What are the guide lines that banks use to determine a short sale?


Is there a formlua that banks use to determine whether or not they will ok a short sale?

If you have had short sales denied, what was the cause or reason given by the bank.

A friend filled out the paper work and the real estate agent said they did not "“qualify for a short sale” and thought the bank would deny them.
They are about 4 months behind in payments.

Any advice on what to do next would be appreciated


Go ahead with the short sale. A lot of real estate agents don’t really know what a short sale really is so go ahead with it. Whats the worst that’s gonna happen? it gets denied? You would be putting some time into it but I think it’s worth it to try and help these people out that are facing foreclosure and plus you never know if the bank will accept it and it will land a large profit for you!

Get r done! :smile

There are at least four reasons borrowers do NOT qualify for a short sale:

  1. They don’t have a true hardship. (no divorce, death, loss of job, etc.)
    → Banks like to see that someone is asking for a short payoff for a legitimate reason; a true hardship.

  2. The make too much money.
    → They have just decided to quit making payments for no apparent reason. The bank will see right through this.

  3. The mark to market value exceeds their mortgage debt.
    → If someone has owned a property for a long time then suddenly falls behind in their payments, they won’t need to sell the property “short”; they’ll just need to sell the property and pay off the remaining loan balance.

  4. The have too much money in liquid assets, or even a 401(k).
    → Sometimes they won’t even ask to see a person’s 401(k) statement, because that is a retirement asset and supposedly exempt. Yet if their plan allows them to borrow from the account, they will take a dismal few of someone who refuses to do that and would rather allow their real estate asset to be foreclosed than to do the honorable thing and just borrow against another asset.

These are the primary reasons for NOT allowing a short sale. The obverse of these is why they WILL allow one.