I wouldn't say I have been avoiding short sale listings, but thankfully, most of my clients do not have to go this route at this time.
Why am I thankful? Because statistics show that the majority of short sales never culminate in the sale of the owners home. This short sale is another one of those statistics.
Seller purchased home in 2005 at height of market and shortly thereafter had a life change and had to move to another home.
Market dropped and home is upside down (seller owes more than the home is worth).
Seller remodels home in hopes of attracting a buyer and lists home at a price that will get seller out of home just breaking even.
Market drops more, homeowner lists home as short sale, receives offers and submits to bank.
Here's where it gets interesting.
Chase asks for way more documentation for sellers hardship than previously seen before. A standard hardship letter is not sufficient anymore. Two letters along with a time line of ALL THE EVENTS leading up to the short sale, in chronological order from date seller purchased to now are required. These events clearly showed the seller has a hardship and in my experience, would have been approved if these offers had been submitted just a few months ago, but Chase told seller that under President Obama's current guidelines for short sales, seller does not fit the criteria BECAUSE HE MOVED OUT OF THE HOME more than a year ago.
I talked with a colleague yesterday who said the bank approved the short sale for one of her listings and the owner is an investor who has tenants in the home.
I'm not sure if Chase is misinterpreting the new regs, or if the other agent is working with someone who isn't aware that the rules have changed.
The seller loses, but the bank loses as well. The offers on the home were far more than the bank will receive if the home becomes an REO. If that happens, the neighborhood loses as well with a further decline in home values. There are no winners when it comes to foreclosure.
Times are a-changing. More documentation is being required than ever before for any type of transaction from a short sale to a conventional mortgage, where underwriters and account executives are running scared that funding a bad loan may cost them their job. Let's hope we soon find a middle ground where the banks are protected, but consumers are as well.
Thank you for stopping by. Your comments on this post are welcomed and appreciated.
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This is kind of scary Fran. Thanks for the heads up on this hardship change with chase.
It will be interesting to see how this change is implemented especially with the coming California moratorium on foreclosure for banks who do not try hard to work with people struggling with loans.