closing, i don’t mind. There is usally enough space in the deal for that. Why would they want contribution when we claim that the borrower is completely broke. I will shut down the file and wake it up in 30 days if any lender ask that from me.
I have a short sale pending in Florida, I live in CA. The mortgage insurance company is requiring I sign a promissary note for $5000. I countered $1500 and they said yes. I haven’t even gotten to the lender yet!! And what about a 1099-C from the lender to the IRS so I don’t get burdened with a huge tax bill??? Any suggestions???
I would not advise having a seller give any money to Countrywide to start a short sale. They are notorious for being a horrible bank to work with. I would never put any of my money up for the lender either. Unless you never want to see that money again that is.
As far as a 1099c, have the seller contact a tax expert. There is a way that if the seller can prove insolvency they can avoid the tax burden