5 ‘Insider Secrets’ To Short Sale Approval – Absolutely Avoid Foreclosure In Florida!
Scoring short sale approval depends on receiving & acting on accurate, timely advice, clearly proving hardship to the bank.
Walking away from a “bad house problem” with no or little CASH demand in exchange for short sale approval requires you to prove documented financial hardship.
To begin, you need a clear, short letter (called a “hardship” letter) stating your reason(s) for not being able to satisfy your debt obligation.
Important: No bank considers “upside down” to be a hardship. PLEASE don’t waste your time trying to walk away on short sale with no deficiency (if) the bank believes you can make your payment.
What you first need to know is that a real person at the bank will read your hardship letter. Therefore, please pay attention to these 5 hardship letter tips:
1. Your hardship clearly must relate to your inability to pay your debt now or later. Not long ago, a short sale negotiator-friend was involved in a short sale with two doctors (husband/wife). They were short selling a $1.3M home. Property had dropped to around $700,000. Along with the property’s value, the doctors’ income had dropped as well.
On paper, doctors did not appear to be hurting financially. I was NOT hopeful for an approved short sale, despite the buyer’s strong offer and the 3rd part appraisal confirming reduced value. Lo and behold, we got the bank (just one lien holder) to approve short sale with one contingency – bank required borrower (husband/wife) to pay $18,000 cash at closing or $32,000 promissory note.
Seriously, I was jumping all over myself. None of us could believe it. However, our excitement was short lived – the two doctors REJECTED the short sale offer! “Mr. Doctor” said, “I’m not giving them one red cent! We bailed them out. No, we’re not paying another red cent.”
And that was their final answer. No amount of reasoning with them about Florida’s 20 YEAR statute of limitations on judgment debt would change their minds. Last I heard, bank foreclosed on these doctors. I fully expect judgment creditor to pursue collections. Why do I expect this? Because the doctors have the means to pay.
2. Your bank doesn’t consider it hardship if your mortgage person or title company or realtor didn’t tell you something that you feel one or all should have told you – don’t waste your time.
3. You need to handwrite your hardship letter. Appears to be a small detail but real people read these letters. Borrower should write hardship letter in his/her/their own handwriting – in your own words, why can you NOT continue paying?
4. You need to keep your handwritten hardship letter to no more than 1 page – even better 3 or 4 short paragraphs starting with WHY you can’t afford the house and request short sale approval in the interest of both parties;
5. Your hardship letter needs to be supported by the financial information you provide your bank. You’d be surprised just how often I see a hardship letter sounding as if the home owner is one step from the soup line, only to see assets and vacations and $1000s spent on eating out, buying gifts & expensive cars.
A “bad” hardship letter doesn’t automatically reject your short sale but you might have a more difficult time walking away without a promissory note or lump sum payment at closing.
No matter what, please control yourself from getting too angry with banks & short sales. Anger only makes the situation worse. Believe me when I say I understand anger, confusion, fear, doubt, etc. I have short sold two investment properties. I KNOW anger!
You need to do everything the bank asks you to do, even if you already have done everything before that point. It is what is is. Faxing for the 3rd time? Just fax it for the 3rd time. You see, the alternative to short sale is HORRIBLE – foreclosure. Do you recall hearing me mention something WORSE than foreclosure?
The answer is JUDGMENT. If a bank forecloses, debt owner automatically receives judgment. In Florida, judgment legally allows debt collectors to chase you or bang on your front door for up to TWENTY years! This is the horrible secret banks do not want you to know.
Important: If you get a chance to settle a debt, please do it to make the “house problem” go away. If you or someone you know wants/need to sell or buy a home, please call me.
For more information on avoiding foreclosure and considering your options, please review 2 short videos:
Sarasota Foreclosures -5 Dangerous Foreclosure Myths
Sarasota Foreclosure Traps Destroy Unaware Homeowners!