Short Sales for Seniors with Assets

I’ve been thinking a lot lately about a relative who is going to be selling his home in the coming months and moving into an assisted living facility.  Thankfully he owns his home outright and has no liens on the property.

But, what if he didn’t own the home outright? What if he owed the bank more than its market value and he had to short sell the home because of his medical condition(s)? What if he had a fair amount of assets BUT the assets were going to be used for his tenure at the assisted living facility? What if these assets were in bank accounts as opposed to other “protected” retirement accounts. How would his lender consider these assets? Would he qualify for a short sale? Would he be required to make a cash contribution to the transaction? Would his lender or his lender’s faceless investor want him to sign a promissory note to be paid off over 20 years (yes, I really just wrote that)?

From a Public Relations standpoint, it would probably be in the bank’s best interest to be somewhat lenient in this matter, however, the bottom line is that the bank must make a business decision whether it’s public relations driven or financially based.

What’s the decision going to be?

I’d like to think that a lender would be willing to consider this short sale situation a little differently than some of the other “financial hardships” I’ve seen in the past. However, in the past 4 years through processing over 450 short sales, I’ve seen too many lender decisions that just don’t make a lot of sense. Anyone have any experiences with a scenario similar to this one? If not, what are your thoughts? Do you think the lender should be more lenient, less lenient or indifferent to the situation and base it strictly on internal policies?

Comments (or experiences) anyone?