California Short Sale Information
by KC from Central Valley, CA
Ask Kate for California short sale information: Hi Kate, With an unrelated buyer, can we rent or lease back our house after the short sale process? We own a home in California. It has a first loan-to-value of 210% with a home equity line bringing the combined LTV to 240%. Recently, we have been denied a HAMP loan mod and also been denied a refinance through HARP 2.0.
Both programs were attempted with our first mortgage company servicer (who acquired the loan from Citi Mortgage). Their refi department has recommended that we consider and attempt a short sale.
We love our home and would really like to remain in it, but a short sale may be our only option. We have never missed a payment and show no late pays on any of our credit debt. We do have moderate credit card debt.
There is an unrelated interested buyer if we could qualify for a short sale (there has been a reduction in income as a result of a job loss and then re-employed at lower salary, high medical costs, and high credit card monthly payments and debt).
First question, with our LTV so upside down what is your estimation of our ability to be allowed to do a short sale?
Second question, in California is it possible to short sale your primary residence and then lease it back from an unrelated buyer (buyer is a cash buyer)?
Age is an issue also, we are about 5 years from retirement.
Thank you for your commitment to helping so many people by providing a forum to ask questions.
Kate Answers: California Short Sale Information
First of all, I hope no lender has told you that your age is a factor!
Except for Reverse Mortgages for senior homeowners, your age cannot be included in underwriting criteria, assuming you are old enough to sign a contract.
(Of course, I understand age plays into your personal plans.)
HARP 2.0 Refinancing and Mortgage Loan Modifications
Moving on, have you considered applying to other lenders for HARP 2.0
? It might be worth the effort.
Regarding your mortgage loan modification, through November 2012, local Making Home Affordable (MHA) community events have not been scheduled for your area in California. But watch and bookmark my blog for upcoming mortgage news
where you will find them announced.
Here is why I suggest the local MHA events. When you can get face-to-face with the decision makers, modifying your mortgage becomes much less of an ordeal. In many cases, modifications are preformed on the spot, same day!
Real Estate Short Sales
I agree with you that an LTV of 240% is quite upside down. But successful short sales often seem to depend on the lender's appetite. Hopefully your lender is hungry for short sales and wants to avoid another lengthy foreclosure process. In addition, underwater mortgages in California are of no surprise to lenders, even at this extreme LTV.
Even so, I'd go into the short sale process understanding it's going to require negotiation power. I recommend getting a top-notch Realtor in your area to represent you, one who is very experienced working with banks' short sale departments. They can best advise you regarding specific practices within California that limit the use of the house after the real estate short sale transaction is complete.
But the final word regarding a lease-back will be within the short sale documents from your lender. Read them ultra-carefully, including the small print found in the boiler-plate disclosures.
Free Making Home Affordable Housing Counselor Assistance
But back to the HAMP loan modification
. Before giving up on it altogether, call a Making Home Affordable loan counselor. Their service is free and they offer to help you through the modification process when you are having trouble with the lender. Go here for more about free Making Home Affordable Housing Counselor assistance
Making Home Affordable Short Sale and Foreclosure Alternatives
In the end, should modifying your mortgage, HARP 2.0 refinancing, or a short sale transaction not be available to you, there are still options within the Home Affordable Foreclosure Alternatives (HAFA).
Take for example, a deed-in-lieu of foreclosure (DIL) where the mortgage company allows you to give back the title, transferring home ownership back to them. Making Home Affordable may even provide $3,000 in relocation assistance after you close. Read more about Making Home Affordable Short Sale and Foreclosure Alternatives
One last thought. Thank you for showing your appreciation. It is my sincerest intention to spread the news of available options to struggling homeowners, many like you, who never thought they would find themselves in such dire predicaments.
Good luck and very best wishes. I hope you will come back to comment and let other Readers know of your progress.
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