Hi!
I have a quick question.

Currently my in laws have an investor interested in buying their house.

They have applied for short sale consideration because they're upside down and have to move out of state

but the lender is playing hard ball. So unfortunately they will have to miss a few payments.

So the question is:

If they miss a few payments and move out before the short sale occurs or not and instead rent in the same

town and use the missed payment amount for mortgage to apply towards rent before moving out of state after rental lease is up then

will the lender wonder why they're renting in the same town when they told

us(lender) that they have to move out of state OR do they not care?

If they rent then utilities will have to be transferred to the rental home and a simple credit check may reveal

their new address. Any input would be greatly appreciated.

Thanks

A short sale will look the same as a foeclosure on the credit report, which means it will be at least 3 years before they'd be eligible to purchase a new home.  So whichever way it goes down won't really matter.  But if they still want to do a short sale, then don't worry about renting.  That information is not reported to the credit agencies (unless they don't pay and it turns into a collection)  and neither are utilities (although I've been seeing the electric reported if over 30 days late).  I've never heard of a lender even saying anything about needing someone to move out of state, they're just trying to scare your in-laws.

Hi!
Thanks for the reply.

Their main concern is that if the bank finds out via public record search or other that they're renting

in the same town where the short sale is to occur and they stated in the hardship letter

that they have to move out of state asap for personal reasons which they do but NOT necessarily asap,

then they're afraid that the bank will reject the shortsale on grounds that

if they can afford to rent and pay utilities and also pay for elec. and water

for the current house while short sale is in review then there is no financial hardship and as for the moving out of state

reason since they're renting locally that means they're not moving out of state anymore.

Not sure what to do.

Thanks

Mike,

I don't know how the bank would find out if they're renting or not, as that would not be recorded anywhere for the public to see.  The only place it could possibly show up would be a credit report, and that's only if they had stopped making rent payments and it was turned into a collection, which would take months to happen.  Otherwise, rent payments are not recorded on someone's credit.  If they don't list a new phone number for the apartment then there would be no way for the bank to find out that they have not left the state.  But I understand their concern and if they are still afraid of the bank finding out than I'm not sure what we can do to help.

I told them the same thing but wanted to double check.

Thanks for the input, it is very much appreciated.