Short sale of my rental

[sakina96]

I rent a property in north county. The property was purchased for something like 620K. I don’t know the details but the owners put no more than 5% down and their ARM is about to reset. The property is currently listed for 470K (short sale). There has been quite a bit of interest in the property so I’m sure an offer will be made soon.

For those in the business…what are the odds that the bank will accept a short sale. Or to phase it another way, should I stay put and ride things out or do I start looking for another place to live?

[NotCranky]

If the bank approved of the 470k list price that property is likely going to sell because of the traffic(interest shown). If it is an agent who has dreamed that number up and is going to try to present a surprise offer to the lender it might not happen.This last scenario is not very likely. My semi- educated guess is that odds are in favor of the property going to escrow.It could also just be a rush of interest that fades. If you go, you are taking control of your own destiny. If you wait, you will at least get standard notice and things will probably be fine. It is really up to you.
You might want to find out if an investor buys the property too. Maybe they would take you on as a tenant.

[NotCranky]

If the bank approved of the 470k list price that property is likely going to sell because of the traffic(interest shown). If it is an agent who has dreamed that number up and is going to try to present a surprise offer to the lender it might not happen.This last scenario is not very likely. My semi- educated guess is that odds are in favor of the property going to escrow.It could also just be a rush of interest that fades. If you go, you are taking control of your own destiny. If you wait, you will at least get standard notice and things will probably be fine. It is really up to you.
You might want to find out if an investor buys the property too. Maybe they would take you on as a tenant.

[SD Realtor]

There are alot of variables in your question so it is hard to answer. Sounds like they how about 590k according to your post. Hard to say if the bank will take a short. Banks have been pretty cruddy about accepting shorts. However if the bank doesn’t take it then they will eventually foreclose. However generally it takes at least 3 missed payments before the lender starts to act. Also I find that lenders will not even look at short sale offers unless the home has been listed for at least 3 months. So.. it looks like you have some time, but make no mistake, eventually you will be needed to move.

SD Realtor

[SD Realtor]

There are alot of variables in your question so it is hard to answer. Sounds like they how about 590k according to your post. Hard to say if the bank will take a short. Banks have been pretty cruddy about accepting shorts. However if the bank doesn’t take it then they will eventually foreclose. However generally it takes at least 3 missed payments before the lender starts to act. Also I find that lenders will not even look at short sale offers unless the home has been listed for at least 3 months. So.. it looks like you have some time, but make no mistake, eventually you will be needed to move.

SD Realtor

[HLS]

I’d say that you have plenty of time, and probably not have to move at all. Many real estate agents mislead sellers about the possibility of a short sale.

Lenders are not the borrower’s partner in the loan.
Just because the property has dropped in value, doesn’t mean that the borrower can complete a short sale, especially on a rental property.

A short sale hardship application package needs to be submitted to the lender. If the borrower has assets, they CAN afford the payments, although they may not want to pay them.

They probably won’t get approved. This is a rental property, not primary residence.
Your landlord probably has other assets, and until those are exhausted and it’s a hardship to pay, why should a short sale even be considered. They are getting rental income from you.

If a short sale was as easy as saying my property is worth less than I owe, I’ll do a short sale, there would be 10 times the number of properties on the market (or more)
Seems that some real estate agents don’t understand this.

Regardless of what a borrower tells the lender, as long as payments are being made there is NO problem in the lenders eyes.

Once the borrower misses a few payments, the service company will yawn and start some communication, it’s just another statistic to them.

Your landlord’s credit score will be whacked 150-200 points or more due to late payments.
A non neg am loan payment plus taxes & ins will cost them over $4,000 a month.

Like many other foolish people, your landlord got involved in a game that they didn’t understand the rules,playing way out of their league.
He took a gamble and lost, There is a price to pay.

If a short sale were accepted, I wonder if your landlord knows that they could get a 1099 from the lender, and that $120,000 +/- of debt relief will be reported as income to them, and they will owe income tax on that amount for the current year.

