Huynh T asked:
? CA law please, thanks.
LEO
? CA law please, thanks.
LEO
April 3, 2009
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quick personal loans | home sales | mortgage loans
BRANDON
depends on the lender; either the lender will let it go [the
borrower's obligation] or seek it from the borrower. IT has nothing
to do with law.
Comment by kemperk — April 4, 2009 @ 12:53 am
HOUSTON
can’t happen without lender agreement
seller may have to come up with money to make sale happen
TALK to your lender first
new federal law may mean that lender can’t come after you for difference between sale price and mortgage amount; some states have that law already
Comment by chatsplas@sbcglobal.net — April 6, 2009 @ 1:01 pm
BRYON
First the owner contacts the bank and tells them that they have a hardship that prevents them from making the payments anymore without severe financial harm. A hardship may be the loss of a job, a divorce, a death in the family, forced relocation, etc. (and, “I owe more on my house than it’s worth” is not a hardship).
The bank then sends out a hardship package for the owner to complete that describes and verifies the hardship. The bank then either approves or disapproves the hardship. If approved, the bank instructs the owner to put the house for sale on the open market to see what offers they can get.
One thing that many owners do that is a mistake is to contact a selling real estate agent – particularly one who is inexperienced with short sales – before getting approval from the bank for the short sale. In this case, the selling agent lists the property for sale and “fishes” for offers. When an offer comes through, the owner then contacts the bank, which then instructs the owner to go through the approval process. This takes months and the person who made the offer is then in limbo until the hardship is approved.
Then the bank has to approve the actual amount of the sale. This can get further complicated if the property has any liens against it (second mortgage, property tax lien, etc.), because the bank has to negotiate with the lienholders as to who gets what upon sale of the property.
Once the short sale is approved, the property goes into escrow and, at this point, the transaction is pretty much like any other real estate transaction. The only exception, really, is that the property is sold as-is and the bank rarely would make any standard concessions to the buyer (like paying part of the buyer’s closing costs or giving allowances for repairs). Also, the seller may have to pay into escrow to make the deal happen. This might be some compensation if the seller has other valuable assets, like additional properties, or to pay off one of the lienholders.
Comment by Paul in San Diego — April 6, 2009 @ 7:03 pm
CHADWICK
The way it works is like this:
You list your home with a Realtor, just as with a “normal” sale. However, it’s listed at whatever the market price is, even though that’s less than the mortgage. The house is marketed normally, and (hopefully) a prospective buyer is found.
The buyer makes a purchase offer, just as would normally happen. However, this is where the process differs.
First, the sale is contingent on your lender’s approval. Just like any other contingency in the contract. The lender must approve it.
Second, you’ll be required to provide a lot of documentation to the lender indicating financial or other distress. Typically, this includes your tax return, your most recent paystubs, a financial statement listing your assets and liabilities, and more. Also, very important, is a hardship letter from you to your lender, handwritten if possible, explaining the circumstances leading up to the sale. Your real estate agent will assist you with all this; he/she will request a “short sale package” from the lender listing that lender’s requirements.
Your short sale package and the contract between you and the buyer are sent to the lender, who then may approve (or disapprove) the sale.
Not all short sales succeed. In fact, many/most don’t. And lenders generally aren’t very responsive to you or your agent. The ball’s in their court.
In a short sale, the lender won’t allow you to walk away with any money. They figure, understandably, that if they’re taking a loss, then you shouldn’t profit from that.
Also, a short sale (or short sale attempt) will not “stop the clock” on a foreclosure. They proceed on two parallel tracks. If the foreclosure date occurs first, then you lose the house. If the short sale is approved first, then you sell the house.
Hope that helps.
Comment by I Buy And Sell Houses — April 10, 2009 @ 3:35 am
SIDNEY
depends on the lender; either the lender will write it off or seek it from the borrower. If the bank writes it off you will have to claim the difference on your taxes as a gain.
Comment by Life is what it is! :))))))))) — April 12, 2009 @ 8:24 am
SON
If you owe $250,000 and sell for $200,000, you are short $50,000. The bank will make you an offer. If they give up $30,000, will you give them $10,000 cash today and sign an IOU for $10,000 at 8% interest that you will pay them? If you agree to that, the house is sold and the buyer owns it. If you don’t agree, you wasted a lot of time./
Comment by Ed Atun — April 14, 2009 @ 7:58 pm