Question by Luis C: Do I have to be behind on my Mortgage payments before I can request a short sale on my property?
I don’t have enough equity, all of a sudden, in my home. I have Good Credit, Steady Income. but because of no equity, I am unable to refinance. Wachovia stopped Modifying Loans just today (7/2/08) and I don’t want to forclose. Do I have to wait and become behind in monthly mortgage payments before I can request a short sale from the Lender? Please let me know.
Best answer:
Answer by bailie28
do you realize a shortsale is more harmful to your credit than a foreclosure….we were trying to sell a house in nc and i called the bank to inquire about a shortsale…we had an offer it was lower than what we owed..we wanted to pay the overage off….and that is what they told me…you should really check into this..seriously
Know better? Leave your own answer in the comments!
Im a Realtor!..No you dont have to be behind your mortgage payment.. But you have to QUALIFY for it. Therefore, after making your mortage payment, credit card payments, and other expenses, you are negative, then you can qualify for a short sale. Now, if you make all those monthly payments and you still have money left, you may not qualify. YOU REALLY HAVE TO BE STRUGGLING AND SHOW PROOF THAT YOU ARE AT $ 0 OR -$ 0 or cannt make payment to qualify. Also, there is a possibility that you may be taxed for the difference between what you owe and what the current property value is. Talk to a Tax Professiona.l A foreclosure look worse on you credit report and stays longer and will affect you when buying in a near future A short sale wont show or hurt you (again check with you tax to find out if you wil be taxed or not). This is some little info. Good luck
Ok…Balie is incorrect…she probably talked to some $ 8.00 an hour customer service rep and those people aren’t really qualified to make statements like that.
Short sale is just AS damaging to your credit as a short-sale, but not moreso. The reason why is a foreclosure is INVOLUNTARY and a short-sale is VOLUNTARY. They are treated the SAME by banks for future lending purposes.
During a foreclosure, if your house is resold, there is no guarantee that the sale will pay off what you owe…and if it doesn’t, the bank will seek a deficiency judgement against you for the balance and this forces some people into a bankruptcy right after a foreclosure.
In a short sale, this is negotiated up front. Every bank has different requirements for a short-sale. Some you have to prove you have a significant hardship, some require you to be behind in payments, some even require you to be current in payments…they are all different in this respect.
A short sale is just like doing a negotiation on a debt owed. The bank agrees to take less IN EXCHANGE for a sale to minimize their losses.
You used to have to pay taxes on the difference as income, but there is a new law that is temporarily in effect to where you don’t have to do that.
You contact the loss-litigation department of your bank…NOT customer service.
PS: SHORT SALES DO SHOW ON YOUR CREDIT!!! Underwriters are trained to spot these!!!!!! Let’s say that you financed a house for $ 100,000, your payments were $ 700 per month, and you had the house for only 4 years and the underwriter notices that the “last payment” was only for $ 90,000. Well, that is IMPOSSIBLE if you only had the house for 4 years unless you put a huge chunk of principle down in the interim (which is unlikely)…the underwriter has the loan processor call the bank and ask if it was a short sale (you sign a paper giving them permission to do this when you apply for the loan) and that is when the mortgage company discloses that it was a short sale.
Some banks also report these as “settled” amounts or the underwriter notices several lates right before the house was sold, which is another tell-tale sign.
yes it’s possible – and a short sale is still better than a foreclosure although it will affect your credit – you need to show Wachovia you can’t afford the home anymore to qualify – talk to a local realtor – find one who specializes in short sales – and they will have you submit financial docs to your lender and start looking into qualifying for a short sale – good luck