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Answers (18)
- sunnyview
- Contributions:25139
There is a good explanation of the basics of short sale here that might help. Generally you have to qualify for short sale with a hardship. Then, you list it using an agent and hope the lender agrees to allow you to sell the house for less than what you owe.
There are effects on your credit too. Less of them if you keep your payments up through the time of the sale, but they still exist. You also may have tax consequences that vary by situation and state.
There are effects on your credit too. Less of them if you keep your payments up through the time of the sale, but they still exist. You also may have tax consequences that vary by situation and state.
- shasta_steve
- Contributions:448
Nice sales pitch Mark and yours is a classic example why realtors should never be treated as financial advisors. Funny your laws in Arizona are very similar to California's and most of what you said, especially about taxes, would be wrong in both states. Although what you implied about deficiency was mostly wrong too, in both states. In both cases it is unlikely the OP would owe either but they did not give enough information to say for sure.
- Mark Antonowsky, "Scottsdale Homes"
- Contributions:9
Loan modifications only happen about 15% of the time. Your experience with Aurora is pretty much the norm. Yes, a forbearance means they will tack the arrears on to the back of your current loan and require payment down the road. Before you make any decision it's recommended you speak to a local real estate attorney so you understand as the laws pertaining to foreclosures and/or trustee sales vary from state to state. Your question on what to do will probably be an easier one for your to answer once you thoroughly understand the downside to all of your options. Here would be my concerns:
1) If you go through your savings hoping to get a job and the market will bounce back, the downside to being wrong as you could end up broke and having a short sale, deed in lieu or trustee sale or foreclosure anyway.
2) Having a foreclosure could put you in the banks cross hairs for a deficiency judgement that they might be able to garnish or levy bank accounts to collect. In many cases the bank will waive their rights to a deficiency judgment as part of the short sale negotiations. This is one of the main reason to have a seasoned short sale agent / attorney negotiate your short sale.
3) Credit wise a foreclosure effects your credit more adversely and for longer. You can buy a new house as soon as 2 to 3 years after a short sale, but 3 to 7 years if your opt for foreclosure. I've had clients recover from a short sale in as little as 6 months!
4) HR 3648, The Mortgage Debt Relief Act of 2007 sunsets the end of 2012. So if you have a positive net-worth (if not you can ask your CPA about IRS form 982 to avoid the taxable income generated by either a 1009c aka cancellation of debt income or 1099a in the case of a foreclosure) - So, as non of us are immune to sickness, health, divorce, loss of income or employment, loss of networth, etc, if your upside down now and you have to sell after HR 3648 sunsets, you could end up with paying your deficiency as earned income aka a sizable tax burden.
So, based on your posts, I would say this is a great time for you to get advice from your attorney, cpa and real estate agent to make an informed decision given the market may not come back before you need to sell. I hope this helped.
1) If you go through your savings hoping to get a job and the market will bounce back, the downside to being wrong as you could end up broke and having a short sale, deed in lieu or trustee sale or foreclosure anyway.
2) Having a foreclosure could put you in the banks cross hairs for a deficiency judgement that they might be able to garnish or levy bank accounts to collect. In many cases the bank will waive their rights to a deficiency judgment as part of the short sale negotiations. This is one of the main reason to have a seasoned short sale agent / attorney negotiate your short sale.
3) Credit wise a foreclosure effects your credit more adversely and for longer. You can buy a new house as soon as 2 to 3 years after a short sale, but 3 to 7 years if your opt for foreclosure. I've had clients recover from a short sale in as little as 6 months!
4) HR 3648, The Mortgage Debt Relief Act of 2007 sunsets the end of 2012. So if you have a positive net-worth (if not you can ask your CPA about IRS form 982 to avoid the taxable income generated by either a 1009c aka cancellation of debt income or 1099a in the case of a foreclosure) - So, as non of us are immune to sickness, health, divorce, loss of income or employment, loss of networth, etc, if your upside down now and you have to sell after HR 3648 sunsets, you could end up with paying your deficiency as earned income aka a sizable tax burden.
So, based on your posts, I would say this is a great time for you to get advice from your attorney, cpa and real estate agent to make an informed decision given the market may not come back before you need to sell. I hope this helped.
- marbid12
- Contributions:32
I hear ya loud and clear. Nice clarification. It just that lender is shady and they communicated different message from time to time and keep asking for documents resubmit even though they had agreed previously that they had received everything.
Can you run by me how short sales works exactly?
Can you run by me how short sales works exactly?
