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short sale

Orlando short sales, need urgent help!

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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.

What is involved in a short sale?

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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.

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.

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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.

I am in California. I missed my first payment Sept 1. I got a letter telling me to bring things current by Dec 16th. What happens now?

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Question: I am in California. I missed my first payment Sept 1. I got a letter telling me to bring things current by Dec 16th. What happens now? I am not sure when the period of redemption begins? Was I already in it? Or does it begin Dec 16 and go three months? People tell me different things and I am a single mom of four kids and need to plan. Thank-you. Nomi

Answer: -Nomi, the California redemption period is approximately 3 months and begins after you receive the notice of default. Typically you won’t receive a notice of default until you are at least 3 months behind on your mortgage, especially now, banks are slower issuing the notices of default because they don’t need any more inventory. So you’re about 6 to 8 months out from foreclosure, if it goes that far, so you do have several options as a homeowner. Unfortunately Obama’s HAMP program hasn’t turned out the way we had all hoped, however there are alternatives. Assuming you want to stay in your home, one option is a loan modification. This is something you can do yourself or you can hire an attorney to do it for you…just be careful in choosing the right attorney that really does care about your situation and will guarantee their work. Another option is to sell your home, if it has equity, and move into something smaller or less expensive until things pick up again. If your home does not have equity and a loan modification doesn’t work, you could try to do a short sale where a buyer offers the bank less than what is owed on the property. Whatever you do, don’t give up.

2 houses in Arizona, unable to modify our loan. If the house sell in short sale or if I give the house back to the bank can they come after our primary residence?

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Question: We don’t know what to do, we have 2 houses in Arizona, 1st house we took out a loan of $60k (leaving us a loan amount of $220k) and used those $60k to build our 2nd home which is now our primary residence we have been living in it for 1yr 4months and we were renting out the 1st house to help us pay the loan, but now we have been unable to get renters in and my husband got fired from work and has been unable to find a job, this month will be our first month not be able to make the mortgage payment, I called the bank and they told me that they were unable to modify our loan since we have 2 houses and 1 is not owner occupied. I spoke to anther department and asked them about a deed in lieu foreclosure, all they told me was that the house would need to be in short sale for 90 days before they could talk to me about that. So my question is if the house sell in short sale or if I give the house back to the bank deed in lieu foreclosure can they come after our primary residence to collect money and if they will can I change the deed of trust to owner primary home (which is free and clear of any loans) before the bank tries to get involved to someone elses name so the bank wont take away our primary residence away? Thank you.

Answer: -This is a very common question…can the bank come after my other assets if I do a short sale, deed in lieu foreclosure or it just goes to auction. The answer is “NO”. When you signed the paperwork with the bank it specifically states that the home would be sufficient collateral for the loan. The only way they could come after other assets is if you pledged them as additional collateral in order to get the loan. So you don’t have anything to worry about. What you do have to worry about is a deficiency judgment where the lender can sue you for the difference that was not collected. Although this procedure is not common at all, it does happen once in a while and is more common in mortgage states. It does not happen very often because homeowners will just file bankruptcy and wipe it out altogether, which means the bank loses even more money. So more often they will issue the homeowner a 1099 for the amount they lost, which could be a significant amount. That is why a short sale is a better alternative because it’s less damaging on your credit, you can eliminate the deficiency judgment altogether if done properly, and in many cases you don’t have to pay as much when they 1099 you.

An agreement of sale has been signed 6/27/09 by myself & the seller on their home that was a short sale. The seller is NOW working with their bank on a loan modification….IS THIS LEGAL?

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Question: An agreement of sale has been signed 6/27/09 by myself & the seller on their home that was a short sale at the time. I have jumped thru hoops with everything they wanted. NOW 2-1/2 months later while waiting for the seller’s bank’s approval on the offer , the seller is NOW working with their bank on a loan modification….IS THIS LEGAL? What about my rights since I have a signed Agreement of Sale. Please rush reply since I am really outraged!!. Thanks,

Answer: -Unfortunately that has always been the challenge working with homeowners in pre-foreclosure…you do a whole bunch of work helping the homeowner avoid foreclosure, work out a short sale deal with the bank and come to find out they’ve decided to back out and do something different. So basically you’ve wasted a bunch of time and money. Unfortunately there is not a lot you can do because you need the cooperation of the homeowner to get the short sale deal approved and pushed through. If they won’t cooperate with the bank, it’s difficult to get an acceptance. This is one of the biggest reasons why I always like to get the deed first. I may have to deed it back in order to get the short sale accepted but at least I have control of the property all the way through until closing.