Most lenders will consider allowing a Short Sale if there has been a change in circumstance after the loan was initally obtained which prevents the borrower from making payments. Exceptions exist when a loan is sufficiently “upside down” that the investor considers approving a short sale for a seller with no hardship, who is pursuing a so-called “strategic default”.
Some of the possible reasons for hardship:
- Loss of income
- Job Loss
- Divorce
- Job Transfer or Military PCS
- Medical Bills
- Mortgage Rate Reset
- Death of Breadwinner
The lender will want a Hardship Letter explaining what happened to cause the inability to keep up with mortgage payments. An unsatisfactory reason would be “the market has declined”.
If a seller has substantial savings, and sometimes not, the lender may ask for a “contribution” to offset some of the loss. Additionally, the lender may ask for a “promissory note” if the borrower shows a good income stream or potential for such. The promissory note will often a favorable rate and terms, such as 0% interest over five to seven years. Promissory notes can be negotiated for start date, rate and term or even to meet a payment amount.
Contact Wendy Rulnick, short sale agent to discuss your hardship or chance for short sale approval at 850-259-0422 or email [email protected]