Free Republic
Browse · Search
General/Chat
Topics · Post Article

Skip to comments.

Short sale of home
vanity ^ | November 19, 2011 | ChocChipCookie

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?


TOPICS: Business/Economy
KEYWORDS: realestate; shortsale
Navigation: use the links below to view more comments.
first 1-5051-56 next last

1 posted on 11/19/2011 8:39:59 AM PST by ChocChipCookie
[ Post Reply | Private Reply | View Replies]

To: ChocChipCookie

Bobby Reich is involved?


2 posted on 11/19/2011 8:41:45 AM PST by Paladin2
[ Post Reply | Private Reply | To 1 | View Replies]

To: ChocChipCookie

“Some other negative situation” covers just about everything.


3 posted on 11/19/2011 8:42:12 AM PST by Terry Mross (I'll only vote for a second party)
[ Post Reply | Private Reply | To 1 | View Replies]

To: ChocChipCookie
How To Do a Short Sale: Why Would a Lender Accept a Short Sale?
4 posted on 11/19/2011 8:42:27 AM PST by E. Pluribus Unum (The enemy of my enemy is my candidate.<sup>®</sup>)
[ Post Reply | Private Reply | To 1 | View Replies]

To: ChocChipCookie

I think, if it’s not your home, you’d want to short sale that too.


5 posted on 11/19/2011 8:43:03 AM PST by Jonty30
[ Post Reply | Private Reply | To 1 | View Replies]

To: ChocChipCookie

The house is majorly messed up somehow


6 posted on 11/19/2011 8:43:08 AM PST by yldstrk (My heroes have always been cowboys)
[ Post Reply | Private Reply | To 1 | View Replies]

To: ChocChipCookie

Being underwater on your mortgage is NOT a reason to short sale unless you absolutely have to leave thev area for some reason. Everyone keeps complaining about being underwater on their homes, but it’s no reason to panic. Just live there, pay your mortgage and carry on. Don’t try to sell and your fine.


7 posted on 11/19/2011 8:44:53 AM PST by mockingbyrd
[ Post Reply | Private Reply | To 1 | View Replies]

To: ChocChipCookie

A friend of mine was just relocated from Phoenix to Chicago and their neighborhood had a major crash due to neighboring foreclosures so they were in a major short-sale situation.


8 posted on 11/19/2011 8:47:11 AM PST by mnehring
[ Post Reply | Private Reply | To 1 | View Replies]

To: mockingbyrd

Even if it’s a bit underwater, by paying down a mortgage, you’re still building equity.


9 posted on 11/19/2011 8:47:48 AM PST by Jonty30
[ Post Reply | Private Reply | To 7 | View Replies]

To: ChocChipCookie

“some other negative financial situation”

That one won’t hunt.

Underwater and foreclosure are about the only 2 things that will induce a lender to accept a short sale. Usually you have to have had the property up for sale for at least 3 mos before they will consider it.


10 posted on 11/19/2011 8:47:57 AM PST by Georgia Girl 2 (The only purpose of a pistol is to fight your way back to the rifle you should never have dropped.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: ChocChipCookie

No. If you can afford the payments, don’t do it.
I have read that some lenders are issuing 1099s (I think that’s the one)for the difference as income.
If I can get this correct. Say you bought your house for $200K had a loan of $175K but found yourself underwater now, and could only get $150K. the bank agrees to the short sale (they want to avoid foreclosure). When the deal is complete they give you a 1099 for $25K. (The 150 + 25 = loan amount.)
Also have read that not all banks are doing that form.


11 posted on 11/19/2011 8:48:50 AM PST by svcw (God's Grace - thank you!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: ChocChipCookie

I bought a condo in a short sale . It took exactly one year from start to finish. If I had known, I probably would not have done it. I


12 posted on 11/19/2011 8:49:47 AM PST by Hildy ("When the debate is lost, slander becomes the tool of the loser." - SocratesH)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Terry Mross
Catastrophic medical debt.

My family was overrun in medical debt (despite having insurance) and we considered a short sale just to get out so we didn't foreclose. We figured it would be better in the long run to walk away with good credit and a chance to own again in the future than to have the black mark of a foreclosure on our record.

Thankfully, we were able to hang on. Took us years to pay off that debt, but we did - to the last penny, and kept our house and exceptional credit rating intact.

Sacrifice, sacrifice, sacrifice...worth it in the end.

