can you short sale a home if the owner passed without probate?

7 Replies

I am new to wholesaling and went to one of the houses on my pre foreclosure list and found out the owner of the home had passed and it was currently her son living there after going through the house and looking at repairs needed we talked to him and he said he would be happy with getting just 500$ more for the house than the mortgage, So I decided to see if it would be possible to do a short sale with the home and got his approval and loan number on the house and plan on contacting the lender tomorrow, but I thought I would ask on here to get some advise on if this is even possible to do since the house is not in his name and there isn't enough time for the house to go through probate, or would the house currently belong to the bank and I would have to sign a contract with them instead of her son? any responses or advice would be greatly appreciated thanks.

Originally posted by @Daniel Walkowiak :

I am new to wholesaling and went to one of the houses on my pre foreclosure list and found out the owner of the home had passed and it was currently her son living there after going through the house and looking at repairs needed we talked to him and he said he would be happy with getting just 500$ more for the house than the mortgage, So I decided to see if it would be possible to do a short sale with the home and got his approval and loan number on the house and plan on contacting the lender tomorrow, but I thought I would ask on here to get some advise on if this is even possible to do since the house is not in his name and there isn't enough time for the house to go through probate, or would the house currently belong to the bank and I would have to sign a contract with them instead of her son? any responses or advice would be greatly appreciated thanks.

 No. Only the owner can sell a house unless it is by court order.

@Daniel Walkowiak

A short sale is based on the owner (mortgagor) being behind in payments and cannot catch up.  Usually you need to be behind 90 days.  Only the mortgagor can apply.  Death of the mortgagor requires probate.  The solution is buy the property.  You indicated the son wanted $500 more then the balance on the mortgage.  Make sure the son has the legal right to sell the property.  If you are going this route, I would hire an attorney to make sure you proceeding properly.

Good Luck.

Originally posted by @Kenneth Garrett :

@Daniel Walkowiak

A short sale is based on the owner (mortgagor) being behind in payments and cannot catch up.  Usually you need to be behind 90 days.  Only the mortgagor can apply.  Death of the mortgagor requires probate.  The solution is buy the property.  You indicated the son wanted $500 more then the balance on the mortgage.  Make sure the son has the legal right to sell the property.  If you are going this route, I would hire an attorney to make sure you proceeding properly.

Good Luck.

No need to be behind to do a short sale. Yes, years ago, lenders wouldn't consider a current borrower for short sale. That test expired many years ago though.

@Ron S.

I have bought a number of short sales.  I am not aware that being current the bank would even consider this.  Every short I have bought would not even consider it unless they were in trouble as in behind in payments.  I imagine it depends on the mortgage company.

Thanks for your input.

Originally posted by @Kenneth Garrett :

@Ron S.

I have bought a number of short sales.  I am not aware that being current the bank would even consider this.  Every short I have bought would not even consider it unless they were in trouble as in behind in payments.  I imagine it depends on the mortgage company.

Thanks for your input.

 It doesn't. Federal CFPB rules prohibit servicers from considering delinquency as a qualifier. Additionally, requiring a borrower to go delinquent before consideration, would subject the servicer to penalties and sanctions by CFPB and while CFPB is tasked with regulating banks over $10 billion in assets, that financial institution's regulatory authority will follow CFPB rules when nailing the servicer for their violation. Fannie Mae prohibits it. Freddie Mac prohibits it. The Department of Defense prohibits it (SCRA for service members).

You would typically see "Borrower must be in imminent danger of default or no less than 90 days past due" in a short sale package in 2014, maybe even up to 2016 but i'm confident no lender/servicer still in business would be stupid enough to try to get away with that today.

A servicer CAN say, "Wait, you are current, you have income, you have assets, no, we aren't going to approve your request to consider a short sale" but their denial would be based on a lack of any imminent danger of default after a full short sale package was submitted and reviewed, not on, "borrower is not delinquent" and they would never say (now) "Borrower must be behind in payments for consideration". for military though, even if they are current, have income, have assets and are not in danger, the mere presentation of PCS orders (relocation) requires the servicer to consider (approve) a short sale request).

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