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Occupied vs. Non-occupied

San Diego, CA

August 31, 2009

Can anyone tell me why the banks ask if the property is occupied by the borrower on a short sale transaction and how it affects their approval decision?

Licensed Real Estate Agent

Reno, NV

August 31, 2009

There are rules for qualifying a short sale depending on who the loan is backed by: FHA, Fanny or Freddie, etc.

According to the FHA guild lines: the home has to be occupied by homeowner and can't have been rented within any part of the past 18 months to qualify. Still look at all of it - rules continue to change. If it is an FHA loan - Suggestion: call HUD and have them review your particular situation.

It is advisable to discuss this with listing agent also. Some properties do not qualify per rules and the negotiator does not seem to review those until there is an offer submitted.

Licensed Real Estate Agent

Cerritos, CA

August 31, 2009

Re Occupied versus Non-occupied

In my experience, I do not believe approval for a short sale is affected whether the property is occupied or not. What I think is that, banks, through their property preservation departments, want to ensure the property is secured and under the maintenance of a third-party to prevent damages from break-ins and unauthorized occupants, including my vacant listings.

San Diego, CA

August 31, 2009

Thank you for your replies! Very very helpful!!

Licensed Real Estate Agent

Hopedale, MA

August 31, 2009

I had a situation earlier this year where the lender sent in a home preservation company to winterize the property (which I was short selling). I got a call from the contractor asking me for the pass code for the lock box. We discussed his purpose. When he said "to winterize", I told him that the owner was still living there and he should not do anything. He said he had his orders and had to do something. He also said that if I didn't give him the code, he was required to go in and if necessary, would break a window.... I gave him the code. We agreed that he would do the minimum, something like change an inconsequential lock.

The owner came home. All locks were changed except the one where the lock box was. But worse, the home was totally winterized. Water was off and the system drained (all over the cellar floor), electric was off, heating was off and the system drained (again, all over the cellar floor). There was damage to window blinds and other things. Plus a drill driver (Milwaukee) was missing. The owner was in trouble;e and had to stay at his son's home... which is where he was planning on moving to.

After several calls to the lender, I finally spoke to a responsible party who told me that the bank has the right to protect their interests and that they had reports that the property was vacant.

It took about 4 weeks to have the place de-winterized and the locks restored. The drill/driver was returned.

A few months later the property was foreclosed on, unbeknown to anyone. I was called by another agent who said that she had just been assigned the home as an REO. I called the short sale dept who assured me that the foreclosure had been suspended. Through several layers, I finally spoke with the foreclosure dept who told me that it had been foreclosed a few weeks earlier. Seems everyone knew that the foreclosure had been suspended except the foreclosure department.

Bottom line, and an answer to this thread is that the lender has the right to protect their investment. If the property is vacant, then the lender can secure the property.

If your sellers are still living in the home, make sure it LOOKS like they are living in the home. The lenders will send someone to check to see if the property is vacant.

RaytheRealtor

Licensed Real Estate Broker

Pleasant Hill, CA

August 31, 2009

Ray, sounds like you're talking about WaMu, but admittedly I've had Wells also "suspend" foreclosure actions only to have it foreclosed within a week of closing with a new buyer. I had WaMu change the locks on a home after we closed and a new owner was moving in . They had gone out to eat, and came home to locks changed and door damaged. WaMu , after I threatened to go to the press and the police, did get their prop preservation people out there, they fixed the door and reimbursed the locksmith the clients had to enlist to get back into THEIR home. They did make a police report and the report even said "they wonder if the bank did this." Yup, they did.

Licensed Real Estate Agent

Hopedale, MA

August 31, 2009

Catherine

You were right on your 2nd guess... it was Wells!

RaytheRealtor

Licensed Real Estate Agent

Schaumburg, IL

September 01, 2009

Help , I have people who are planning to vacate their home because Bank of America told them they needed to list for 90 days as a short sale before they would consider a deed in leiu of foreclosure. I want to help them sell before anything else happens but if they plan to move to another state and they in fact have already rented an apt there for them and their 3 children under 3 .... is that going to make this whole thing worse. I think it will sell faster with them gone because like I said they have 3 month old twins a dog and a another 3 year old. The house is hard to keep up with all that going on. I was told that Bank of America which has the first lein is the hardeset of all to work with on Short Sales. What can I do to speed this process up so when we do get a contract the process has already started???? I have the Letter of Authorzation which is signed and dated and the hardship letter , I told them to get the tax bills and the financial statement and the pay stubs etc together so we can send it all in. I heard that we should do a dummy contract to get them going on this .... isn't that deceitful????

Betty Cunningham

buywithme@comcast.net

Licensed Real Estate Agent

Woodland

September 01, 2009

Yes...because if it is not occupied they will go out there and change the locks to protect their asset.

Licensed Real Estate Broker

Lake Elsinore, CA

September 01, 2009

I have successfully closed short sales on non-owner occupied properties. I don't believe the issue is whether or not they live in the house but if they actually have a hardship and qualify for a short sale.Although I have heard of the tactic of sending an offer to get the ball rolling,I would not send an offer unless it is legitimate. I believe from what you wrote there is a second lien on the property and I don't believe they can qualify for a deed-in-lieu in that case,although I am not 100% certain. I think the house being empty will make it easier to sell. Your best bet would be to send a complete short sale package once you do receive an offer and to make sure to constantly follow up. Good luck!

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