Profile picture for LindaGattis

Short sale & sizable savings

I am looking into selling my home - I separated in 2009, divorced in 8/2012 and have since had a child. At present, the home is solely in my name (deed was changed) but my ex husband is still listed on the loan. I pay the mortgage on a monthly basis and have never been late. I've met with 2 realtors - both told me the house will not sell for what I owe. (113k.) At that time, I obtained a secured loan - I have approx 7k in my savings account as a result. I'd hoped to fix the house somewhat, in order to have a better chance at selling and to be able to make up the difference in commission to the realtor. (priced at 4.5%) At this point, I want to just get rid of this home as it's far too much mortgage for me and I'm afraid it's going to just sit on the market for years. 1) Does a short sale sound like my best option? I've never been late on the mortgage payment but I really don't want my credit to take a hit. And 2) What should I do with the money in my savings from the loan prior to applying for my short sale? Will the bank look at the savings and decline my hardship/short sale application?
 
Thank you.

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May 04 2013 - Raleigh
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Profile picture for sunnyview
You can try, but the bank in unlikely to approve a short sale solely based on what you posted. If you short sell in North Carolina, it looks like you might be responsible for a deficiency judgement for any difference between the balance of what you owe on the mortgage and what the house sells for.

Agents are not attorneys. They will sell any house you want to sell, but please seek legal advice before you sell or you may have a nasty judgement that will follow you after you walk away. Your credit will take a hit with short sale in most cases, but it will recover as you build new history. Anyone who promises a quick credit fix is selling fairy tales.

The bank is not likely to care about your  or your new child or divorce unless it was financially devastating. They just want their money. If you can prove a significant drop in income, you may have a qualifying hardship. However, the bank approving a short sale does not protect you from a judgement. Get legal advice ASAP before you follow through with your plan.
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May 04 2013
If you can not afford the house any more it may be best to do a short sale or see if you can rent out your house and find a smaller place to save money.  Yes your credit may take a hot but you can recover from that and doing a short sale could be the best option for you in the long run
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May 04 2013
Profile picture for LindaGattis
Thanks, all. I'm terrified of ruining my credit. Sounds like selling it for anything CLOSE to what I owe is the way to go - I'd find a way to make up the difference if it was only 5-6k to avoid short sale or bankruptcy. (In addition to the 7k I already have -and have been paying for for months now- going into realtor commission and the difference.)

My ex husband's credit is a complete mess and at this point he could care less about doing any further damage. He'd agree to whatever I choose to do - as I have financially carried this house since the separation. Per the divorcee decree he's "supposed" to pay me back any owed monies to equal out the mortgage - but I know that will never happen and I won't take him to court because there's just NO MONEY to take from him.

I applied to refinance and was at the last stages when I opted to NOT go through with it as it forced me to hold onto the property for at least another year and it upped the 'pay off' amount, so I didnt go through with it.
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May 04 2013
Profile picture for sunnyview
Medical issues can constitute a hardship for a short sale. I would write a hardship letter and not borrow ANY money to fix up the house period. Please do not throw good money after bad.

If you have other bills including medical that are financially pressing, you may want to look into bankruptcy also. The bank is more likely to work with you if they think they will get nothing from you if they don't. If you say you are declaring BK they may even accept a deed in lieu where they take the house back and agree not to file a judgement for the balance.

I know it sounds like a broken record, but a good attorney would look at the legal issues in your situation and a 30 minute consult could save you a lot of money and heartache too. They know the law and the loopholes. You need more advice then an agent can give on this one.
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May 04 2013
Profile picture for wetdawgs
As others have mentioned, selling short will also have an impact on your ex-husband's credit as he is also on the mortgage.     As the house was transferred to your name only, was it also your obligation to refinance the home in your name only?   Please review this with an attorney because if you destroy your ex-husband's credit because you didn't refinance, you may find a lawsuit knocking at your door.

