I have an owner willing to short sale but currently up-to-date on payments of both first and second mortgages (80/20 - different companies). They cannot continue to pay (payments just increased 55% last month! Long term illness means they have to move out of the property, so it will ultimately go into foreclosure, if nothing is done to prevent it.
Is the lender likely to listen to a case at this stage, or should I wait until payments are delinquent?
Chris
You should wait. Technically it is not foreclosure because all payments are current. Just prepare all documents when time is right, which usually 90 days without paying a mortgage.
I had a case similar to this one last year. The homeowner approached me while they were still current on both of their mortgages. Foreclosure was inevitable for them and other circumstances created a situation that a short sale was the only option available to them. I contacted both banks and they both said the same thing. “We will not look at short sale offers as long as the loan is still current. Should the homeowner go into default on this loan we will then review all short sale offers that are submitted.”
My strategy for this project was a combination between my normal short sale method and an above average marketing campaign. My initial introduction was both on paper, which I sent in along with the authorization form, and verbal when I spoke with the loss mitigation representative handling the case. I also included a very close copy of this letter, altered a bit from the first letter, in my short sale offer once I submitted it. My goal was to tell the bank what the plan was, then execute the plan as presented. This shows the loss mit rep that I know what I’m doing when it comes to finding buyers for properties while at the same time also showing them the lack of interest on the property.
If I can show them proof that there was a more well advertised campaign to find a buyer than what any REO Realtor will come close to creating then common sense should dictate that the REO Realtor will not be able to find a better offer than what I present. My postition is to paint any REO Realtor they may use as a MLS listing only kind of Realtor. These are the kind of Realtors who get the REO listings and do nothing more than post them on the MLS looking for buyers. My campaign consisted of MULTIPLE MLS listings, not just the local one, news paper ads, magazine ads, about 12 internet websites from Craigs List to the listing Realtors Brokerage website, and bandit signs. I also included 8 open houses. I documented the responses (or lack there of) and included them in the short sale pkg along with the highest offer.
I started all of this when they were still current with their mortgage. So once they went into default I had a head jump on the situation. If only all of my short sale deals gave me this much time… My latest, the one I picked up yesterday is only allowing me a little less than a month to do from beginning to end. The only good thing I have going for me is that there is already an end buyer for the property…and he’s cash.
In your situation I would say to get a move on it! The fact that they are not yet in foreclosure means you have a little more time than normal for marketing to an end buyer and to get your paperwork straight. I suggest holding open houses and get potential buyers in the home and making offers.
A note on an open house in this kind of situation… I never told them a solid purchase number. I said the current offer on the home was for $???.?? So any offer they made above that would be considered. I also told them the minimum difference between the current high offer and their’s must be at least $1,000. This stops the smart asses from giving you a $10 higher bid.
GooD Luck! :beer
thanks you sir.
Thank you for the helpful information. As a matter of interest, I have also heard that a number of companies are now prepared to consider a short sale before the loan is delinquent. This was confirmed by a loss mitigation department.
Chris
We are working a number of files where the homeowner is not yet behind and the lender is more than willing to cooperate. It really depends on the lender, the circumstances and most importantly, the investor backing the loan. Each case is unique.
That’s awesome! The more time you have the better as long as you get prepared and work the system. The bottom line is that the bank(s) does not want to foreclose and if you can provide the solution to them and work it, they’ll work with you.
Is Wells Fargo one of the banks which, will cooperated on s short sale when the payments are current but default in eminent?
excellent insight. i know you knew that, but still… :biggrin