Does financial hardship = gauranteed debt forgiveness?

Question

I have a distressed homeowner who is interested in selling his home to me as a shortsale. He is way upside down on his mortgage and has experienced financial hardship. (Lost job.) Yet he does not live in the residence, it is not his primary home. Will this disqualify him from a shortsale?

If his hardship does qualify him with his lender, does this mean they will automatically forgive any deficiency after the sale?

Phil Z. · Answer

Being eligable for a Short Sale never 'automatically qualifies' you for a "Waiver of Deficiency Judgement".  However, the entire purchase of doing a short sale is to get out of debt and get that waiver.  99% of the time they will include that waiver in their approval.  In the cases where they don't, you can continue to push for a full release, or the owner has to decide if the sale is worth the possibility of still having debt.

Graham Nash · Answer

Sean, I recently tried to acquire a property through a similar situation. The owner I was working with, had a USDA loan on a property that she had ,for the most part, abandoned. I contacted her and she said she was willing to sell the property. The bank was also willing to entertain offers.  She told me that she would have to incur the difference between sale price and appraised value as income.

I made her an offer, no response.  I guess it was an insult. This probably doesn't help you much. I do think the short sale depends on the financier who holds the note.

Good luck.