The loss mit I am working with did something new today (well, new for me anyway). The homeowner/seller submitted handwritten financial statement that included authorization to check her credit. Countrywide checked her credit and discovered 1 mortage (on a rental property) that homeowner did not include in her financial statement. Now, homeowner is planning to kick tenant out of this other property and live there after her subject property with Countrywide is sold.
This was satifactory explanation for Countrywide, however loss mit called back 30 minutes later and requested the latest statement of ALL homeowner’s bills (everything - credit cards, utility bills, etc.). So WARNING for all of you doing SS out there - make sure your seller includes everything in the financial statement that can be reconciled with his/her credit report.
Has anyone experienced this? It seems Countrywide, at least in this case, needs to REALLY prove the seller’s hardship to complete their documentation prior to approving short sale. I asked loss mit if there was a special reason that he needed all the bills - and he said that his supervisor instructed him to collect them for the file.
???
A credit report is run on every borrower for a short sale request (whether the borrower authorizes it or not)-- a legitimate hardship has to be proven. We look to see if borrower is current on other mortgages, loans, credit cards etc. If they are current on everything else you better bet that a prom note or cash contribution will be required.
It’s a very rare thing where I see a short sale for someone with a FICO above 620 or that’s current and requires more work by the negotiator to prove that the short sale is requested for a hardship and not someone just wanting to get rid of the property (which happens quite often with investment properties)
A financial statement is also requested with a breakdown of all monthly expenses-- other mortgages, income from rentals, bills, etc.
Investors & MI companies have really tightened belts-- most MI’s are now requiring the full financial workout package and requiring prom notes for their approval.
Yeah, I figured as much. It’s still strange, as I have another SS with Countrywide and that seller is not late on payments. They didn’t run a credit check and approved the SS pending junior lein release from the 2nd. You’d think they would need more documenation for the seller that is not in default - to really prove the hardship.
I guess it depends on the loss mit and the mood of the supervisors.
I did not even know you can short sale a mortgage not behind. Why would the bank even consider a short sale. I have many people looking to short sale and the banks tell them they need to be behind 90days before they will discuss a lower payment.
Yes, you can submit a short sale even if seller is not behind. 3 of our most recent ss approvals were for clients that never went late. The key is proving the seller’s hardship.
For example, the latest approval was for a mortgage broker who was laid off by American Home in August of 2007. She hasn’t been able to get a new job in the field and had been using savings and credit line to pay her very large mortgage. Her ss is going to close escrow on 3/17. She maintained her credit with no lates on her mortgages or credit cards.
This is just the first time Countrywide is pushing for so much more seller hardship documentation. It’s also odd that they would be asking this of a seller that is over 90 days late on the loan, but not ask it of our up to date sellers. ??
The credit report is pulled on every short sale- but it could be the investor (who owns the mortgage) or if it does have MI (even if your negotiator has not mentioned this to you) that the negotiator is requesting additional documentation.
Wells Fargo, Fannie Mae, and Citizens Bank are just a few of the companies that have to approve the short sale if the loss is over a certain amount. These companies will require every financial doc-- tax returns (2 years), bank statements (2 months) financial statement, POI (2 months) and letter of hardship to be sent along with a copy of the current Credit Report. I’ve had files declined by the investor because they were current on all other mortgages-- or got a new line of credit (whether it be credit card or car) when going through the short sale process.
Every company (and short sale negotiator) is a little different.
A short sale is possible when borrower is current but more of an effort and documentation is usually need to prove the hardship (bank statements & paystubs for further length of time as an example or letter from an employer if pay decrease/curtailment of income or future unemployment)
It always amazes me how much time some negotiators waste arguing over prices or closing costs-- a person might get a heck of a lot more done if they’d stop talking about what they’re going to do.
in the situation with a seller not being behind, I am assumming they have excellent credit like one mentioned above, no lates on bills.
Now did the bank give a big discount on th SS price. Is the home being SS b/c house just lost alot of value and they can not sell convenstional so they play the hardship route?
Yes, the seller so far had excellent credit and never late on anything. However, she lost her job as a mortgage broker and was quickly burning through her cash reserves to keep up payments on a house that was UPSIDE DOWN. Now, she got a new job as a bank teller, but her income from that new job is less than half of what she was making in comission as a mortgage broker. She was running 306% negative with her mortgage on the ss property.
She had a both LEGITIMATE hardship situation AND could not get offers on her property to cover the outstanding loans (95% LTV when she bought 2 years ago). The first mortgage bank (Countrywide) took 83% of their outstanding loan and the 2nd (Home Eq) took 1% of their loan.