Relocation Short Sale - Likelihood of Approval

[tbone499]

Hello,

I have recently relocated from Michigan to Ohio for a new job with a new company. The switch was for a better opportunity and was by choice but if I had stayed I would have likely lost my job eventually due to the current conditions in Michigan (automotive industry).

We currently own a home in MI that has the following mortgages:

1st $230k with Wells Fargo
2nd HELOC of $108k serviced by HSBC

As market conditions continue to deteriorate in my area, I expect the house will not sell for more than 275k.

We are not currently more than 30 days behind on either mortgage, but have been struggling to make the payments mostly due to substantial credit card debt with increasing monthly payments. We do not have any substantial assets or cash in bank, but my I do have a pretty good income.

My question is if I choose to list the house as a Short Sale what is the likelihood of approval and forgiveness of the short payment? Will my relocation be considered as a hardship? I expect that Wells Fargo would get paid in full so would I only be dealing with HSBC for short sale approval. Is it any easier or harder being a HELOC?

Do I need to allow my HELOC payments to go past due in order to have leverage?

How much of an effect will this have on my credit and how long until I could possibly purchase a new home? I fear I do not have another alternative given my current situation.

[Moe Bedard]

Hi tbone499,



Welcome to the forum and thank you for joining...................

Here are the new rules for FannieMae regarding getting a new loan after foreclosure or BK...........

https://www.efanniemae.com/sf/guides.../2008/0816.pdf

For a Short Sale you need to go through Wells Fargo and HSBC first to see if that is an option at this time......so you would need to ask for a short sale package from each of them..........

Wells Fargo
1-800-416-1472

HSBC
1-888-648-3124

also be very careful about defaulting on the HELOC because the HELOC can be charged off and placed into the hands of a collection agency...........so you would not have any leverage with a HELOC if that were to happen.

[tbone499]

Thank you for the Fannie Mae information and the feedback on the HELOC. Is there an alternative with a HELOC that I should consider first? I do not have a lot of options here other than pursue a short sale i'm afraid.

Am I correct in interpreting this as that if I request a Short Sale package from the lender (HSBC) that they may begin to pursue alternative options to default on the loan instead which would put me in a worse position? Would it help to show them that the would likely receive a portion of the loan value in a short sale (probably 40K of the 100k).

Anyone have any direct experience with a short involving a HELOC that has been successful?

Thanks!

[Moe Bedard]

Go to the search on the top of the thread and put in HELOC or Short Sale info and you can look for other members dealing with them.

Your question was, do I need to have my HELOC payments go past due.........the explanation was what could potentially happen if you did go past due on a HELOC. Some investors do settle for less on a HELOC on a Short Sale............but you won't know if it is possible with the investor on the loan unless you ask them.............

[jloskar]

I am in a similar situation with a pro-active relocation out-off state before I loose my job. We are looking to short sell since I can not afford both a morgage and rent. Would you share your hardship letter?