Does your seller have a “TRUE HARDSHIP?” or have they just made many bad financial decisions?In our office we are finding out that the hardest thing that we are encountering when processing a short sale is not that we have to make multiple phone calls to the banks, collect docs, list the property for sale or even find a buyer, It’s submitting a true Hardship letter to the bank.Yes, the banks dangled a big carrot to the borrower and many took it. Whether it was in the form of a new loan or a cash out re-fi when the market was at its most profitable, we are finding more and more borrowers that want to get bailed out for their poor choices than borrowers who have a legitimate hardship. What do you do in cases like these?1.Pre-Screen your client. This is the best way to save time and money.2.After pre-screening your client, ask yourself if they are a true candidate for a short sale. If your screening process does not easily recognize a hardship, your client may not be a candidate for the bank or your company.3.Short sale candidates should be highly motivated to go through the short sale process. If you are chasing your client for needed docs, signatures and information at the beginning, you will be chasing themt all the way through the transaction.4.Know your self worth. Remember time is money and although your heart is in the right place for helping someone in need, you are in business to make money & earn a living. Many agents are not being compensated up front for the short sale service. It may take 90-220 days before you see your commission check and if the bank rejects the short sale, you may never get compensated for your labor or even receive a "thank you". Choose the client wisely.So what is a “true hardship?” Involuntary loss of job. A serious long term illness. A divorce is a hardship. Bankruptcy and Death are also hardships.Is anyone else getting their short sales approved that aren’t in these categories? Please let me know and feel free to comment on the above.
Hello Karen. You asked a very good question. I think if a borrower could show that they've had the same balance or roughly near to it and the interest rate still went up then it may be a hardship. If the borrower could show that they are using their credit card to pay off medical bills etc because they don't have money and the interest rate kicked in to 30% then I would definately argue the illness for the borrower.
At the beginning of summer the news stations were reporting that banks were cancelling credit cards for those who weren't using them. Even those who were keeping small balances on them were getting their cards cut off.
Lastly, I think that if the borrower shows that they are maxing out their credit card, therefore the late charges and finance charges were taking the balance over the limit, then the banks are going to hit you for the max as a penalty.
With all the credit cards increasing the rates to 30% does this qualify as a hardship? Even if you qualified well when you purchased, now your debt to income ratio is compromised and is forcing many to file bankrupcy or try a short sale.
Hello Denise. You are correct, a true hardship is the basic ingredient to the recipe AND that we as agents are assisting with the short sale transacation who truly qualify. We have to do the same thing on short sales as we do when our services are requested to list a property, that is to interview the client and get in their business to find out their motivation. Thank you for your comment.
A true hardship is the basic ingredient to this recipe. Many homeowners believe somehow they qualify because their bad real estate decision.
In my area there are some wealthy homeowners trying to take advantage of this process and the banks do put on the brakes. Thank goodness...it "behoves" me to know when greed takes over.
As an agent it is our responsibility to the transaction to seek assistance w/ a Short Sale transaction for those homeowners whom truly to qualify for bank assistance. Amen!
Comments
At the beginning of summer the news stations were reporting that banks were cancelling credit cards for those who weren't using them. Even those who were keeping small balances on them were getting their cards cut off.
Lastly, I think that if the borrower shows that they are maxing out their credit card, therefore the late charges and finance charges were taking the balance over the limit, then the banks are going to hit you for the max as a penalty.
A true hardship is the basic ingredient to this recipe. Many homeowners believe somehow they qualify because their bad real estate decision.
In my area there are some wealthy homeowners trying to take advantage of this process and the banks do put on the brakes. Thank goodness...it "behoves" me to know when greed takes over.
As an agent it is our responsibility to the transaction to seek assistance w/ a Short Sale transaction for those homeowners whom truly to qualify for bank assistance. Amen!