- sunnyview
- Contributions:25139
I sure didn't mean to imply that you were broke, it's just that short sales can take years. The last person that I talked to on Zillow with a short sale took 6 months to get approval and almost 18 months on the market--that's almost two years. That's a long time to carry a property out of pocket for anyone.
- marbid12
- Contributions:32
I have money saved up for rainy days though. I am not broke
- sunnyview
- Contributions:25139
Disadvantages of short sale are many here. Why is short sale preferable if the credit will be trashed anyway since the recent loss of employment will make it almost impossible to keep payments in time?
Other than having to wait longer before you buy another home (possible 2-3 years for short sale vs about 7 for foreclosure) and implications for employment in some industries, why is short sale truly better for a struggling homeowner if deficiency judgement is not an issue?
Other than having to wait longer before you buy another home (possible 2-3 years for short sale vs about 7 for foreclosure) and implications for employment in some industries, why is short sale truly better for a struggling homeowner if deficiency judgement is not an issue?
- Rita A. Walker, "Rita Walker"
- Contributions:277
If the fact that you are now unemployed puts you in a financial hardship, then you are a candidate for a short sale. Check with an agent in your area that is well versed in Short sales to help.
Good luck with your home.
Good luck with your home.
- sunnyview
- Contributions:25139
I think Shasta has solid advice. Short sale or loan mod is not a panacea for peoples problems or underwater mortgages. They are only two options. I think before you decide what to do you need to read all you can from people who do not have a dog in the fight and do not profit from promoting one specific alternative. There is an article here and here.
You also may want to make a list of your options and questions while you are collecting information and then sit down with an attorney to make sure you understand the consequences of each one so you can make the best choice to move forward financially.
When you are old and grey the bank will not be there for you, so you have to make the best decision you can on your own. There is often no perfect or painless choice, but you should choose the one that gets you where you want to go.
You also may want to make a list of your options and questions while you are collecting information and then sit down with an attorney to make sure you understand the consequences of each one so you can make the best choice to move forward financially.
When you are old and grey the bank will not be there for you, so you have to make the best decision you can on your own. There is often no perfect or painless choice, but you should choose the one that gets you where you want to go.
- marbid12
- Contributions:32
The big question I keep asking is if whether the house will ever recover to match the loan. Also I am tired of Aurora Bank as they offered me a forbearance plan last October but when I asked for modification they denied because my income on my outgoing job was high.
I applied for modification this month and since I lost my job at the same time, they said I don't qualify for modification without a job but possibly another forbearance plan. Any forbearance plans mean have to pay the shortage later no?
Jobs come and go in this country. But with the continuous deterioration I am not sure if staying in the house is a sound financial decision.
But again it is like paying rent right now. But what I am hearing is if I hired a lawyer the outcome might change? But can the lawyer get around their tactics and tricky rules?
I applied for modification this month and since I lost my job at the same time, they said I don't qualify for modification without a job but possibly another forbearance plan. Any forbearance plans mean have to pay the shortage later no?
Jobs come and go in this country. But with the continuous deterioration I am not sure if staying in the house is a sound financial decision.
But again it is like paying rent right now. But what I am hearing is if I hired a lawyer the outcome might change? But can the lawyer get around their tactics and tricky rules?
- shasta_steve
- Contributions:448
The only reason real estate agents push short sales so much is because they make money off of them. If they made money off you walking away they would tell you how great that was for you.
Here is my opinion. I would only entertain a short sale if you could do it without going late on your payments. If you stop paying your mortgage you will most likely be better off just sitting in the house until the bank forecloses. There are things to consider if you do decide to go that route but for most people I feel it is usually the best option. One thing to consider is how it would affect your job propects. For the most part in California employers are not allowed to consider it but in financial type jobs they can. I don't know what your fianances are like now but if you are without a job I would guess you will have a very hard time making your mortgage.
Banks don't have to offer a modification. If your mortgage was all purchase money and you have not refinanced, your loan will be non-recourse. What that means is the bank can only take your house and not later come after you for more money. In the end you just have to do what is best for you and your family.
Here is my opinion. I would only entertain a short sale if you could do it without going late on your payments. If you stop paying your mortgage you will most likely be better off just sitting in the house until the bank forecloses. There are things to consider if you do decide to go that route but for most people I feel it is usually the best option. One thing to consider is how it would affect your job propects. For the most part in California employers are not allowed to consider it but in financial type jobs they can. I don't know what your fianances are like now but if you are without a job I would guess you will have a very hard time making your mortgage.
