I'm asking this question to see if anyone else has done a short sale like this before.
Here goes: Seller of the home on title is let's say: John Doe. But seller is NOT the borrower on the loan. Name of borrower on loan( which was a Wachovia loan, now bought out by Wells Fargo) is let's say: Joe Smith.
Can a short sale be done? Seller is on title as the owner of property when you pull the records, but the borrower on the loan is a different person? We are in CA. This is not an uncommon thing here in CA,
but I've not come across a seller needing to do a short sale in this position before.
Technically all the financials for the borrower would still be sent in to bank....tax records, bank statements,paystubs, hardship letter...yet listing agreement would be in seller's name and 3rd party form would be in BOTH names.
This should be able to be done...right?
Just asking...hope I made myself clear???!!!! lol
OKAY HAVE SAME PROBLEM IN RI AND MASS ANYBODY GOT AN ANSWER ???
Never run across this exactly, but I've just had two short sales similar.
In one case, the wife was on title, but wasn't a borrower. We had to write the listing and purchase contracts with her ON them, but BoA needed her quit claimed off before they could issue to final HUD approval.
In the other, divorced couple, the ex-wife was already quit claimed off, but was on both loans. We wrote the contracts in his name only, since she had no property rights. And just the opposit occurred: Aurora Loan (1st) and BoA (2nd) wanted her quit claimed back ON before they issue the approval of the HUD.
I'd go ahead and submit it just the way it is, but would submit the finances of both individuals, then see what the banks ask you to do.
You've got it right. The bank will need the financials of the person on the loan but the person signing your listing contract will be the one on title. For your own protection, I would recommend that you have the borrower sign a disclosure as to the fact that short sales damage your credit, etc. In AZ we have a standard disclosure and informational form that we have each seller sign. In this case, it just seems to be more important because the person isn't on title but his/her credit is being affected.
I have done transactions where two people were on title and only one was a borrower. The bank treated those transactions as if the 2nd person on title didn't exist (in terms of asking for documentation, etc). Your situation might confuse them at first, but they should be able to get it approved.
Is this an "Arms Length Transaction" ?
The banks will probably have that disclosure, and what is the relationship of the parties???
Whether they will do the short sale or not will be based upon the investor. There is a case where WF refuses to do the short sale because the owner transferred ownership to his business. He transferred it back, but WF doesn't care - refuses to do the short sale. WF can be pretty pointy headed, so I don't know if this is WF being brilliant or the investor really has guidelines like this. I have seen Ginny Mae refuse short sales before. I'd say on principle, but can you say that when the principle is screw up the return on investment as much as possible? Hmmm..
You might be able to short circuit the confusion by having the owner quit claim the property back to the original owner. After all, you only need to raise a faint red flag to throw a wrench into short sale works at banks - better to look as normal as possible..
I've had similar issue in short sale with BOA. Seller was on title, loan in another person - required all documentation of financials to be the person holding the loan with BOA & required quit claim just prior to closing to relinquish from Seller on Title back to person holding note. Otherwise would not approve short sale. Person on Title had no credit dings as the note was in the original note holders name. There was a deficit but written off due to being a purchase loan & never refinanced. This was in California.
The Bank refused to allow the short sale to close escrow in person on Title's name. The HUD had borrowers name as Seller. Approval came back for person on title to have no future interest in property or claims. Quit claim back to note holder to match on title.
I am not sure of the relationship between note holder and Title holder - but would need cooperation from both parties to complete transaction. I'd check to see if person holding title is willing to sign back over prior to closing to ensure the short sale will be approved. & Vice versa person holding note willing to provide necessary documents to allow approval. Oh, and worked closely with the Escrow so that the person on Title was promised that the note holder would not change their mind at last moment and interfere with closing.
Relationship between the two parties will be a key factor.
I'm interested to see the comments for this, we have a very similar situation. If anyone has any suggestions I'd welcome it. Looks like we will be dealing with Bank of America and CitiFinancial for ours.
A family compound was split up and is now 4 parcels which I will call A, B, C and D for clarity's (what little there is) sake. There are 2 mortgages. Both Mortgages are held by "Jane". Properties A and B are in "Jane"'s name and properties C and D are in "Betty"'s name. One mortgage covers properties A and C, the other mortgage covers properties B, D and a small part of A.
Now to finish off the complications, properties A and D are on the market for sale and owners are trying to retain properties C and B.
If anyone can follow this confusion and has any suggestions, please let me know.
Ive come across this in Texas, community property state where the wife is not a borrower on the loan but the mother in law is a borrower but with another scenario... First question,- Is there a power of attorney from the person on the title? If not, there needs to be clear authorization because the banks concern is with the borrower and having that power. I have a case with Bank of America as well, they used the power of attorney signed off by the person on the title but needed the borrower's info to do the short sale, the hardship letter explained a lot to move to approval.
The borrower probably transferred title after getting the mortgage without getting their lenders approval. They will have to transfer title back in their name prior to approval/closing.
The title owner is NOT A PART OF THE SHORT SALE, only the CLOSING. All documentation and negotiation is with the entity/person on MORTGAGE.