Coral Springs Florida Short Sales: The Real Reasons Why Banks Insist on a Seller Contribution

Coral Springs Florida Short Sales: The Real Reasons Why Banks Insist on a Seller Contribution

In a Coral Springs short sale, the bank is already agreeing to a major loss on the balance between the selling price of the short sale home and the seller’s unpaid mortgage. Banks lose more money in a foreclosure, so they are more motivated to do a short sale instead.

The seller is the one who is indebted to the bank, and not the buyer. It is for this reason that the bank will, in all likelihood, demand what they can from the seller.

Here are other reasons why banks may insist on a seller contribution:

1. The seller has disposable income or other assets. To verify the sellers’ monthly income and expenses, banks assess the sellers’ financial statement. If there are savings, other liquid assets, disposable income, or money remaining after calculating the expenses, they will ask for it.

2. The seller pulled cash out of their home equity and refinanced. If the seller bought an expensive item, say a luxury cruise or a boat, but used cash from the home, then this can be considered as a temporary setback by the back and they might ask for a seller contribution. The bank could also require the seller to pay the balance if the home’s selling price isn’t sufficient to reach the bank’s required net.

3. The seller has no financial hardship. There are banks that will accept a short sale if the seller shows proof of a valid hardship that is permanent. It does not necessarily have to be financial in nature. Nevertheless, the bank may still demand a seller contribution if they see that the seller has a strong income stream.

4. Deficiency judgment. The banks in the state of Florida, have the legal right to ask the seller to contribute an amount to make up for the difference between the unpaid mortgage balance and the selling price of the short sale.

Even if banks have the right to demand a seller contribution, they recognize that the majority of short sale sellers don’t have the money needed because if they do, they wouldn’t be doing a Coral Springs short sale at all. If the seller doesn’t have enough money to pay for the seller contribution, banks may allow seller to submit an unsecured promissory note. Banks would usually agree to a a 3 to 15-year payback of principal and non-interest bearing terms.

For assistance with your Coral Springs short sale, contact us Nestor Gasset and Katerina Gasset at 561-753-0135 today! We’ll help to navigate you through the Florida short sale process.

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