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short sale

Short Sale on Second Mortgage

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Question:  We are moving and our home will have to be a short sale. We have perfect credit and have never been late on a payment. The short sale will need to be on the second mortgage only. We owe $150,000 on the second and the short sale will probably be $75,000 of that. We are purchasing a lot where we are moving to and I want to make sure they will not be able to put a lien on it for the difference. In other words what assets will they come after for the difference.

Answer:  – Well, technically they can come after you for whatever is not satisfied. If the short sale is approved and successful, the individual doing the short sale will need to make sure it “satisfies” the loan in which you will receive a 1099-c. If they don’t satisfy the loan, then the bank retains the right to come after you for the deficient amount.

There is actually another option, similar to a short sale, but takes half the time, allows you to stay in the home or (be able to actually sell it in this case) for a profit. We basically get rid of the $150,000 second mortgage by offering a settlement with the lender. The loan is completely satisfied and it never shows up on your credit like a short sale does. Just another option out there for you to think about.

My mortgage company, PNC, has accepted a shortsale offer on my house.

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Question:  My mortgage company, PNC, has accepted a short sale offer on my house. I owe approximately $149,000 and the accepted offer is for $115,000. Coinciding with my application for short sale, PNC moved forward with foreclosure. The court, in Pennsylvania, granted judgement in foreclosure for the owed mortgage balance plus legal fees. Based on what I have read, because I do not have a second mortgage, HELOC and have not refinanced I am at low risk of being sued for the deficient balance after short sale. My concern is that PNC will, however, pursue me for legal fees involved with the foreclosure even though the short sale was accepted post hoc. Can you provide any insight or advice?

Answer:  – Most of the time banks won’t come after you for just legal fees, if they come after you, they will file a judgment for the amount they lost because it costs them a great deal more to pursue someone for a deficiency. So unless they are confident you can pay, they typically will 1099 the homeowner instead. And if you’re like most homeowners, the debt relief act will counteract the 1099 or you could claim insolvency. Best to talk to you accountant if you have specific questions.

Which is better, short sale or deed in lieu?

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Question: What is a Deed in Lieu? Which is better, short sale or deed in lieu? I am in So. California.
MS

Answer: – We explain what a Deed in Lieu of Foreclosure is in our free reports section. With a deed in lieu foreclosure you are giving the home back to the bank. By giving or deeding it back to the bank, the deed is considered full payment of the mortgage loan, so there cannot be a deficiency judgment. However, there are certain restrictions like all junior lien holders must be satisfied and there must be clear title. Although you’ll be avoiding a deficiency judgment, the bank will 1099 you for the deficient amount. This deficient amount is calculated by taking the difference between the fair market value (FMV) and the outstanding debt. As far as credit issues, a deed in lieu of foreclosure shows up as “Acquisition or Abandonment of Secured Property” and is very similar to an actual foreclosure.

A short sale on the other hand has fewer restrictions but is very similar in avoiding a deficiency judgment. You can ask the bank to satisfy the loan so it’s paid in full. You will be 1099 for the deficient amount. And for your credit, a short sale shows up as a “settled debt” which is very similar, however most credit experts believe a short sale is better on your credit report than a foreclosure or deed in lieu of foreclosure. I would have to agree…but it’s not by much. Any way you go, it’s going to be bad on your credit.

short-sale, foreclosure, or bankruptcy… what should I do?

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Question: Looking at short-sale, foreclosure, or bankruptcy… only is Social Security Disability, VA Disability (100%), and disability insurance monthly payment… what should I do? can they come after any of my income in a deficiency judgement? will they even come after me? how will bankruptcy affect me… I currently have NO assets at all except for about 15,000 dollars in savings. thanks Tom from FLORIDA

Answer: -Tom, I have to make the assumption that you’re planning on or you’ve already stopped making payments on your home or you wouldn’t be asking these questions. A short sale in my opinion is by far the best option if you can’t sell your home for what’s owed, rent it out or can’t work out something with the bank like a forbearance or loan modification. A short sale will affect your credit but will eliminate a foreclosure on it. If done properly will also eliminate the possibility of a deficiency judgment. If a short sale is not accepted an ultimately your home ends up at the foreclosure auction, then you will either receive a 1099 or they will file a deficiency judgment against you. If they file a deficiency judgment and you can’t pay, they can garnish wages. Depending on the amount of the judgment, this forces most people to file bankruptcy to eliminate the judgment.

Buying our first home that is in foreclosure, why is it taking so long?

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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

My home is awaiting bank approval of a short sale.

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

Answer: -Yes, for only a short period of time.  Eventually it will foreclose. 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.