I MIGHT be jumping the gun a little bit but what we have been hearing is that lenders will start to allow short sales without a reason of hardship. Wow, that will bring out more homeowners that are underwater that would just like to get rid of their sinking ship. Obviously the outcome also will be that home values will spiral down some more, right? Is there any truth to this “rumor”?
I have been researching this topic for a couple of days and I can’t find any new information on it but my sources are very reliable. I will definitely keep you posted, since I am on this topic and I want to just broaden your knowledge about short sales some more.
A hardship letter that lenders ask for usually is usually a letter that homeowners type up to explain their current hardship situation. The most common is the curtailment of income (loss of hours worked) we are always stretched to the limit on our payments and when our income sources decreases that often changes our ability to pay. Unemployment was the main reason of default the past few years and of courses there are illness, death in the family, exotic mortgage terms, etc… Increased in expenses and excessive debts is pretty popular too.
Sometimes a hardship is a matter of perception. A hardship is defined as a condition that is difficult to handle or support. It may involve a form of suffering. You don’t have to be literally looking like you have not eaten in months, to claim hardship. It could be a family member who supports you -- financially or emotionally or both -- or on whom you rely for support that has suffered a hardship.
TOPIC: A common question now from homeowners: Buying a New House and Doing a Short Sale on the First Home
To buy a new home, most homebuyers get a mortgage. A new mortgage involves showing the lender your tax returns. Your tax returns will indicate that you own a home. It is very easy for your new lender to find out that your home is upside down. The mere fact that you owe more on your existing home than it is worth is enough of a reason for many underwriters to kick your file out of underwriting and deny the loan. Unless, you can qualify for both mortgages and do not have any mortgage late payments within the past 24 months.
•Buy and Bail
Why would the bank deny your loan if you are current on your mortgage payments and have an excellent credit report? Three words: buy and bail. Buy and bail is considered mortgage fraud. If you lie and say you plan to keep your existing home when your intention is to walk away, that might be considered mortgage fraud as well. I suggest you think more than twice before you do this, you don’t want to have two problems on your hands that would create a bigger mess.
•Strategic Short Sale
It is very unlikely that the bank will grant you a strategic short sale on your existing home after buying a new home -- even if you do meet the qualifications to own two homes. The bank will not reward you for your financial smarts to think ahead. Furthermore, the bank will see that you had previously qualified to own two homes, and you enjoy a good credit rating; why should the bank let you off the hook at this point?
The twist in all of this is if you have a financial hardship, then you won’t qualify to buy a new home in the first place. However, if your financial hardship was sudden, without notice and extreme, you might qualify for an exemption. Think about this, your Realtor will not be responsible for this decision, they will see you a home but the consequences are there. Please review and consider carefully.
TOPIC: Refinancing without any income documentation or if the property is really underwater.
Banks have programs out there thru the Obama refi that will allow more than 125% LTV on a refi, I know for a fact that Citimortgage will even do a refinance without any income documentation. The later is on very selected properties; if you have a loan with Citimortgage and would like a quick refinance without any income documentation, please Call Ken to get details. Again, this is not for everyone but selected few depending on the actual investor.
Now, the 125% Refinance means if your property is only worth $400K and your owe $500K, you can refinance your existing loan amount of $400K without having to pay a PMI (Private Mortgage Insurance). One of the major condition is that your loan has to be owned by Fannie Mae or Freddie Mac, to check please go to “Makinghomeaffordable.com” and go to the loan look up drop down, then it will tell you if you are either a Fannie or Freddie. Then of course, you have to have good credit to get great rates and most of all qualify based on the guidelines.
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Thanks for all your inquiries, please call Ken Go of 1st Innovative Finance Group at 562-508-7048 or write to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
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