It seems that everyone I meet with lately is trying to dodge missing payments. This makes me a little timid in listing the home. Is anyone else seeing this or working with any banks that completely reject this from the beginning?
We just had one denied by BofA because they weren't 60 days late and they said it was a Fannie Mae rule. We don't ever advise people to go late on their 1st as it can have adverse credit consequences. However, we do stress to the homeowner that it could delay or kill their short sale if they're not. Kind of a double edged sword.
On the 2nd mortgage, we strongly recommend that they not go past 60 days late as then we have to possibly deal with the account being charged off and going to collections. When that happens, we've found it becomes much more difficult to get the 2nd to settle for a small amount to allow the short sale.
As Ellen said, it usually depends on the investor. Some servicers, such as SunTrust will not entertain a short sale unless the borrower is delinquent, regardless of the investor's rules.
I have reccently had several short sales approved and settled while they remained current. One was with BoA with Freddie Mac as the investor and the other was IndyMac/OneWest Bank with an unknown investor (we only know it was not one of the GSEs.)
I suggest you check with the lender(s) about the investor's rules about mandatory delinquency. If the seller can keep current the credit damage will be much less. Each time a payment is missed, it is reported to the Credit Bureaus and a hit is taken.
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