short sale questions

**Maisiedotes** · 06-23-2009, 07:39 PM

We are not in default (yet) on our mortgage. We are paying rent right now in MA and own our house in maine but it is vacant. Our mortgage company (citimortgage) is not being very helpful. They want all or nothing- no half-payments. They call me (an automated call) at least 3x/day since June 2 (when our payment was 1 day late) as a reminder that they have not received our payment. We are not 30 days late yet, as I said. We met with a realtor to put the house on the market yesterday and it will be listed in the next 4 days. Jobs took us out of state.

Our realtor said our home will most likely be a short sale because of the appraisal we got and the amount we owe. We can't continue to pay on the house since we are paying rent- we either have to stop paying on it or stop paying our other bills and rent. Since my credit is going to be ruined by the short sale, woudl I be wise to stop paying it? I am OK with a short sale- I have come to grips with it- but I don't want to have to be escorted out, foreclosure, court, etc etc. UGH. I applied for assistance from the mortgage company but they said since we are paying rent, which puts us oweing more than we make each month, we would most likely not get any help.

*sigh* Can anyone suggest anything?

**craftypam** · 06-23-2009, 08:08 PM

Could you rent your house? Even if its less than your payment it would be something to maybe help. I'm not familiar with short sales. Could you google it?

**Momto2Boyz** · 06-24-2009, 07:21 AM

I believe a short sale is when the sales price is smaller than what is owed...am I correct?

I don't have any experience with it, but I just wanted to give you some support and hopefully it will all work out for you. I woudl check into renting out your house too, maybe just until the real estate market picks back up and housing prices rise again. Then you'd be able to sell it for a higher asking price and maybe come out even again!

**jvera** · 06-24-2009, 02:57 PM

Originally Posted by Maisiedotes

We can't continue to pay on the house since we are paying rent- we either have to stop paying on it or stop paying our other bills and rent. Since my credit is going to be ruined by the short sale, woudl I be wise to stop paying it? I am OK with a short sale- I have come to grips with it- but I don't want to have to be escorted out, foreclosure, court, etc etc. UGH. I applied for assistance from the mortgage company but they said since we are paying rent, which puts us oweing more than we make each month, we would most likely not get any help.

*sigh* Can anyone suggest anything?

Unfortunately when my husband lost his job we lost two houses to foreclosure. We tried a short sale but there were no takers. We moved out of the house and rented a apartment and quit paying on the houses when our savings were gone. We didn't get escorted out or anything major. Just letters saying we were behind on our payments. When they called I explained the situation and they were understanding.

**NikoSan999** · 06-24-2009, 11:06 PM

Depending on the state you are in in a short sale you can have a judgement put against you for the amount difference. YOu can also be issued a 1099 from the mortgage company and they will also send one to the IRS if they send one to you. This is for the difference between what is owed and what the house brought. It is looked at as income since there was a contract and it was broken. Same as when a credit card writes off a balance. A 1099 can be issued and you pay income tax on that amount as money made. I just talked with a lawyer last week. We were served papers on a house on june 4th. The lawyer did say the deed in lieu was the worst thing to do. I just posted all this on another thread. There's nothing like kicking a person when they are down. But the mortgage companys aren't very forthcoming with the information about the 1099 or the judgement for the full amount. The lawyer said they couldn't do both so a 1099 might be in the mailbox at some point..again depending on what state you are in. Most foreclosure lawyers will give a free consultation. I'd advise getting one. If you are in one of the bad states ( which where I am is Florida and it's bad) the only way to guarantee getting out of it totally is bankruptcy. Not one of the things wanting to be heard on this forum but it's true. So if there are many thousands of dollars here to be paid taxes on along with alot of other debt it's an option. Know we are considering it. Like the above poster ( who is in California which is one of the good states ) we also had two houses and a ton of credit card debt inherited from a business. Long story. We are considering the bankruptcy aspect. The one as I said was just foreclosed on and having a hard time with the one we are living in.
Heart is with you.

**mhsmaine** · 07-01-2009, 01:33 PM

I'm sorry to hear about your situation with your property. Although I'm not a lawyer, but we do have one on our team, and he typically suggests to folks we work with that if paying the mortgage on a property they are going to have to short sale creates a financial hardship, then it's usually not worth doing. Obviously the missed payments will damage your credit score, but ironically sometimes this motivates the lender to accept a short sale too.

Good luck! Peter

**scottp999** · 07-21-2009, 04:03 PM

Trying to get a short sale done on my GF's house. Her income is way down, they put her in a loan way too big for her income. Basically the originator did a stated income, stated asset loan when her income was well documented with her tax returns, etc. The originator made big commissions up front and doesn't care what trouble it puts someone in.

Someone mentioned 1099 taxes for the difference, the forgiven part of the debt. If it is your primary residence, Congress passed a law on that to not tax through the end of this year. Hopefully they will extend it.

Short sales suck, but we are giving it our best effort. Some small lenders can get a decision done in 30 days, her lender is a big one and is taking 60-90 days. We found a buyer for market price, but they bailed on us because the timeframe was just too long. They were pre-approved, and put down a check deposit and now they are gone, bought a house 2 dors down.

From what I have learned banks that approve a short sale will ask you to sign something on the difference, usually a new note with terms to pay back some, or all of the difference over time. Sometimes with 0% interest. They will require you to sign it as part of the terms of the approval. They are doing this on behalf of the investor, usually Fannie Mae or Freddie Mac. It looks like they are completley negotiable, but the negotiations take a few more days.

Some people get away with a letter saying the lender will come after them for nothing, others can negotiate down the amount. Some people are even able to negotiate an update to their credit reports to show paid as agreed, with no late payments.