13 posted on 11/19/2011 8:49:50 AM PST by TheWriterTX (Rock you like a Herman Cain 2012)
[ Post Reply | Private Reply | To 3 | View Replies]

To: ChocChipCookie
Give us your situation in more detail. Some of us work in the industry, and maybe can give you some advice with some more detail.
14 posted on 11/19/2011 8:50:53 AM PST by HereInTheHeartland (I love how the FR spellchecker doesn't recognize the word "Obama")
[ Post Reply | Private Reply | To 1 | View Replies]

Did You Know?

The Current FReepathon Pays For The Current Quarters Expenses?

Now That You Do, Donate And Keep FR Running


15 posted on 11/19/2011 8:51:01 AM PST by DJ MacWoW (America! The wolves are here! What will you do?)
[ Post Reply | Private Reply | To 1 | View Replies]

To: ChocChipCookie

You need to move, and you cannot afford rent where you are going AND house payments and do not want to try long distance land lording.
Someone died and you need to clear the estate up as soon as possible.


16 posted on 11/19/2011 8:53:33 AM PST by tbw2
[ Post Reply | Private Reply | To 1 | View Replies]

To: ChocChipCookie

We ask our clients, can you make the payment? We’re upside down on our beach-view condo, but we can make our payments and want to stay here the rest of our ives.

The feds and others have generated a lot of potential loan relief programs, like it or not.

As brokers, we always welcome listings, but the first question is can you stay there and make your payment? Second question, have you contacted your lender for a renovation?

There are papers on the net comparing short sales, with deed in lieu of, and foreclosures. Read those and call your customer service before you put your house up for sale.

The VA will let you get another loan after two years. Read about FHA and conventional loans and building credit.


17 posted on 11/19/2011 8:57:21 AM PST by morphing libertarian
[ Post Reply | Private Reply | To 1 | View Replies]

To: svcw

Most lenders are not reporting unpaid balances as debt forgiveness to the IRS. There are laws prohibiting that if you sell before the end of next year. In Cal they even have a state law so no state income tax.

Don’t believe some anonymous guy on the internet. Search the net for debt forgiveness on loan balance or talk to your tax preparer.


18 posted on 11/19/2011 8:59:49 AM PST by morphing libertarian
[ Post Reply | Private Reply | To 11 | View Replies]

To: TheWriterTX

You don’t walk away with good credit with a short sale, but you may be able to rebuild it sooner. Consult lenders. They will tell you what they are accepting in new applications from those who were foreclosed or did a short sale.


19 posted on 11/19/2011 9:01:57 AM PST by morphing libertarian
[ Post Reply | Private Reply | To 13 | View Replies]

To: Georgia Girl 2; tbw2; HereInTheHeartland; Hildy; svcw; mockingbyrd

I’m not contemplating a short sale! I probably should have mentioned that. LOL

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.

They’re a semi-retired couple, and I had them pegged as, “the millionaires next door,” due to a lucrative family business they’ve owned. They bought their house before we bought ours 8 years ago, so there’s no way they could be underwater, unless they took out a massive 2nd mortgage on the house. The houses in our neighborhood are holding steady at the value they were 6-7 years ago.

It’s just weird and unsettling to suddenly see a moving van out front.


20 posted on 11/19/2011 9:05:03 AM PST by ChocChipCookie
[ Post Reply | Private Reply | To 10 | View Replies]

To: Hildy

I just bought a log cabin on a short sale. It took 6 months.

That said, I got a great deal!


21 posted on 11/19/2011 9:05:53 AM PST by TSgt (whenever any Form of Government becomes destructive...it is the Right of the People to abolish it.)
[ Post Reply | Private Reply | To 12 | View Replies]

To: morphing libertarian

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.


22 posted on 11/19/2011 9:05:59 AM PST by morphing libertarian
[ Post Reply | Private Reply | To 19 | View Replies]

To: morphing libertarian

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


23 posted on 11/19/2011 9:06:54 AM PST by svcw (God's Grace - thank you!)
[ Post Reply | Private Reply | To 18 | View Replies]

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).


24 posted on 11/19/2011 9:08:50 AM PST by ChocChipCookie
[ Post Reply | Private Reply | To 20 | View Replies]

To: TSgt

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)


25 posted on 11/19/2011 9:09:05 AM PST by svcw (God's Grace - thank you!)
[ Post Reply | Private Reply | To 21 | View Replies]

To: ChocChipCookie

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.


26 posted on 11/19/2011 9:10:04 AM PST by wolfman23601
[ Post Reply | Private Reply | To 1 | View Replies]

To: ChocChipCookie

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.


27 posted on 11/19/2011 9:11:30 AM PST by morphing libertarian
[ Post Reply | Private Reply | To 24 | View Replies]

To: svcw

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.


