I came across another investor who wants to unload multiple rental properties. This investor is not yet behind in payments however told me they are willing to give there blessing on a short sale. Since a bank wont even tender the idea of a short sale until he is behind in payments, can I really tell him to stop paying?
Also, can the investor only approve me to work with the bank? I am fearful that as soon as the lis pendens notices are out, he will be bombarded and I may lose out on the deal. Can I ask him to sign a document saying I have first rights to work with the bank when and if it goes to foreclosure in a few months if he goes down that path?
No, I don’t think you should tell him to stop paying. It would effect his credit even if you get a short sale approved. The other thing is that if he doesn’t have some hardship the lender may not willing to accept a short.
Yes, a homeowner has to approve you to work with the bank. If the homeowner(investor) doesn’t give you an authorization to release information the bank will not talk to you. You can request that he doesn’t give anyone else authorization.
When they ask if they should stop making payments, I disclose that I am not an attorney nor a foreclosure consultant and they should seek professional guidence from such people and tax experts, I also say banks will not consider a short sale offer until borrower is behind at least 90 days… if they are upside down, facing interest resets, loss rents, cant find new tenants, etc. that would be a hardship - when these conditions exist, you will need to execute a purchase agreement & authorization letter and collect all sorts of stuff for the short sale. You could record the transfer, I dont recommend it, if you do your best to help him and keep him informed, he wont call any body else, I guarrantee it.
The mortgage climate has changed. I started working a potential short sale while the borrower was current. The borrower has notified the lender of their intent to default, and that notification was sufficient for the lender to entertain a short sale offer.
Thanks everyone. I am having him sign a letter of authorization this week. I will search online for one to use. I’m sure its a pretty standard/basic form.
Accordingly, upon presentation to you of this authorization form, please provide to
YOUR NAME and any of its agents and assigns, all data pertinent to our payment history, current balances owed and any outstanding fees or penalties as yet unpaid.
“Agents” shall include all real estate agents, attorneys and their assistants. You may reproduce this document to acquire references from more than one source.
BY MY/OUR SIGNATURE(S) HERE, I/WE AUTHORIZE THE RELEASE OF ANY AND ALL INFORMATION REGARDING THIS/THESE ACCOUNTS AND THE ABOVE NAMED PROPERTY TO THE ABOVE NAMED PARTY.
Borrower Date Co-Borrower Date
Printed name Printed name
Social Sec #: __________________ Social Sec # ___________________
PLEASE USE THE FOLLOWING CONTACT EXCLUSIVELY:
YOUR NAME
Direct Line: (XXX) XXX-XXXX
Fax (XXX) XXX-XXXX
Email: XXX@com
We work Short Sales all the time on people that are not behind a dime. You just need him to reflect in the Hardship letter the reason he want’s to do a Short Sale and why he/she won’t be able to pay in the future. Also have him offer a Deed in Lieu in the hardship letter. There are other options out there for this guy as well such as Loan Modification. Trust me when the lender see’s that he is thinking there is no way to pay they will offer options left and right…
Otherwise known as a “friendly foreclosure”…it is when the homeowner gives over the keys to the bank - it counts as a repossesion and in most cases they will need to qualify for this option. Hope that helps!
Very few lenders are taking the Deed in Lieu option on there houses until they know they are at the end and can’t do anything else. It will look better on there credit then a Foreclosure.