The time the process takes vary's by bank, find out how long yours is taking. If it is taking 90 days to ake a decision, then if one buyer backs out, try to get another one and substitute in that contract so you don't have to start over at 90 days.

Also, figure out who is the loss mitigation supervisior, who is the manager, who is their boss. Write a letter to them if their service is lacking, call them directly. If you write a letter, then cc your Congressional Representatives, United States Senate Committee on Banking, BBB, your Governor, and others.

This is a thread on Bank of America coming after people for judgements: http://www.loansafe.org/forum/short-...le-debt-2.html

I was able to gain a lot from reading the entire thread. The BOA managers are there with their email and phone numbers. There are also other short sale threads, foreclosure forums, etc on that site.

We are frustrated, but it's been listed for about 5 weeks. We got an offer the 2nd day it was listed. The people walked, but we are hopeful to get another offer and substitute it in to the offer that is already in process.

We have a listing agreement for 6 months and want to try our best for that length of time. My vacataion was to spend time at her house fixing it up, painting, shampooing carpets, etc. to get it ready to go on the market. She missed this months payment, and we will see how it goes...good luck

**scottp999** · 07-21-2009, 04:08 PM

Here is something on the debt forgiveness act:

http://www.loansafe.org/forum/short-...rgiveness.html

**Maisiedotes** · 07-31-2009, 01:44 PM

Update on our saga:
So, we got an offer on our house. We owe $112,000. "Opinion of Value" is $98,000. Offer: $75000. We turned down the offer. We don't need the mortgage company coming after us for $37,000 (The difference).

I got a call from our loan company (which I was told was an installment loan based on the equity in our home and was not tied to the mortgage- this was back in May). Today a different person told me it is a second mortgage. We owe $43,000 on that. So, I may be looking at a bankruptcy in our future... which I DON'T want to do.

*sigh* I called twice to talk to the same person I spoke to in May and they would not connect me to her. Heaven forbid I should get the same answer from 2 different people... I just don't trust that everyone is on the same page.

I am trying not to stress- I know they are not going to beat me up (I don't think!)... We continued to pay both our mortgage till last month and our home equity loan till this month but have stopped at the advice of our realtor.. since we have nothing to gain from paying, since it is a short sale..

I need a drink.

**Greebo** · 07-31-2009, 01:53 PM

I'm not sure you're fully grasping the concept of a short sale here...

You should have taken the offer to the bank and asked THEM if they'd accept a short sale for that amount. If they did, by definition the bank would NOT come after you for the $37,000 - that's the point of a "short sale". You sell the property for less than owed with the permission of the bank, and the bank then accepts that as fully settled.

My suggestion - get on the phone w/ the realtor, try to get the buyer to resubmit the offer with the understanding that you're going to try for a short sale, and get your realtor to help you with the short sale process and deal with the bank.

It will take a long time, it'll be a pain in the ass, but if the bank takes the offer it'll get you out of the house debt.

**craftypam** · 07-31-2009, 01:54 PM

I'm sorry for all of you having to go through this.

**Maisiedotes** · 07-31-2009, 01:57 PM

Originally Posted by Greebo

I'm not sure you're fully grasping the concept of a short sale here...

You should have taken the offer to the bank and asked THEM if they'd accept a short sale for that amount. If they did, by definition the bank would NOT come after you for the $37,000 - that's the point of a "short sale". You sell the property for less than owed with the permission of the bank, and the bank then accepts that as fully settled.

My suggestion - get on the phone w/ the realtor, try to get the buyer to resubmit the offer with the understanding that you're going to try for a short sale, and get your realtor to help you with the short sale process and deal with the bank.

It will take a long time, it'll be a pain in the ass, but if the bank takes the offer it'll get you out of the house debt.

That is SO GOOD to hear! I had spoken to my realtor about foreclosure and short sale on the same day and I think I am confusing what they can come after us for. I guess it may be the foreclosure that they can put a judgement out against us for... the buyer's offer is being counter-offered by us for $90,000.

Thanks Greebo!

**Greebo** · 07-31-2009, 02:00 PM

Originally Posted by Maisiedotes

I got a call from our loan company (which I was told was an installment loan based on the equity in our home and was not tied to the mortgage- this was back in May). Today a different person told me it is a second mortgage.

Yes, an equity line is a mortgage. No, it's not tied to the first mortgage. It's a separate mortgage, but its still tied to the home, and reading this a bit more carefully - you really are in a mess. You owe a total of $155k on the house, and a short sale may not be possible at ALL because the second mortgage (aka. home equity line) has a say in the sale as well. If anyone would come after you on a short sale, it'd be them, not the primary mortgage...

I am trying not to stress- I know they are not going to beat me up (I don't think!)... We continued to pay both our mortgage till last month and our home equity loan till this month but have stopped at the advice of our realtor.. since we have nothing to gain from paying, since it is a short sale..

You keep not paying and the bank is just going to foreclose on you and then come after you for the difference.

I'm starting to think your realtor may be an idiot. Get a second opinion:
http://www.daveramsey.com/sa/realestate/

**Greebo** · 07-31-2009, 02:01 PM

Originally Posted by Maisiedotes

That is SO GOOD to hear! I had spoken to my realtor about foreclosure and short sale on the same day and I think I am confusing what they can come after us for. I guess it may be the foreclosure that they can put a judgement out against us for... the buyer's offer is being counter-offered by us for $90,000.

Thanks Greebo!

Don't get too excited too fast - I shouldn't have answered as fast as I did. After rereading your post...well...see my last...

Sorry.

**Maisiedotes** · 08-01-2009, 08:37 AM

Well, since, best case scenario, it will be a short sale, which I have read affects our credit the same as a foreclosure, we will not be gaining anything by paying on the mortgage. It is not like what we owe is going to go down enough that we would make money on the sale... plus the mortgage company won't even consider a short sale till we are in default.