28 posted on 11/19/2011 9:13:40 AM PST by morphing libertarian
[ Post Reply | Private Reply | To 23 | View Replies]

To: yldstrk
The area where the house is located is majorly messed up somehow. Poster child: Detroit.

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.

29 posted on 11/19/2011 9:15:58 AM PST by Vigilanteman (Obama: Fake black man. Fake Messiah. Fake American. How many fakes can you fit in one Zer0?)
[ Post Reply | Private Reply | To 6 | View Replies]

To: ChocChipCookie

Too much debt. Loss of job or income. Home needing major repairs that homeowner cannot afford.

Those are the main reasons.


30 posted on 11/19/2011 9:18:45 AM PST by floridarunner01
[ Post Reply | Private Reply | To 1 | View Replies]

To: svcw

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


31 posted on 11/19/2011 9:22:10 AM PST by TSgt (whenever any Form of Government becomes destructive...it is the Right of the People to abolish it.)
[ Post Reply | Private Reply | To 25 | View Replies]

To: ChocChipCookie

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/


32 posted on 11/19/2011 9:27:37 AM PST by outofsalt ("If History teaches us anything it's that history rarely teaches us anything")
[ Post Reply | Private Reply | To 1 | View Replies]

To: ChocChipCookie

“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.


33 posted on 11/19/2011 9:28:54 AM PST by UniqueViews
[ Post Reply | Private Reply | To 20 | View Replies]

To: svcw

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.


34 posted on 11/19/2011 9:30:00 AM PST by goodnesswins (My Kid/Grandkids are NOT your ATM, liberals! (Sarah Palin))
[ Post Reply | Private Reply | To 11 | View Replies]

To: ChocChipCookie

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.


35 posted on 11/19/2011 9:30:55 AM PST by Georgia Girl 2 (The only purpose of a pistol is to fight your way back to the rifle you should never have dropped.)
[ Post Reply | Private Reply | To 20 | View Replies]

To: ChocChipCookie
We had two neighbors short sale here in our neighborhood and one other involved in a suspicious fire here in Northern Glendale. We like our house a lot and the kids are happy, but the values are taking a beating with everyone bailing like they have. Come to think of it, I guess the values are doing pretty well considering all that...

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.

36 posted on 11/19/2011 9:36:39 AM PST by Caipirabob ( Communists... Socialists... Democrats...Traitors... Who can tell the difference?)
[ Post Reply | Private Reply | To 20 | View Replies]

To: Caipirabob
It's like the biggest secret in the country how much better the quality of life is here compared to places like South Florida.

SHHHH! Don't let the Californians find out! ;)

37 posted on 11/19/2011 9:44:10 AM PST by Mr. Jeeves (CTRL-GALT-DELETE)
[ Post Reply | Private Reply | To 36 | View Replies]

To: ChocChipCookie
Good info.
Possibly things are not what they appear with the couple. Maybe the business is in bad shape; and they have liquidity issues that involve the home and the business.
38 posted on 11/19/2011 10:09:15 AM PST by HereInTheHeartland (I love how the FR spellchecker doesn't recognize the word "Obama")
[ Post Reply | Private Reply | To 20 | View Replies]

To: TSgt

Fantastic! Glad to hear there is a bank out there that doesn’t freak out because a house is different.


39 posted on 11/19/2011 10:32:02 AM PST by svcw (God's Grace - thank you!)
[ Post Reply | Private Reply | To 31 | View Replies]

To: svcw

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.


40 posted on 11/19/2011 10:37:23 AM PST by TSgt (whenever any Form of Government becomes destructive...it is the Right of the People to abolish it.)
[ Post Reply | Private Reply | To 39 | View Replies]

To: TheWriterTX
We figured it would be better in the long run to walk away with good credit and a chance to own again in the future than to have the black mark of a foreclosure on our record.

You did good.

I've never experienced the problem, but Dave Ramsey says a short sale will also ding your credit, just not quite as much as foreclosure.

41 posted on 11/19/2011 10:41:36 AM PST by Ole Okie
[ Post Reply | Private Reply | To 13 | View Replies]

To: ChocChipCookie

I think I have heard of this happening in estate cases where the surviving relatives want their $$ now.


