Wednesday, October 31, 2012

Should I Stop Paying My Destin FL Mortgage to do a Short Sale?

I just hung up the phone with an upcoming Destin Florida short sale seller. She told me she had a Bank of America mortgage. Her husband had lost his job, and that was making it difficult for them to keep up with their payments. She said they only had a few hundred dollars, and they were starting to incur credit card debt of several thousands of dollars to keep paying the mortgage. Since they could not refinance, they wanted to short sale.
At one point in the conversation, this Destin seller said she read she should stop making her mortgage payments to do a short sale. I acknowledged it must be hard for them to pay basic expenses without incurring more credit card debt. She immediately said “OK, that’s what I thought – I’ll stop making mortgage payments to Bank of America.” I corrected her – I did not tell her to stop making her payments. That is the seller's personal decision. Most, but not all, investors on a mortgage (Bank of America is likely just the servicer of the mortgage, not the investor) will allow a short sale if the seller is still current.  FHA HUD short sale guidelines state a homeowner must be behind. Fannie Mae and Freddie Mac short sale guidelines just changed so that a “current” borrower can do a short sale. There are other examples, but there are always exceptions and program changes.
The bottom line is the short sale seller must make the decision to make his mortgage payment or not. If your lender tells you to stop paying, or your attorney recommends it, then do so. But remember, every month that goes by with a late or missed mortgage payment may be derogatory to your credit score. The short sale itself can lower a credit score by 50-200 points. The important question is - can you provide food and shelter to your family and have funds for emergencies? Is paying your mortgage jeopardizing your family’s welfare? I ask my potential short sale sellers these questions. They make the final decision.
It's Wendy!
Wendy Rulnick, Broker, Rulnick Realty, Inc.
Call toll-free 1-877-487-9639 or local 850-650-7883 ext 204

Email Wendy: [email protected]

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