topic Re: 2012 (current info) on the impact of a short sale without late payments. in Mortgage Loans

2012 (current info) on the impact of a short sale without late payments.

esg — Mon, 01 Oct 2012 20:35:14 GMT

I have searched the forum, but can't seem to get any current information on short sales. Short sales in 2012 are being considered now by the banks without being behind. I am in the process of a short sale due to a divorce and my ex losing his job. I am not late on my payments and expect the sale to close in about 60 days. I have read that it's really the late payments that affect your score more than the short sale itself. My realtor said not to bother making the payments that it is "bank propaganda" that they put out to get more money. My feeling is this is not true. I really want to minimize the negative impact on my score. If they report a "settled as agreed" without showing delinquency, what will be the impact? Trying to find the truth so I can decide weather to scrape up money for payments. Thanks.

Re: 2012 (current info) on the impact of a short sale without late payments.

chasmith — Mon, 01 Oct 2012 20:48:28 GMT

The damage comes from them reported "settled for less than full balance", as opposed to "paid as agreed". You'll face a waiting period (3 years I believe for FHA) to get another mortgage, because short sales are treated the same as foreclosure for mortgage underwriting. And with a short sale in your past you'll be "thoroughly" studied by underwriting. So if you can swing remaining current that will help you if you want to get underwritten for another mortgage any time soon.

Re: 2012 (current info) on the impact of a short sale without late payments.

UplandCitizen — Thu, 18 Oct 2012 23:52:19 GMT

I've am selling my house via short sale. I have made all payments except October's payment because the sale is suppose to be completed soon. BofA advised that they only report a late payment after 30 days of being late and since the short sale will be done before the 30 days, I will close without any 30 day lates. I will let you know how this affects my credit, but this could be a couple months from now.

As for FHA loans, it is my understanding that as long as you do not have an 30 days lates prior to a short sale, you would be eligible to obtain an FHA mortgage as long as the property is smaller than your original property.

Re: 2012 (current info) on the impact of a short sale without late payments.

esg — Fri, 19 Oct 2012 01:31:37 GMT

Thanks for the input. My bank is Chase and when I called regarding making the October payment (they have already approved my short sale.) they said "we cannot advise you on wheher or not to make a payment." when I escalated it to a manager she said a payment would jeopardize the approval since a payment would cause all the numbers to change and force it all to be re-done. Of course I don't want to do this, but my escrow is not closing for 45 days do it looks like I will get the the 30 day late and the 60 day late now. Very frustrating!!!

Re: 2012 (current info) on the impact of a short sale without late payments.

Elcid89 — Fri, 19 Oct 2012 02:06:32 GMT

This is spelled out in FHA mortgagee letter 09-52

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-52ml.pdf

Re: 2012 (current info) on the impact of a short sale without late payments.

jnkp2001 — Fri, 19 Oct 2012 04:57:05 GMT

Elcid89 wrote:
This is spelled out in FHA mortgagee letter 09-52

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-52ml.pdf

I would say, if it gets close to the 30 day late mark, to pay. According to the HUD letter. When in doubt, conventional wisdom would say it is always better to pay then not to pay.

Re: 2012 (current info) on the impact of a short sale without late payments.

tooleman694 — Fri, 19 Oct 2012 05:25:01 GMT

I would think a short sell would hurt a lot more then the lates. Late or not I would think your credit would be close to the same score.

Re: 2012 (current info) on the impact of a short sale without late payments.

UplandCitizen — Mon, 22 Oct 2012 16:52:20 GMT

Agreed, the short sale will hurt, but from what I read, lates combined with a short sale hurts a lot more. Plus, under the FHA guidelines, you may be eligibile to purchase a smaller property right away.

Re: 2012 (current info) on the impact of a short sale without late payments.

UplandCitizen — Mon, 22 Oct 2012 16:53:54 GMT

Agreed, if it gets close, I will pay the mortgage because I do not want a 30 day late. FYI, this is also a HAFA short sale.

Re: 2012 (current info) on the impact of a short sale without late payments.

UplandCitizen — Thu, 25 Oct 2012 18:58:10 GMT

The closing was extended to October 31, 2012 and the Buyer lender BoA have not submitted final loan docs as of 10/25/12. Looks like I will have to pay October's mortgage payment inorder to avoid a 30 day late mark since I doubt it will be funded by 10/30 with a weekend in between. :(

Re: 2012 (current info) on the impact of a short sale without late payments.

esg — Thu, 25 Oct 2012 19:04:40 GMT

Be careful it doesn't change all the numbers by making a payment, thus voiding the bank's approval which is based on the existing numbers. This is why I was told not to make a payment!! If they have to re-do the paperwork it might delay you more. I also heard that sometimes the banks hold on to the payment in this situation and won't apply it anyway, but take the money later... Just passing on what I've heard from my realtor (and from Chase bank about the numbers changing.)

Re: 2012 (current info) on the impact of a short sale without late payments.

webhopper — Thu, 25 Oct 2012 19:59:38 GMT

UplandCitizen wrote:
The closing was extended to October 31, 2012 and the Buyer lender BoA have not submitted final loan docs as of 10/25/12. Looks like I will have to pay October's mortgage payment inorder to avoid a 30 day late mark since I doubt it will be funded by 10/30 with a weekend in between. :(

Lates + short sell is bad..... pay the mortgage for october, even if it means that they have to redo the paperwork.