Banks don't have to offer a modification. If your mortgage was all purchase money and you have not refinanced, your loan will be non-recourse. What that means is the bank can only take your house and not later come after you for more money. In the end you just have to do what is best for you and your family.
- Dave Bond, "DaveBondRealtor"
- Contributions:18
Does anyone had good stories about loan mods? I am working with a man who will be starting a short sale soon and his loan mod lowered his payment from $3600-$3300 a month. The home is nowhere near what that monthly payment equates to in market value. There may be some success stories but I haven't heard any. Also being unemployed is a legitimate reason to claim financial hardship if you wanted to do a short sale.
- Shannon Jones, "TheShannonJonesTeam"
- Contributions:1084
@Tiffany - Thanks. And sorry!
Re: loan modification.... One of the posters had suggested contacting an attorney so that your lender would know you mean business... Know that for loan modification, one of the things the lender looks at is ability to repay. So if you are unemployed, that would make it very difficult to get a loan modification. If you find another job quickly or you have another source of income and you want to stay in your home, then contacting a qualified, reputable attorney who specializes in modfications might make sense. Otherwise, I still think it makes sense to consider the option of short sale.
Re: loan modification.... One of the posters had suggested contacting an attorney so that your lender would know you mean business... Know that for loan modification, one of the things the lender looks at is ability to repay. So if you are unemployed, that would make it very difficult to get a loan modification. If you find another job quickly or you have another source of income and you want to stay in your home, then contacting a qualified, reputable attorney who specializes in modfications might make sense. Otherwise, I still think it makes sense to consider the option of short sale.
- Scott Fullerton, "Mt High Realty"
- Contributions:1
There are a couple of options....First obtaining a modification attorney will essentially open the eyes of your lender and they will know you mean business. I would cross reference and attorney you "google" with the BBB. Of course this option is one that requires patience and you will be in it for the long haul. Of course leaving the keys on the counter and walking away or a short sale are other options.....It all depends how much you love your home.....
- Karen Hubbard, "Karen Hubbard"
- Contributions:6
What do you want to do?
Do you love your home? Do you want to stay there?
We are all affected by declining home values. I may not be upside down in my mortgage, but my homes value dropped by over 300k in the past couple years. This means I likely do not want to try and sell it right now. But instead I will sit tight and enjoy my home for a number of years and see if the values in my area come up some. Allowing me to sell some day.
You are no different. Your homes value is lower than your mortgage but that may be temporary. So, my advise is... if you want to stay in your home, if you feel you can secure new employment and can afford to make the scheduled payments... try and hang in there like the rest of us... waiting for better times.
If you can not afford it any more and do not want to fight for it... then run like the wind!! Try to negotiate a deed in lou of foreclosure or short sale.
Do you love your home? Do you want to stay there?
We are all affected by declining home values. I may not be upside down in my mortgage, but my homes value dropped by over 300k in the past couple years. This means I likely do not want to try and sell it right now. But instead I will sit tight and enjoy my home for a number of years and see if the values in my area come up some. Allowing me to sell some day.
You are no different. Your homes value is lower than your mortgage but that may be temporary. So, my advise is... if you want to stay in your home, if you feel you can secure new employment and can afford to make the scheduled payments... try and hang in there like the rest of us... waiting for better times.
If you can not afford it any more and do not want to fight for it... then run like the wind!! Try to negotiate a deed in lou of foreclosure or short sale.
- Tiffany Bond, "TiffanyBond"
- Contributions:3010
@Shannon
Including your contact information in a post is considered spam in this forum. You can invitie people to contact you and go hog wild with contact info on your profile.
Including your contact information in a post is considered spam in this forum. You can invitie people to contact you and go hog wild with contact info on your profile.
- Shannon Jones, "TheShannonJonesTeam"
- Contributions:1084
I'm sorry to hear about your situation. It sounds as though short sale may be an option for you to consider before you just walk away.[self promotion deleted by Zillow moderator]. [contact information deleted by Zillow moderator. Please see our Good Neighbor Policy]
- Terry Schneider, "TVSchneider"
- Contributions:1
Loss of a job will help to qualify you for a Short Sale -- be sure to use a Short Sale Certified Realtor to sell your home for a market value price and remember: there is no fee charged by these Specialists. I know, I am one of them! I have helped many families sell their homes short of total mortgage owed - saving them from Foreclosure and in some cases (FHA) these families were given money to move into a rental home upon closing the sale. Wish I were in your area .... email me and I can certianly recommend you to a local Short Sale Specialist!
My house is near 100k below mortgage value. Should I dump? My interest is 6.5 30 years fixed
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