We had a short sale and underwiting flagged it because we are only at the 3 year mark. We went to contract last year (sept) but had a delayed closing (feb 2016). When we went to contract we were under the impression the waiting period was only 3 years but it changed. Everything else is strong – 20% down, 25% DTI, 1 year reserves. The lender has asked us to do a Letter Of Extenuating Circumstances – thinks we have a case bit everytning I read says it is a long shot. The short sale was only for 20K on a 60K mortgage that we took out on a home we gave our dad to use – it needed to be fixed up and he was living in terrible conditions. When he became too ill to live alone the bank advised short sale to cover the deficit – big mistake – we agreed shame on us. Our fault and in our letter we will fully own up to it. Wife’s loss of job and the inability to rent the home resulted in the short sale. We made payments on the empty house for a long time but finally went the short sale route.
Any assistance, thoughts, key points would be great? Also if the rules changed after we went to contract maybe we add that in to the letter. Just bad luck for us but maybe it will help. We have another option but the closing cost and interest rate are not the best.
Thanks in advance for any help!