Are you eligible to apply for a short sale even if you’ve already
tried to modify your mortgage loan? Your
effort as a borrower to short sell your property should never appear to be a strategic
default to your lender. A strategic
default is a decision by a borrower to stop making payments on a debt
despite having the financial ability to make the payments. Banks don’t like to approve short sale
applications when it looks like a borrower can pay but simply chooses not to
pay. If you applied for a loan
modification, you are certainly eligible to apply for a short sale. Your attempt to modify your loan may strengthen
your short sale application by showing that you sincerely tried to lower your
payments so that you could continue to pay your mortgage.
You cannot pursue a loan modification and a short sale at the
same time. Borrowers often want to hedge
their bets and pursue both workout alternatives simultaneously. I suppose in theory this may seem like a good
idea. Unfortunately, it is not possible
to pursue both strategies concurrently--you must choose one option or the
other. To figure out which solution, a
loan modification or a short sale is best for your personal circumstances, you must
take an honest look at your current financial situation and verify how much you
can realistically afford to pay toward your mortgage every month for the
foreseeable future.
Demonstrating that you have
a legitimate financial hardship is critical to convincing your lender to
approve your short sale application. You
should always do your best to show that you are not trying to escape your financial
obligations and that you have a genuine financial hardship. Even if you were successful in getting your
loan modified, you may still not have enough cash or make enough money to
continue paying your mortgage. Your lender
will evaluate your short sale application based on your current financial position
regardless of whether you tried to modify your loan or were successful in doing
so. Your earlier attempt to modify your
loan may strengthen your short sale application by showing that you tried to
work things out with your lender rather than just walking away from your
financial responsibilities.
Gerald Lucas, 'The Short Sale Authority' http://performanceshortsale.com/ has successfully negotiated hundreds of short sales over the past decade he has spent in the real estate business. He shares his extensive experience as a real estate investor, coach, licensed Realtor, college professor and lecturer. Mr. Lucas is Managing Director of Performance Property, LLC, a short sale negotiation company based in Jersey City, NJ http://www.performancepropertyllc.com/ Mr. Lucas holds an undergraduate business degree from Howard University as well as an MBA from MIT's Sloan School of Management.
