Short Sale Blog

There has been some confusion regarding when mutual acceptance is, in regards to qualifying for the tax credit.

The WA Association of Realtors Legal Assistance Hotline has issued their opinion that mutual acceptance is when buyer and seller have reached agreement. The approval from the lien holder is simply one contingency in the agreement.

Form 22SS discusses mutual acceptance, but it is only in regards to the "computation of time" and does not apply to this situation.

In conclusion, you do not need the lien holder's approval by April 30, 2010 in order to get the tax credit.

Let's get those offers in!

Please let me know if you have any questions.

To your success,

Ross Kilburn
Seattle Short Sales, Inc.
800-603-3525 (office)
888-860-1314 (fax)

In Washington State, by the last day of February 2010, 9.1% of loans were delinquent. This figure was provided by a new report issued by Lender Processing Services. LPS states that of those delinquent loans, 7.8% were already in default and starting the foreclosure process.

Nationally, the total non-current loan figure, including both delinquencies and foreclosures is at 13.5%. This includes 1.1 million loans that were current at the beginning of January and became delinquent or entered foreclosure as of February month end.

In February, nationwide, 4.56% of loans rolled into 'worse' status vs 2.22% that improved. Total delinquencies nationwide increased 21.3% since February 2009.

These numbers are staggering. The one bright spot is that HAMP loan modifications seem to be picking up speed. In addition, the new HAFA (Home Affordable Foreclosure Alternatives) is just starting to roll out, and should help homeowners pursuing short sales.

Seattle Short Sales, Inc. has seen a dramatic increase in homeowners pursuing short sales in the Seattle area. For help with your situation, please contact us today.

Many homeowners considering a short sale as an option to avoid foreclosure, ask Seattle Short Sales, Inc. what it takes to get their short sale approved.

The answer is that it varies by case. It depends on the policies of the investor who owns the loan, and the polices of any mortgage insurance company that may be insuring the loan for the investor.

One mortgage insurer, Mortgage Guaranty Insurance Corp. (MGIC) just released new guidelines for expedited short sale approvals. These guidelines are provided to the servicers of the loans. In most cases, if you are making your mortgage payments to Bank of America, Wells Fargo, or Chase, your lender doesn't own the loan. They are simply servicing the loan for the investor. Investors may be private hedge funds or Fannie Mae or Freddie Mac.

Servicers must get approvals from the investors and, if applicable, the mortgage insurance companies to move forward with a short sale. The new MGIC guidelines give an automatic fast track go-ahead if the short sale application meets certain criteria.

• The property must be owner-occupied and at least 60 days delinquent
• The loss on the sale must not be greater than $75,000, based on a broker price opinion (BPO) or appraisal performed within 90 days of the sale.
• The property must be sold in “as-is” condition
• The sales price must be within 90% of the home’s value after repairs.
• Net proceeds at closing must be at least 82% of the “as-is” value.
• The borrower cannot receive any money from the short sale
• The borrower must prove a hardship. Acceptable hardships include job loss, involuntary relocation, divorce, reduction in income used to sustain mortgage debt, serious illness or a call to military duty.

The servicer must first determine credible hardship. Then, the servicer must analyze the borrower's financial situation. The borrower’s monthly positive cash flow must be less than or equal to $200, short-term savings must be less than the total of three full mortgage payments and long-term savings are less than or equal to $50,000.

If these guidelines aren’t meant, the servicer must submit the short sale request to MGIC for review and approval.

In Seattle, many short sales and homeowners do not fit this criteria. The majority of short sales that Seattle Short Sales, Inc. works on have total discounts well over $100,000. It may mean that the short sale application takes a bit longer, but in the end, if the lender views that the offer on the property is fair-market value, then they are inclined to take the offer.