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short sale

If the bank sells my house for less than what was owed on it can they come after me for the balance…

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Question: If the bank sells my house for less than what was owed on it can they come after me for the balance…

Answer: Yes…The bank has 3 options at this point. Either they will do nothing or they will 1099 the homeowner or they will file a deficiency judgment for the amount they lost. In most cases they will 1099 the homeowner and count the loss as income to the homeowner. If you talk to your accountant, sometimes IRS form 982 will counteract the 1099 and you won’t have to pay a huge amount of taxes. They could also file a deficiency judgment against the homeowner and require the debt be paid off. Since most homeowners in this situation can’t pay it off, they file bankruptcy which will get rid of the judgment. There are some things you can do to ensure that a judgment is not filed and that is by doing a short sale. If you have someone who knows what they are doing, they can ask for a satisfaction or to satisfy the loan which means the bank can no longer come after the borrower for the deficient amount. The loan is considered paid in full. Plus with a short sale, the home is sold and foreclosure stays off your credit.

In Arizona I have come across lenders who talk homeowners into short selling their home vs. signing a deed in lieu.

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Question: In Arizona I have come across lenders who talk homeowners into short selling their home vs. signing a deed in lieu. Why wouldn’t they want the deed in lieu? What’s in it for them if the homeowner does a short sale?

Answer: – With a short sale, the home gets sold even though they may take a larger loss upfront. With a deed in lieu, they take back the property, which looks bad on the books and now they have to find a buyer. In a market like this, they would much rather take a for sure sale and not have to worry about selling it some time in the future.

Short sale home in Arizona.

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Question: I just purchased a short sale home in AZ. GMAC had the 1st position and Indy Mac had the 2nd position. We signed and the short seller signed. The HUD was sent to title and it was registered and released. However, the short seller and broker says we still owe Indy Mac 15K and won’t get the home. Can this be possible?

Answer: -Sure, if that’s what you negotiated with them. On the HUD it should show the amount each lender will be receiving. The 2nd always wants something in order for them to release the lien or else it makes no sense for them to do it. They’d be better off letting it go to auction and hope someone bids past the opening bid. The 1st typically wants to know how much the 2nd is receiving because they don’t want them to get anything, which is why sometimes it has to be handled outside of closing.

Short sale and release of lien

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Question: Close to signing a short sale agreement between my first(Countrywide) and second(WAMU). this is a rental, Countrywide has settled, second will accept $7000 to release the lien, however they still want to come after me for the $93,ooo balance. Broker(advocate) was told that WAMU has already charge of the second as bad debt. Can WAMU sell the note to a collector that will still come after us for the full 93,000K. Been advise to try to settle with wamu at an agreed amount and make $100/MONTH PAYMENTS TO LIMIT LIABILITY. Any other questions to consider? If the house goes into foreclosure, Countrywide does a trustee sale are we finished with wamu too?

Answer: The best thing you can do is ask for a satisfaction of the loan. Ask them how much they need to “satisfy” the loan. Typically you’ll have to pay more for a satisfaction of loan, but they give up their right to come after you for the difference. If they’ve agreed to “release the lien” then yes, they can and usually will come after you for the difference. If the home goes to foreclosure, you can bet WAMU will file a deficiency judgment because it sounds like that is what they are planning to do anyway. So, no, you are most likely not finished with WAMU. The best thing you can do is try to get them to accept a satisfaction. Good Luck.

Who is responsible for the difference of the original loan amount if a short sale is accepted?

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Question: Who is responsible for the difference of the original loan amount if the property is redeemed by the mortgagor, or if the property is sold in a short sale? Who is responsible for the difference? The money lost on the original loan?

Answer: -The individual(s) who signed on the dotted lines and promised to pay the loan back are responsible for the difference. The lender has the option of doing nothing and counts it as a loss, or they can 1099 the homeowner for the difference, or they can file a deficiency judgment against you for the whole amount. If they file a deficiency judgment against you, the only way to get rid of it is to file bankruptcy or pay it off. If they 1099 you for the difference and count it as income, you can fill out a form (982) the IRS has that (in most cases) will counter the 1099. So really all you have to worry about is the deficiency judgment. And a good short sale expert knows how to avoid that so it’s rarely an issue. Most of the time they just 1099 you for the difference.

when buying a short sale home how long does it take to close?

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Question: when buying a short sale home how long does it take to close?

Answer: – If you are the end buyer, the time it takes to close varies depending on how ready you are. It can take 3 days to 60 days depending on where you get financing and what they require. The transaction is the same as any other residential home. Typically with short sales, you’re just getting a better deal. You should be able to close within 30 days which is usually what the banks require once the short sale as been approved.