What is the criteria to approve short sales?

[Radiance]

When do banks approve short sales?

I have been going around in circles so please bear with me.

I can "afford" the house; the problem is that I am very tight; any emergency puts me deeper in debt, which is not a sustainable solution. With one toddler and two elderly parents under my support, there are always emergencies and unexpected expenses. The bank simply says "they will work with me" but when something happens, they want me to talk with my other creditors. To me this is not affordability. I live with my 16 month old son. My parents live overseas.

They already approved a hardship for 6 months where my payments became $650/mo lower and my interest was lowered from 8.0 to 5.5. I don't know if they will approve an extension (the hardship expires this month). If they decline, my payments go up by 650 again, but that is another story. I am current on my payments under the reduced amount.

People say I can go for foreclosure and live rent free for about a year. Ok, yes, but then you have to pay ridiculous deposits for an apartment, and I might not be able to rent on a decent place with decent schools for my son.

I am not even sure that makes financial sense on my case.
Let's say I just stop paying and I let the foreclosure take place, I save 26400 in a year.

Then I would need to make a 3-6 month deposit on an apartment because my credit will be a mess. That is about 6400 minimum. Leaving 20000. But then I would be responsible for the deficiency of 67000 plus taxes. How do I pay that?

Do you think there is a way to convince the bank to let me do a short sale, they would need to bite the 67000 deficiency, but I can go and rent without affecting my credit or before it gets affected that much. The main consequence for me would be paying taxes over the deficiency.

What criteria do banks use to approve shortsales? (besides being late, that is )

[momof1in150]

the first thing you need to do with your bank is call them. You will need to show hardship. They usually have a financial workup package that you have to complete. You then need to find an agent that has experience in short sales. Most banks have the financial packages on their websites. You need to make sure all the paperwork is filled out and in order as if it isn't then you go to the bottom of the pile.

Short sales typically take 4-6 months to close after you and the bank accept the offer. A short sale will lower your credit score 100-120 points. Each payment you are late on lowers your score 20-30 points.

Let me know if you have any questions as I am a Realtor in an office that has handled too many short sales.

[disneysteve]

Not related to this thread, but something just occurred to me. Are you claiming your parents as dependents when you file your taxes? I'm not sure if that is even possible since they don't live in this country but it is definitely something you should look into.

[Radiance]

momof1in150,

Showing hardship will be the challenge to say the least. If you look at my numbers you would say I am ok. However I am way too tight without space to buy a pair of pants if the ones I have brake. I mean, I would buy them, but I would need to charge, or eat less that month.

I will certainly try, however, after I talked to two financial advisors, they say I am not showing real hardship and most people in my situation go into looking to increase their incomes with a second job or business opportunity and/or renting a room. I am looking into those options as well. Still researching and learning.

In top of everything I am seriously considering moving up North where quality of life is better, so yet another reason why I am considering getting out of the house.

They do not have a set package, but I know what they require since I already had them approve me a 6 months hardship. THis was before my parents became disabled. This is why I am almost sure they will say I am not in any further hardship and to call them if an unexpected expense occurs.
I know because I tried and insted of helping me with forbearance or similar they said I can not apply for more help and to talk to my other creditors.

As per my parents, it is very tricky to have them as dependentes, I was advised against it by tax advisors. I have them included as medical expenses, basically another bill.

[tripods68]

Debt income ratio above 40% > The higher that number is the better your chances they'll approve you.

You have to provide them a list all your asset & expenses

Copy of your last tax return
Copy of your (last 2 months) bank statement & pay stub

Write them a "hardship" letter explaining your entire situation. Perhaps mentioning something like "Short Sale is my only choice OR else I have no choice but to foreclose". You get my drift.

[Radiance]

I am "only" at 27%. under the reduced payments they approved

It is my other obligations what makes it difficult.
Single mom of a baby boy and responsible for two parents.

My unsecured debt monthly payments are 380 a month:
360 for a 3-year personal loan I took to consolidate all my credit cards but one.
Plus 20 (minimum payment) for the one visa I didn't consolidate.

Baby daycare is $800

The father is in no position to contribute more than the $100 he contributes today. We used a mediator to split bills and negotiate responsibilities.

Parents support is $400 (average)

I know I''ll figure it out, but It seems my only way out of the house would be to walk away. And this is a moral issue for me.

[tripods68]

I am "only" at 27%. under the reduced payments they approved

It is my other obligations what makes it difficult.
Single mom of a baby boy and responsible for two parents.

My unsecured debt monthly payments are 380 a month:
360 for a 3-year personal loan I took to consolidate all my credit cards but one.
Plus 20 (minimum payment) for the one visa I didn't consolidate.

Baby daycare is $800

The father is in no position to contribute more than the $100 he contributes today. We used a mediator to split bills and negotiate responsibilities.

Parents support is $400 (average)

I know I''ll figure it out, but It seems my only way out of the house would be to walk away. And this is a moral issue for me.

You have to let them know you are situation is "DIRE" and "SERIOUS".

Don't let 27% debt/income ratio stop you from applying. Let them decide that. Your ratio is only ONE factor of consideration. The rest of your income versus expenses is what you will include in your "hardship" letter. I think personally, you being a single mom is what makes it or break you.

Good luck.