Question: I live in Orlando and I recently got engaged. I am now in a position where I would like to move in with my fiance and sell my property. I have 2 properties that I would like to short sell, my house and a condo. Both properties are obviously not worth what they used to be and I can’t sell either of them for what I owe. I just got a general appraisal on the house today and it is approximately $56,000 less than what I currently owe. I have called both of my banks and gotten the requirements of short sell. My banks are BOA for the house and Wells Fargo for the condo. The bank states that your mortgage should be 31% of your income, mine is closer to 55%. The problem is I believe that in order to sell both properties, I will have to do 3-short sells at one time, one for my house, one for the condo and one for the line of credit or 2nd mortgage for the condo in order to prove hardship. 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, “arms length” does have some grey area, but that’s your call. 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.
I don’t think it would be appropriate to sell to your fiance. That’s borderline fraud. She is your fiance, you know that going into the deal. You will be husband and wife soon. As long as these short sales take to close, you may be married by that time. Not a good idea if you ask me. Start over. Go find a small house with less payment or something while your credit is still good. Qualify together. Then short sell this home and be done with it if you can’t afford it anymore. If you can afford it with the income of your new spouse, then work something out with the bank, even if you’ve missed a few payments. Show them you are getting married and with both incomes will be able to afford the home. Hope this helps.
Hello everyone. We are in Michigan and need help with a short sale. I have done a lot of searching on the internet, but haven’t really found anyone that offers short sale help to a seller. We thought there may be a professional service of this nature that we could hire, or ?
Our situation is this – mtg is upside down. 1st and 2nd total $260k aprx. We have it on the market by owner for $247k. Not sure what we will get for it. It is priced at FMV for this area. We can’t use a realtor as we cannot afford the 3-6%.
Backing up a little – the 2nd said we could sell it and that they would write a new, unsecured, loan for the difference. They said it would be at 10%. The problem is, we will not be able to afford that new loan payment!
I have received a few emails from people saying they could (on our behalf) go to the 2nd and offer them a short sale – about $5k! I can’t imagine the 2nd would accept that. If we sell it, they would get a whole lot more than that! Also, I am really afraid to just deal with anyone. We were hoping to find a legitimate company to work with. I always read about how people get the mtg company to agree to much less, but how on earth do we do that!>
We keep on paying “just enough” on the first to keep us out of trouble, but we cannot continue that. We simply cannot afford the payments! Also, we want out of the house – we do not want to save it as we are relocating out of state. Hence, time is a factor as well.
I apologize in advance for the length of this. I would truly appreciate any advice anyone here could offer us.
Thank you!
I am in the EXACT same situation – exactly, so I’m curious to see what you get back for advice.
In addition, I’ve found an outstanding rental property close to where I live (I’m dropping $1700 a month into a 1200 sq ft condo now and I would pay $1095 a month rent for a 1750 sq ft home right down the street). I know I’d have significant credit consequences (I have over an 800 score now) but circumstances will not allow me to pay this much money. My 4.3% ARM just went up to 6.5% and I can’t pay it. I owe 205,000 (195k on 1st and 10k on 2nd) and it’s only worth 175,000.
I’m trying to work out a deed in lieu of foreclosure with the bank – I hope they accept but I’m afraid they will come after me for whatever is owed after the sale.
Tracy
Yes, I too am curious about any advice that may be posted. Hopefully it will help us both! I have spent so much time researching this, and am really exhausted from it all! On your deed in lieu offer to your bank, is there a formal process you followed, or did you just send them a letter? I would be interested in knowing how to go about that. Good luck!
Typically, banks will not short sale a property to the owner. They do not want the seller to receive a dime if a short sale is approved. If you sell the home for $247K which is lower then what you owe, someone has to come up with the difference or the bank will have to agree to a settlement meaning they will take less than what is owed. Or like you said, they could write a new loan for the difference, but in my experience they just write it off as a loss and 1099 the borrower for the difference. It is possible they could file a judgment against you for the difference, which is why you want to make sure it’s settled as “paid in full”, so that way they can’t come after you with a judgment.
You can give the property back to the lender – deed in lieu foreclosure- however, it is subject to junior lien holders. Meaning you are also responsible that junior lien holders get paid. You could have someone short sale the 2nd for you. Usually DIL works good if you have some equity.
I work for a non-profit foundation that helps people in foreclosure. With the glut of low equity homes we have begun to work short sales.
I currently have 10 short sale files working in just the two short weeks we started doing this.
I think we are going to have issues funding all of these. Any suggestions?
I read your entire short sale book (which was excellent) but it seemed clear to me that you must have the money to pay the discount in order to make the deal go through.
Thanks in advance.
Yes, you are correct. This is why we use transactional funding. It’s perfect for what you are doing here. And we can save you a ton of money.
I need help… This is my 1st attempt for a short sale. There is a 1st of $174K and a 2nd for $54.5K. I called the 1st note owner and they sent out the shot sale package and I’ve already faxed everything back. I called the 2nd note owner and the bank is being a pain in the butt. I spoke with them last Friday. I told them the owner is $8000 behind in payments and the 1st started the foreclosure process. I wanted to see if I could work something out and I offered him $5,000 as a payoff. He basically told me to go to hell. He said they would bring the 1st current and rehab the home. Is there anything to be done here> It seems like the 1st is willing to work something out. Any suggestions? Oh I forgot it needs 25K in repairs.
Some banks can be like this and it makes it very difficult to deal with them. Try to bring them to reality. Tell them they it’s not worth $260K, (which is what it would cost them to cure the loan, plus fix it up). If they want to hold on to it in this down market, then let them have it. You are doing them a favor.
One thing you may want to try is wait a week or so and have someone else call and offer them a different amount. See what they say.