I have a big problem and I can't seem to get an answer from anyone. I don't want to bore you with the details but I need to lay the whole story out. My client has a Government job with top secret clearance. He cannot default on his loan at all. No short sale, no foreclosure and no lates on the mortgage payments. His wife lost her Job and they are living with the one income and he has never been late on the mortgage. Trying to be proactive, he called and initiated the process because his savings are quickly being depleted and it will become a struggle in 2 to 3 months to pay the mortgage and expenses or the family. He has 2 small children also. We had the house on the market and received an offer that meets what the Wells Fargo's appaisal came in at. The buyers are waiting patiently for an aswer. My question is, Has anyone had the experience of trying to get a short sale done when there is no default? Default is coming but at this ponit, default means his termination as per his superiors who researched the companies stand on that issue. We were told that he cannot go 31 days and then get the account back up to date on day 32. He has to stop paying in order for them to start the process of contract review. Any suggestions? We are in dire straits right now. Any help would be greatly appreciated. We called Hud and explained the situation to no avail.
I've dealt with homeowners who have had security clearances similar to your clients.
Short sales can be done at any time, however, as you know, the sale of the property will not clear any outstanding debt and the credit rating WILL be affected, it will usually end up being listed as either a Default/Voluntary default on the credit report.
Depending on what state that the homeowner lives in they will also have to deal with the IRS for the 1099c liabilities.
Why not just put the property on the open market, it will circumvent the short sale liabilities. They WILL still have some outstanding debt to pay back to the bank, but, depending on their tax situation, they would end up paying back for the untaxed remainder in any event anyway.
If they want to keep the property, and are qualified, AND if their lender participates, why not see if they can apply for the MHA/HAMP program? HAMP has an Immanent Default process where the property does not need to be behind in payments for qualifications. Some investors have a similar process, but most will require a minimum of 90 days delinquency in order to qualify.
Deric, what Reuben says about the imminent default is correct. Have your client locate a local housing counseling agency. This will help in the negotiations with the bank under imminent default. The bank may also decide to offer them some other type of solutions, as well.
Wish you all the best.
"He cannot default on his loan at all. No short sale, no foreclosure and no lates on the mortgage payments."
I wanted to get some clarification on this statement. I understand as they need to maintain current, but you stated they can not short sale as well?
If he is allowed to short sale while current and this will maintain his security clearance we would do the following. We know you stated you already reached out to HUD, but at times it's all about who you speak to and how communicate the clients situation. One person may not help you as another will. So i would give this another shot.
Also, I would reach out to high level Well's Fargo FHA contacts and communicate the clients circumstances and have them place a variance to allow the Pre Foreclosure Sale to go through while the client is current. This may be possible, but it's not guaranteed.
Best of luck and if you need any assistance please feel free to reach out to me as my door is always open.
I did not mean to put "No short sale". He can do a short sale but it would have to be a non default short sale. I will take your advice and begin climbing up the chain to get someone higher up involved. The person we spoke to was a customer service rep and not very high in the chain of command at Wells Fargo. I appreciate your offer to help and may send a quick question should I get stumped. Thanks again for your suggestions.
The other alternative you have here is to call the FHA National Loan Servicing Center to apply for variances on this situation. If you need that contact number, email me privately for it, but many times, this has worked for me. It is not HUD, it is the executive escalation for FHA.
I thought that was the number we called before. Perhaps it is not. The people we spoke to there were not the friendliest and we got nowhere fast with them. Answers were "Short and Bitter". They spoke over my client while he was trying to speak in order to get the point accross. I will email you privately and see if the number or department we called is the same. Thanks a lot and maybe this is what we need. I appreciate your time in helping me with this. I think we called 1-800-call hud or something along those lines.
There are some lender that insist the mortgage to be late before they will allow a shortsale. I went to Wells Fargo event and they stated they will do shortsale when current on the mortgage. This is recent change in past 6 months, so the employees probably don't know about the change in policy. Need to good hardship letter. I had a client I was doing 3 short sale and trying to get him HARP on his primary residence. In order to qualify for the HARP he had to be current on all mortgages. I wrote a letter to lender to allow the short sale move forward while the homeowners current. I don't understand why lender would refuse money when they are taking big loss. I would send a letter to lender explaining the customer will lose their job. Escalate the file if you get no response.
The short sale will show on his credit after it is closed. It may say, "short sale $0 settle for less" shortsale paid as agreed $0 balance. I work with company that repairs credit and has been very successful getting short sale and foreclosures off people credit. www.FixYourCreditNow.US 310-977-7822.
Wells Fargo was willing to move forward on the file. This is an FHA loan and FHA guidelines (according to them) is that the loan has to be delinquent before they will move forward on it. We have tried every option that we know of and still they will not proceed with the sale until the buyer is delinquent which is not allowed by my sellers employer. They consider the delinquency to be "reckless" on the part of any employee who cannot maintain his current obligations. The fact that his wife is not working is not even considered. We will keep tryuing to get through to FHA and see if there is anything else we can do. Thanks for the response and I appreciate your time.
There will mark put on his credit for doing the shortsale. It will read "short sale paid in full, settle for less"
or "paid, $0 balance less". I don't see a way of doing the short sale without it reflecting on the their credit report,
even if the lender allows them to pay. I am working with a company who has been successful getting the shortsale and foreclosures off people credit. I not sure if they can clean up the credit before the employer finds out. I would ask lender or his job to see what options he has.
California has govt program to get people current on their mortgage when they get behind.
Maybe an option. If they can't afford the house with wife income, than may have to sell.
Better to get the shortsale done this year for tax reason.
FHA short sales are a bit different - I would contact FHA. I'll send an email to the Rep that is helping nudge Wells Fargo along on a file of mine - maybe she can suggest a name or contact.....
Thanks Wendy. That would be great if you could do that for me. I appreciate your response and offer to help.