If you’re behind on your duplex payments, and are considering a short sale, you may need to act fast.
Specifically, local attorneys who specialize in negotiating short sales have begun to see a disturbing trend with FHA and VA mortgages. Simply put, if the sheriff’s sale has occurred, most banks are refusing to negotiate a short sale.
In Minnesota, the sheriff’s sale is usually scheduled when a duplex owner is six months behind in mortgage payments. While most short sales and foreclosures in recent years have in fact taken much longer than this, it is best to prepare as if the lender will work within the time frames allowed by law.
The first thing a distressed duplex owner must do is find out whether or not the sheriff’s sale has occured. The bank is required to inform the property owner of the first scheduled sale. If the sale is postponed, the lender is not required to formally notify the seller.
If the sale has happened, it’s important to contact the lender to obtain confirmation that they will still consider a short sale.
If the sale hasn’t occurred, duplex sellers should contact their lender to begin the short sale pre-approval process. If the seller is eligible, the lender will order an appraisal and issue an “approval to participate” document.
This letter will state what the approved sales price is. It’s important to note, however, that it will not stop the short sale process.
If there isn’t time to complete the FHA pre-approval process before the sheriff’s sale, or the seller has a VA loan, the duplex owner may be able to get the sheriff’s sale postponed five months, provided they live in the property. However, obtaining this extension must be done at least 15 days before the sale.
If you’re a duplex seller facing foreclosure, it is probably best to get seasoned professionals on your side, who can help guide you to resources and through the difficult months ahead.
Please don’t hesitate to contact me for solutions.