Posts Tagged ‘short sale’

Question: My husband and I are in the process of buying our first home and we are very confused as to what is going on and no one can help us. Here’s the situation…We put in an offer on a house and the offer was accepted after negotiations. Within 2 months the house went into a short sale because the owners did not have the money. Since then (it’s been 6 months) Bank of America has reappraised the home and put it into foreclosure (or so I’m told). Our real estate agent said that they can get the foreclosure postponed…What does this mean? Can they foreclose on a house that has an offer on it? Would this mean that the contract is no longer valid? I would appreciate any help you can give us. Thanks!

Answer: -  It sounds like you made an offer to the bank for less than what is owed on the property, which is a short sale.  And from what you say, the bank accepted the offer but there may have been some other requirements from the initial seller in order to get everything approved.  As a buyer, it’s not uncommon to wait for MONTHS and if you are patient enough it could even be a year or more before you are able to buy a property in foreclosure.  This is all because of bankruptcies, settling with 2nd and 3rd lien holders, uncooperative sellers, etc.  To answer your question, yes, the bank can foreclose on a property even if there is an offer because they are waiting for certain requirements to be met.  Yes, they can postpone the foreclosure auction as long as the bank sees a legitimate reason to postpone.  Don’t give up.  Keep working close with your agent, I’m sure they are on top of the situation…Just don’t be surprised in you have to wait awhile.  Most home buyers get frustrated waiting and move on to another home.  Good Luck

Question: If I declare bankruptcy now with regard to my other debts, will it prevent the short sale from going through?

Answer: -No.  Bankruptcy only postpones an auction or short sale which buys you more time.  In fact, many short sale investors will use bankruptcy as an option if they need to buy more time so it doesn’t go to auction, as long as it’s in the best interest of the homeowner.

Question: Does the fact that my mortgage is 55% of my income help me prove financial hardship?  Can I short sell my condo to my fiance before we get married?  Should I consult a real estate attorney or an agent for help?  Any help on this would be greatly appreciated. Thank you!

Answer: -55% is a lot, but may not prove financial hardship, unless you’ve had a loss in income or increase in bills or something like that.  You can short sell you home to anyone you want as long as they are not related, but you also risk not getting the short sale approved in which then your home will go to auction and then the 2nd may file a judgment against you for the amount they lost.  But if that’s your best option then, yes a short sale is a great route to go.  I would definitely seek help from an agent if you need to find some buyers…or investors in your area would probably love to do a short sale on them.

Question: What is involved in a short sale?

Answer: -This is a great question…the short sale process involves several steps.  First the homeowner falls behind on payments because of some hardship or challenge and can no longer make payments.  The house is over leveraged, so the loans are more than what the house is worth, so it makes it near impossible to sell.

If you are the homeowner, here is what is now involved in a short sale…

Homeowner – Buyer/Investor/Agent approaches you to buy your home for less than what it’s worth.  You have to concent or authorize buyer to talk to lender about loan(s).  You will fill out some paperwork describing your financial hardship, describing your current financial condition, and most likely you’ll also provice some pay stubb’s if you’re employed, bank statements, W2′s, etc.  You will be asked to cooperate fully with the buyer to get the short sale pushed through.  Once the offer is accepted, you’ll have to sign some more paperwork basically disclosing to you the terms of the short sale agreement and you’ll go to closing and be done.  Then you’ll have to move out of your home if you haven’t already.  Then the bank will either 1099 you for the difference they lost or they can file a deficiency judgment against you.  But a good short sale expert can eliminate the whole deficiency judgment option all together, so really you just have to worry about the 1099.

If you are the buyer or investor, this is what is involved in a short sale…

Buyer/Investor – First you will fax the authorization letter to the bank, the homeowner just signed and wait 24 to 48 hours.  Then you will request a “short sale” or “workout packet” from the bank.  In the packet will be everything the lender requires in order to accept a short sale.  Fill it out completely and make sure you include everything the lender requires.  Once everything is filled out, send it back to the lender and start looking for an end buyer.  If you already have your list of buyers, call them up and let them know about your deal.  You’ll use wet funds to close your deal and sell the property to your end buyer.  You make your money and do it over again.

Question: We have a home in NY that we were unable to sell and will be going into foreclosure after trying to get the loan modified and bad renters. We currently live in PA and the PA house is paid for…will they come after me for the deficiency, put a tax lien on the PA residence or 1099 us? Thank you for your help.

Answer: -Typically they can’t come after your other assets because the loan was created based on the properties value which was collateral for the loan.  So in the event you didn’t follow through with the terms, they could take the property.  Now with that said, yes they can file a judgment against you which would affect your “assets” because you would have to pay that back or file bankruptcy.  It’s more common that they would 1099 you for the amount they lost but you never know.  They best way to counter a deficiency judgment is to do a short sale and get it accepted as full satisfaction for the loan.  This means they give up their rights to go after the homeowner for a judgment.  All they can do is issue a 1099.  So I would definitely try to do a short sale because it also helps your credit.