If I am wrong, you should get at least 60 days notice to move. If they let the property go into foreclosure, you may get a notice from loan servicer to start making rent payments to them. That’s when it gets sticky, because your rental agreement is with landlord.

Without knowing more about your landlord’s financial situation it’s hard to say, but if they own a primary home and have a job, some equity or other assets, I wouldn’t worry about filling out a change of address form anytime soon.

Not wanting to pay OR really not being able to pay is the issue.

[HLS]

I’d say that you have plenty of time, and probably not have to move at all. Many real estate agents mislead sellers about the possibility of a short sale.

Lenders are not the borrower’s partner in the loan.
Just because the property has dropped in value, doesn’t mean that the borrower can complete a short sale, especially on a rental property.

A short sale hardship application package needs to be submitted to the lender. If the borrower has assets, they CAN afford the payments, although they may not want to pay them.

They probably won’t get approved. This is a rental property, not primary residence.
Your landlord probably has other assets, and until those are exhausted and it’s a hardship to pay, why should a short sale even be considered. They are getting rental income from you.

If a short sale was as easy as saying my property is worth less than I owe, I’ll do a short sale, there would be 10 times the number of properties on the market (or more)
Seems that some real estate agents don’t understand this.

Regardless of what a borrower tells the lender, as long as payments are being made there is NO problem in the lenders eyes.

Once the borrower misses a few payments, the service company will yawn and start some communication, it’s just another statistic to them.

Your landlord’s credit score will be whacked 150-200 points or more due to late payments.
A non neg am loan payment plus taxes & ins will cost them over $4,000 a month.

Like many other foolish people, your landlord got involved in a game that they didn’t understand the rules,playing way out of their league.
He took a gamble and lost, There is a price to pay.

If a short sale were accepted, I wonder if your landlord knows that they could get a 1099 from the lender, and that $120,000 +/- of debt relief will be reported as income to them, and they will owe income tax on that amount for the current year.

If I am wrong, you should get at least 60 days notice to move. If they let the property go into foreclosure, you may get a notice from loan servicer to start making rent payments to them. That’s when it gets sticky, because your rental agreement is with landlord.

Without knowing more about your landlord’s financial situation it’s hard to say, but if they own a primary home and have a job, some equity or other assets, I wouldn’t worry about filling out a change of address form anytime soon.

Not wanting to pay OR really not being able to pay is the issue.

[sakina96]

Thanks for the responses. In speaking to the realtor, my impression is that they have unilaterally decided on the price. Once an offer is made they plan on submitting it to the bank for for approval of a short sale.

[sakina96]

Thanks for the responses. In speaking to the realtor, my impression is that they have unilaterally decided on the price. Once an offer is made they plan on submitting it to the bank for for approval of a short sale.

[HLS]

OK,, Please update the forum when you can.

I wouldn’t start packing yet.

[HLS]

OK,, Please update the forum when you can.

I wouldn’t start packing yet.

[PerryChase]

I’m with HLS. You have plenty of time.

Remember, as the tenant, the home is YOUR home for as long as you’re paying rent. You don’t need to facilitate the sale and make sure that the lender knows that you’re the tenant (so the lender doesn’t think that the owner is selling his personal residence. You know, people lie).

If I were you, I’d flatly refuse to show the house to potential buyers. You’re entitled to undisturbed enjoyment of the property you’re paying for.

[PerryChase]

I’m with HLS. You have plenty of time.

Remember, as the tenant, the home is YOUR home for as long as you’re paying rent. You don’t need to facilitate the sale and make sure that the lender knows that you’re the tenant (so the lender doesn’t think that the owner is selling his personal residence. You know, people lie).

If I were you, I’d flatly refuse to show the house to potential buyers. You’re entitled to undisturbed enjoyment of the property you’re paying for.

[NotCranky]

Perry you just got notice to vacate as outlined in the contract.
Have a nice day :).

[NotCranky]

Perry you just got notice to vacate as outlined in the contract.
Have a nice day :).

[Author]

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