Santa Maria CA Short Sales – Divorce, Unemployment & Job Transfers
Divorce, unemployment and distant job transfers continue to be strong motivators for short sales. Often homeowners apply for a loan modification before they come to my office for a short sale consultation. If the person had a reduction in income, or a temporary hardship, often applying for a loan modification is preferable. If they are denied, or the loan modification offered is not favorable, they will often then apply for a short sale rather than enduring a foreclosure. However, in the case of divorce, unemployment, or distant job transfer (more than 45 miles) a short sale may make more sense rather than applying for a loan modification.
In the case of divorce, if one party wishes to keep the marital home, they will often eventually need to refinance the loan into their name alone. Refinance may or may not be possible if the home is deeply underwater. The new HARP 2.0 has opened up possibilities for refinancing underwater properties (even investment properties) if the original loans are backed by Freddie Mac or Fannie Mae, but the borrower will still need enough income to qualify for the new loan. If the party applying cannot qualify alone, then a refinance may not be possible. A loan modification will not necessarily help if the goal is to sever ties, as often the new terms will include keeping both previous borrowers on the hook.
In general, income from unemployment will not be considered in order to qualify for a loan modification for obvious reasons. In some instances, I’ve seen borrowers applying for a loan modification hoping that they will regain employment during the process. However, in my experience including unemployment income is a cause for a rather swift denial. So, unemployment remains a strong reason that underwater Santa Maria sellers choose short sale over a loan modification process. The reasoning is much the same when a distant job transfer occurs. Many loan modifications require owner occupancy so borrowers may not qualify if they are not going to live in the home. If the bank does allow a loan modification as an investment property, if the loan modification keeps the owners in a “payment negative” position, they may not be able to afford to keep the home and rent it out.
For these reasons, divorce, unemployment and job transfers remain primary reasons for short sales. And, I’ve found that these hardship reasons are so strong that you may be able to receive a short sale approval without missing a payment in these cases. What does that mean? In some cases, you may be able to turn around and buy with FHA financing. So don’t rely on chit chat at the hair salon and start missing payments before you talk to a short sale agent about YOUR situation, you may have better options other than a loan modification for your particular situation.
If you are going through a divorce, job loss or job relocation and are underwater on your mortgage, get a short sale consultation now. Before deciding whether a short sale of your Santa Maria CA home is right for you, it is essential that you obtain legal and tax advice, and consult with an experienced local short sale agent.
If you are considering a short sale of your Central Coast home and would like a complimentary short sale consultation, please call my office to schedule an in person meeting or a telephone consultation at (805) 878-9879.
Tni LeBlanc is an independent Real Estate Broker, Attorney, and Short Sale Agent. She has successfully completed short sales with Bank of America, Wells Fargo, CHASE , GMAC, Seterus, IndyMac, CitiMortgage, Green Tree Servicing, Specialized Loan Servicing, HomEq Servicing, Wachovia, Coast Hills Federal Credit Union, Select Portfolio Servicing, Fannie Mae, Freddie Mac, and others. She serves Santa Barbara and San Luis Obispo Counties.
* Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement. Tni LeBlanc and MInt properties are not affiliated or endorsed by any lender. Copyright© 2013 Tni LeBlanc *Divorce, Unemployment & Job Transfers in Santa Maria CA Short Sales*
