Posted on 11/19/2011 8:39:56 AM PST by ChocChipCookie
Are there any other reasons for the short sale of a house besides being underwater, a foreclosure, or some other negative financial situation?
I just bought a log cabin on a short sale. It took 6 months.
That said, I got a great deal!
Debt forgiveness for second loans.
Excerpted from the Cal Assoc of Realtors legal section:
My reading is that if the lender approvals a short sale, they cannot come back and seek a judgment for the seller for the balance on the second loan. The law already precludes them from seeking a judgment on any balance remaining on the first.
I am still not an attorney, so verify this information with yours before deciding how you want to pursue.
Gov. signs SB 458 into law
For release:
July 15, 2011
CALIFORNIA ASSOCIATION OF REALTORS® applauds Gov. Brown on signing SB 458 into law
LOS ANGELES (July 15) – The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) applauds Gov. Jerry Brown on signing SB 458 (Corbett) into law. SB 458 extends the protections of SB 931 (2010), to ensure that any lender that agrees to a short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans.
Under previous law (SB 931 of 2010), a first mortgage holder could accept an agreed-upon short sale payment as full payment for the outstanding balance of the loan, but the rule did not apply to junior lien holders. SB 458 extends the protections of SB 931 to junior liens.
“The signing of this bill is a victory for California homeowners who have been forced to short sell their home only to find that the lender will pursue them after the short sale closes, and demand an additional payment to subsidize the difference,” said C.A.R. President Beth L. Peerce. “SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lien holders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property.”
SB 458 contains an urgency clause making it effective upon signing.
Thought you’d might find this interesting about the debt cancellation.
http://homebuying.about.com/gi/o.htm?zi=1/XJ&zTi=1&sdn=homebuying&cdn=homegarden&tm=30&f=00&tt=13&bt=1&bts=1&zu=http%3A//www.irs.gov/individuals/article/0%2C%2Cid%3D179414%2C00.html
I should also say that I’m actually hoping there’s some sort of loophole or they did a short sale to one of their kids, or there was some type of strategy involved for their sake, because I hate to think of them being destitute at this point in their lives (70’s).
How did you finance? We have a dome home and along with hay bale and log homes Fannie Mae says they wont insurance them, so we can’t get a buyer for our dome (well unless they came in with cash)
No, your credit will take a big hit. If you can’t pay your mortgage, it is better than foreclosure, but if you can pay, you’d be a fool to short sell. There is no other reason to do it aside from financial problems.
Thanx. That’s one of the materials I distribute to our leads. I send them to their tax preparer for final word. I tell them, I’m a RE broker and financial planner but not tax attorney, CPA or preparer. They need to hear it from them because when their audited I’ll be on some beach and they will be represented by their tax person.
PS I dislike the tax code and the IRS as much as the last person, but some of their brochures and material are well done and easy to follow. At least for the topics in which I am involved.
Some friends of ours retired from Government Motors before the SHTF and sold their nice house in a nice neighborhood for about half what they paid for it. It was still enough to buy a decent condo out here in Pennsylvania (Pittsburgh area) where real estate is reasonably stable and retirement income goes further because their isn't an army of DemonRat politicians working 24/7 to steal it.
Too much debt. Loss of job or income. Home needing major repairs that homeowner cannot afford.
Those are the main reasons.
We financed it via Mountain National Bank. We have perfect credit and put 25% down. We didn’t have any problem getting it insured.
It took forever to close, we actually close sometime this month, because the current owner has two mortgages on it. Just waiting on the bank appraisal and a closing date.
It was purchased in 2006 for $155K, currently appraised at $99K and we are buying it for $75K. It has $14K of documented annual rental income.
Some incredible deals here!
http://www.smoky-mountain-properties.com/foreclosures.htm
I binged this link and it is somewhat interesting...
http://www.jdanielrealty.com/orange-county-real-estate-news/8-great-reasons-why-you-should-short-sale-your-home/
“Today some neighbors of ours are moving out, and when we were researching the possibility of selling our house, comps and the like, their home came up as a short sale. There was never even a For Sale sign out front.”
There are some people who take out a big loan on their homes and even though they could make the mortgage payments, they decide “it’s not worth it financially” — they do a short sale or even let the bank foreclose.
Same as you, I was researching house sales in my neighborhood and found that someone on my street originally bought the house for $x, then they refinanced and took out a lot of cash when prices were up, then kept the cash, and let the bank foreclose recently. Then they bought another house cheap and spent signifcant amount of money remodeling, so clearly they had no financial hardship.
The bank must have auctioned the foreclosed home, because there was no for sale sign on that house either.
Unethical, but legal.
Yes, BUT, I think I heard an accounting type tell me that people under a certain income (or home price level) don’t have to pay the tax on that difference.
They could have been teetering on foreclosure and came up with a short sale at the last minute. Sometimes the lenders will accept that. Foreclosure is very costly for the lender. Could be that it was only a few thousand short of value or something.
We love Arizona and the people. It's like the biggest secret in the country how much better the quality of life is here compared to places like South Florida. I'm glad people can find happiness on the beach 24/7. Still, after 20+ years in SoFlo, I don't know that I'd ever move back being that this move was for family and career.
SHHHH! Don't let the Californians find out! ;)
Fantastic! Glad to hear there is a bank out there that doesn’t freak out because a house is different.
Farm Credit Services is also a good lender when it comes to log homes.
I’m surprised anyone has issues financing log homes. They appreciate much faster than 2x4 homes.
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