I'm glad you are paying attention... I had to keep myself from paying October's payment since I was refinancing... payment was due on the 15th, I signed docs on the 19th, the refi was funded on the 22nd... I checked my online account just to be sure... I was more than ready to pay Octobers payment if something had gone wrong on the funding

Re: 2012 (current info) on the impact of a short sale without late payments.

UplandCitizen — Thu, 25 Oct 2012 20:17:46 GMT

esg wrote:
Be careful it doesn't change all the numbers by making a payment, thus voiding the bank's approval which is based on the existing numbers. This is why I was told not to make a payment!! If they have to re-do the paperwork it might delay you more. I also heard that sometimes the banks hold on to the payment in this situation and won't apply it anyway, but take the money later... Just passing on what I've heard from my realtor (and from Chase bank about the numbers changing.)

Esg: I spoke to my my bank also BoA and they said they report 30 day lates after the 30th day. So, to avoid a 30 day late pay, they advised that I would need to pay by October 30, 2012. I spoke to the short sale specialist and they advised that if I pay it will not affect the numbers. One person said, if there appears to be an over pay, they would return some money, which I doubt because most of the payment would be in interest anyways.

Re: 2012 (current info) on the impact of a short sale without late payments.

UplandCitizen — Thu, 25 Oct 2012 20:23:17 GMT

webhopper wrote:
UplandCitizen wrote:
The closing was extended to October 31, 2012 and the Buyer lender BoA have not submitted final loan docs as of 10/25/12. Looks like I will have to pay October's mortgage payment inorder to avoid a 30 day late mark since I doubt it will be funded by 10/30 with a weekend in between. :(
Lates + short sell is bad..... pay the mortgage for october, even if it means that they have to redo the paperwork.

I'm glad you are paying attention... I had to keep myself from paying October's payment since I was refinancing... payment was due on the 15th, I signed docs on the 19th, the refi was funded on the 22nd... I checked my online account just to be sure... I was more than ready to pay Octobers payment if something had gone wrong on the funding

I agree late plus short sale would be bad. I want my short sale to have as small of an impact as possible. Plus, I want to be able to qualify for an FHA loan as soon as possible. FYI, BoA agreed to waive the late payment fee, which was nice of them. They probably realize that I've never been late and know that I am going through a short sale. They said as long as I take it in before 5 pm on 10/30 I should be okay.

Re: 2012 (current info) on the impact of a short sale without late payments.

esg — Thu, 25 Oct 2012 20:40:41 GMT

@Upland:

Thanks for the info. I wonder why Chase told me it could jeopardize the agreement. It would be in their interest you would think to get the payment! It kills me not to make the payment. I have never missed one and my credit score is in the high 700's right now. I know the short sale is going to ding me big time, especially since it seems people with higher scores get more points knocked off. (Maybe since people with lower scores have not as far to "go down"?).

My escrow is not meant to close until December 5th, so looks like a 60 days late is inevitable. My realtor is adamant about me not paying and possibly causing more delay. I really need to get this sale done by the end of the year for the tax exemption, and before Dec. 10 property taxes are due is even better!

All my eggs are in one basket at this point. If the buyers can't get their loan funded I am in a worse predicament. I am getting so discouraged by the conflicting information, and not wanting to make a "wrong move" that I am beginning to not care what happens to my score...it's going way down either way :-(

Re: 2012 (current info) on the impact of a short sale without late payments.

UplandCitizen — Thu, 25 Oct 2012 21:20:22 GMT

Esg: I have an 806 score on MyFico so I will definitely be able to tell you the point drops without a 30 day late. If I were you, I would make the first payment (if you have the resources) and holdoff on the second payment as long as possible (kind of like what I'm doing) to see if you can close before a 30 day late.

I read that one 30 day late will affect a person with a high 700 score about 100 points.

A short sale without a late payment I think will affect that same high 700 score between 100 to 150.

Late plus a short sale will be over 200 points.

Plus a short sale without a late makes you eligible for at least an FHA loan immediately.

Re: 2012 (current info) on the impact of a short sale without late payments.

esg — Thu, 25 Oct 2012 21:27:34 GMT

THanks for the info. That's what I planned on doing, until I spoke with the bank on the 15th. I am going to try to speak directly with my "closer" to see what they say.

Re: 2012 (current info) on the impact of a short sale without late payments.

UplandCitizen — Thu, 25 Oct 2012 22:14:12 GMT

Esg: You made it this far without missing a payment, I would encourage you not to get a 30 day late if you have the resources. If you have a 30 day late and a short sale, you will not be eligible to buy another home for almost 3 years, at least that is what I read, it could be 2.

Re: 2012 (current info) on the impact of a short sale without late payments.

UplandCitizen — Thu, 25 Oct 2012 22:19:30 GMT

Esg: I know this is implied in my prior posts, but I paid the first mortgage after the short sale was approved and it did not affect the closing. The numbers stayed the same. Now, I'm going to probably pay the second time and I know from experience and speaking to the BoA that it will not affect the numbers.

Re: 2012 (current info) on the impact of a short sale without late payments.

UplandCitizen — Mon, 29 Oct 2012 20:37:19 GMT

I am disappointed that the close did not occur as it was supposed to on the 10/19 and probably won't close for another week. I did not want to risk getting a 30 day late just prior to the close of my short sale so I just made my October payment. I will let you all know the impact of the short sale on myfico score.