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May 04 2013
Profile picture for LindaGattis
SoCal: The hardship is....I'm divorced. I have a child. I noted all of this in the question. When I bought the house...I was married and childless. In addition, I didn't note this in the original question, but I have significant medical issues and medical bills hanging over my head. From what I've read: divorce, having a child and medical issues are ALL potential reasons to apply for hardship or attempt to short sale.
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May 04 2013
Two important factors need to exist in order to sell a house as a "short sale". First, the seller must prove that they are experiencing a financial hardship to their lender and second the amount owed is greater than the current market value of the house. Based from your post, there seems to be a few financial and legal issues that you will need to sort out in order to successfully sell the house.There are options you can take which will require meeting with a knowledgeable professional in such a situation you are in. I suggest that you work with a REALTOR who is also a short sale specialist or a CDPE (Certified Distressed Property Expert) who can help you in the selling process from beginning to end. An expert will be a valuable resource to you with your situation. If you have any further questions, just let me know.
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May 04 2013
Profile picture for SoCal_Engr
I "don't get it". Why pour good money after bad?

You don't have $7K in savings. You have $7K of secured debt. Why not pay off the secured debt and remove the "savings issue" off the table?

From lurking on Zillow, my understanding is that shortsales require some sort of hardship (i.e., unable to make payments, need to relocate out-of-area, etc.). You don't identify what your hardship is, or any other motivation for selling other than "want to".
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May 04 2013
Profile picture for LindaGattis

Yes, deed is in MY name. Loan = both names.
Last realtor was not really optimistic. House next door foreclosed or short saled - not sure which one - but went for 85k. Other similar homes in better/good condition probably go for 125 range.

I would estimate the house would potentially go for 105ish, though I need 110 (roughly) to break even (using all of my savings) to pay the difference, paperwork fees and realtor commission.

I just did MLS search and in the city (cary, nc) there are no homes this size  under 125k with a same number of beds/baths and square footage. (In addition, this is an end unit townhome.)

Edited to add: My ex is in no position to pay for anything. This house has been my financial responsibility since the split. He cannot make up the difference. If I kept tally, he'd owe my thousands and thousands at this point for the home. He offers no financial assistance for this home. His credit is already wrecked, so no issue there either - regarding a short sale.

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May 04 2013
Profile picture for blub blub blub
At present, the home is solely in my name (deed was changed) but my ex husband is still listed on the loan

Looks to me as though both are on the mortgage only the wife is on the deed.
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May 04 2013
You would not do a short sale at all, your ex could since he is the only one on the loan so he is the only person the bank will deal with. You can just up and walk away since you are not on the loan and you don't expect to get any proceeds from a sale, so just walk away and let your ex deal with it, it won't even show on your credit.

tim
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May 04 2013
Hi.    if you do a short sale you will have to disclose all your bank accounts (assets)to the lender. 
What is the difference the Realtors are saying  you can sell the property for from what you owe?
 I would talk with your ex also, it effects him.  He is on the loan even though he isn't on the title. I believe he would be legally responsible for any deficiency on the loan and probably would have to sign to sell also.  (I'm not an attorney)   You can Ask your ex to agree to split funds on the difference when it is sold.    Better then a short sale. 
I believe he would be required to sign for a short sale also since he is on the loan so his credit would be in jeopardy along with yours.   A real estate attorney really needs to advise you on the legal aspects. 
Good luck
  
     
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May 04 2013
Profile picture for blub blub blub
First, you will not necessarily get the money you put into the house back in the sale price.  The list price should be based on the condition, location and what other homes in similar condition and location are selling for. 

So putting money into the house could just justify the list price, or overprice for the area.  So I wouldn't put money into it.  Also, you would already be taking a hit by doing a short sale, so no reason to spend the money on the house.

As far as your hardship situation.  It will depend on your lender as to what they require for a shortsale.  Every lender is different.  There is no way around taking a hit on your credit by going the shortsale route, but it takes less of a hit than a foreclosure.

The other issue you have is that your husband is still on the mortgage.  He would still be responsible for the loan and anything you do will affect his credit as well.
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May 04 2013
 
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