42 posted on 11/19/2011 10:45:27 AM PST by chris_bdba
[ Post Reply | Private Reply | To 1 | View Replies]

To: TSgt

It is really weird. About two years ago FM and FM changed their rules for insurance which excluded hay bale, log and dome homes. What they told me was that any bank/institution could assume the full risk and lend but they would not insure them.
We have been trying to refinance our dome since we can’t sell it, and are stuck with BofA because they hold the original loan and are required by law to refinance under the current programs. They maybe required but they are sure dragging their feet on the refi.
I mean what is the big deal, it’s a three bedroom, two bath, 2000 sq ft house with a four car garage and 500 sq ft office on 2.5 acres, that is just round on top.
Why is that so difficult.......
Glad you were successful in your endeavors.


43 posted on 11/19/2011 10:47:47 AM PST by svcw (God's Grace - thank you!)
[ Post Reply | Private Reply | To 40 | View Replies]

To: morphing libertarian
We were lucky - we always managed to pay the mortgage, were never late on a payment, never had to go through with the short sale, and kept our 780 credit rating intact.

But there were times, definitely times, when we were ready to raise the white flag of surrender. Learned to live lean and mean, do without, do it ourselves.

The "new reality" folks are dealing with is old hat to us.

44 posted on 11/19/2011 11:09:09 AM PST by TheWriterTX (Rock you like a Herman Cain 2012)
[ Post Reply | Private Reply | To 19 | View Replies]

To: TheWriterTX

Yeah, we like where we live and fortunately have the bucks to stay. Probably will have some equity in 7-10 years.


45 posted on 11/19/2011 11:32:27 AM PST by morphing libertarian
[ Post Reply | Private Reply | To 44 | View Replies]

To: Mr. Jeeves
LOL - you'd laugh at how many times fellow Arizonans have told me that on this board!

Seriously, the people here still celebrate traditional holidays and traditions with a level of enthusiasm I thought was outlawed in South Florida. It was liked moving back to America again. The kids actually like Arizona better than SoFlo which surprised me. I miss the culture, but the byproduct of crime and the transient environment? Not at all.

Cheers!

46 posted on 11/19/2011 11:33:33 AM PST by Caipirabob ( Communists... Socialists... Democrats...Traitors... Who can tell the difference?)
[ Post Reply | Private Reply | To 37 | View Replies]

To: ChocChipCookie
due to a lucrative family business they’ve owned.

Self employed almost always have to sign personally on financing for business loans. Bank defaults on business loans can happen even if the business is sound due to loan requirements that require various covenants like minimum profits etc.

This means their personal residence is eventually subject to lien and levy if in technical default on business loan. Selling their residence could generate cash that would lower the business debt and get the bank off their back. During this recession, I personally experienced my credit sources have cut back on credit as well as required more payments. We are growing and need more working capital rather than less so a profitable business can find itself at risk of default when its business is growing too fast.

47 posted on 11/19/2011 11:40:01 AM PST by Raycpa
[ Post Reply | Private Reply | To 20 | View Replies]

To: ChocChipCookie

Divorce, maybe?


48 posted on 11/19/2011 12:01:35 PM PST by smokingfrog ( sleep with one eye open ( <o> ---)
[ Post Reply | Private Reply | To 1 | View Replies]

To: ChocChipCookie

Yes,
Just had a client that REQUIRED more space, their house they lived in could not be added on to, they have twin daughters, and now are expecting twins again. They only have 2 bedrooms in their starter home. The both have good jobs, but with the drastic hits all homes have taken in value they are upside down.
They are buying another larger home (4 bedrooms) and are adding the difference to their new loan. Technically it is a short sale because the bank has to approve the amount of the sale since it will be below the amount owed, but there will be no shortage of funds at the closing table.


49 posted on 11/19/2011 12:02:29 PM PST by conservativesister
[ Post Reply | Private Reply | To 1 | View Replies]

To: TheWriterTX

I’ll never know the story and would never ask them for the details, but I hadn’t considered medical bills. Our daughter went to the emergency room 2 months ago, spent 1 night in the hospital, and the total of all the bills, if, indeed, I’ve received them all, will come close to 6K, after insurance. They never even gave her an Advil for pain, and we just received a $300+ bill from the ER doc who never even physically touched her and couldn’t have possibly spent more than 20-30 minutes in the room with us, total. He’s already received 80% of his charge, and now wants the other 20% from us — and he earns a salary!!!

Whew. Got that off my chest. Just really meant to say that I can easily understand how massive medical bills would completely devastate a family, especially an older couple living mostly on retirement income.


50 posted on 11/19/2011 12:13:51 PM PST by ChocChipCookie
[ Post Reply | Private Reply | To 48 | View Replies]


Navigation: use the links below to view more comments.
first 1-5051-56 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
General/Chat
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson