Short Seller’s should continue to make payments.

Realtors, do not advise your sellers to stop making payments on their monthly mortgage when they are participating in a short sale. Why, you ask. Banks consider many things when determining if they will accept a short sale and of those many things they consider, the Seller’s Net is the most important. Now before I get ahead of myself, understand that in a short sale, the homeowner isn’t walking away after closing with anything other than debt and when I say “Seller” I am specifically talking about the bank and when I say “homeowner” I am talking about the actual person residing in the home or at the very least, is responsible for paying a monthly mortgage on the residence. Ok, with that being said, back on task. The seller’s net sheet is affected, positively or negatively based on the monthly payments or lack of payments by the homeowner. So, if the homeowner isn’t making monthly payments then the amount of loss the bank incurs increases monthly. Let me assure you, increasing monthly expenses on the part of the bank isn’t going to make it easier for them to accept the short sale. Ultimately, they have a bottom line and granted, they aren’t going to share that with you. Because of falling values chances are you priced your short sale to sale in 30 days or less which most likely means you may very well be at the bottom of the banks bottom line, by the time you get the first accepted offer. In other words, any additional expense the bank is forced to incur because your homeowner won’t pay, can’t paying or isn’t paying his monthly mortgage, the more likely it’s just more cost effective to simply foreclose. My advice to you homeowners, pay as much of your monthly mortgage as possible so that you have a better chance to close the sale. My advice to you Realtors, you better be getting monthly updated pay off statements and sending in monthly revised estimated HUD-1’s otherwise, you may get a nasty surprise the day of closing when the bank refuses to close.

You need to be a member of REO Pro Network to add comments!

Join REO Pro Network

Comments

Jesus (Jesse) Gonzalez January 22, 2009 at 1:53am

I have never had a homeowners payment, partial or not, returned. As for slowing down foreclosure....don't really think that is going to happen short of balance due in full. At the very least, it a goodwill gesture showing a commitment to cooperate.
Troy Sage January 21, 2009 at 6:47pm

This is all good information to know. Just wondering if you know how it plays out for a bank to take a partial payments. Will this slow the foreclosure process (similar to an eviction)? sorry for the silly questions but it ran across my mind and wondered if you know.

Wondering if you have ever had a owner send in a partial payment and the bank returned the check? If so what do you suggest to your owner from there?

Thanks in advance for your time.
Jesus (Jesse) Gonzalez January 19, 2009 at 9:25am

Yes, i am saying it is wise to tell the homeowner to send it whatever they can afford. Yes, it is true, some banks "say" they will not accept a partial payment but, i have never had a bank return a check when they get it.....so, tell the homeowner to send in whatever they can afford. Yes, thier are specific banks that "say" they won't accept partial payment but, again, i never had one return a check yet....lol

Hope that helps.
Troy Sage January 19, 2009 at 6:50am

So are you saying that the homeowner should send in whatever they can afford? It's been my experience that the banks won't accept partial payments. Are there specific banks you are speaking of or is this a general statement? I totally agree with you regarding the estimated HUD. Thanks for a great post.
Jesus (Jesse) Gonzalez January 16, 2009 at 9:21am

It is true, banks typically will not consider the short sale option untill 3 months of payments have been missed. This is because the Short Sale isn't a short term solution. More specifically, they see the Short Sale as a Long Term Fix to a Long Term problem but, that doesn't mean homeowners should just stop paying.

The point, the more payments missed the tighter it becomes for the bank's net and therefore, the more likely it will be more cost effective for the bank to foreclose rather than short sale.

Either way, each month you should be getting a new payoff and doing a new Estimated HUD-1 and providing that to the Negotiator for the bank.
Carlos H. Silva Sr. January 16, 2009 at 8:22am

It is my understanding some banks will not consider a short sale unless the homeowner is delinquent, missed payments. As a matter of fact we've been told not to contact them until the homeowner has missed 2-3 payments. Are we talking to the wrong person or not saying the magic words?

This reply was deleted.