Short Sale objections

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Hello,
Some of my pre foreclosure owners are perfect candidates for a short sale, (1st and second notes are about equal to the market value, or are upside down) but they have basically given up on homeownership, and are planning to walk away from the home. They have accepted that their credit is trashed, and think that a foreclosure will not make it any worse, or it does, they don't care anymore. I tell them that a foreclosure is worse than BK on your record. So, they do not see the point in assisting me with the short sale, and I can't do much without their help. And I can't legally offer them money as an inducement. Does anyone have any words of wisdom to counter these depressing objections? Thanks for any help, Mike :violin:

[Dave P.]

Mike,

I would be very careful about stating what is better or worse, for your potential short sale prospects. I would just lay out the facts. The facts are simple, if you have missed multiple mortgage payments, your credit is probably very damaged. At this point, the seller needs to think about the future.

The future starts with re-establishing their credit. That means getting trade-lines closed that keep accruing missed payments. The best way to do this is by selling the property and paying off all liens in full. Short of that, everything I have read and studied indicates that effect on credit for all other options will be the SAME. They will be reported as serious deficiencies (score reasoning code 22).

However, there is an upside that the home-owners need to realize. Fannie Mae has issued new guide-lines stating that if you have a foreclosure on your record, you must wait five years before becoming eligible for a FM loan. If you have a short sale, you will be eligible in two years.

Essentially, a short sale affords the chance of them owning a home again years faster than a foreclosure.

Having said all that, most families that i meet with prefer to do a short sale because they view it as closer to "the right thing to do" than a foreclosure.