Profile picture for sweetfloridahome

if I stop paying for my investment property, will it be easy to convince bank for short sale?

I have investment property which I need to get rid of. Never late payment, considerably big income. Is short sale best bet? What would be the strategy. How do I protect my residency home from litigation, would it help if I transfer it to my husband?
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August 23 2010 - Palm Coast
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Answers (21)

It is almost always advisable to establish a trust for your assets...especially if they are considerable.  Consult a trust attorney in your state for your options.

Regarding your investment property.  If it was rented and no longer has a tenant, that is considered a hardship because it is "loss of income".  If this was not the case, look deeper for any type of hardship or "imminent default" possibility and get yourself a true professional listing agent that is an expert in short sales.

If you have any questions, feel free to contact me.
Best regards,
Steve
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November 07 2010

Do you still pay your mo pmt?

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November 02 2010
We have done a ton of short sales.  In the end, it still comes down to your ability to claim and prove hardship.  It doesn't matter if the property is your residence or an investment property, but you have to show hardship.

With that said, you will have tax implications too. With non homesteaded properties you will receive a 1099 tax form on the difference between what you owe and what you get.  For instance:  You sell your home for $200k and you owe $300k.  You will receive a 1099 for $100k and will be taxed as income. 
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November 02 2010
You would not be eligible for a Short Sale because there is no real hardship. If you stop making payments, you will go into pre-foreclosure and you will either have to pay the full amount you owe, likely with fees included, or let your investment turn to an REO and take a 200-300 point hit on your credit and lose the property.
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November 02 2010
Um no. You cannot stop paying for an item with hopes to renegotiate what you previusly agreed to pay.
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October 15 2010
Honestly, it doesn't sound like you're in hardship to qualify for a short sale. Don't stop making the payments.
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October 11 2010
Be sure you can prove you are broke or have a hardship or else be ready to keep paying.
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October 11 2010
We closed several investment properties on a short sale getting the same response and approval as regular owner occupied homes. Lenders dont care if it was an investment property or not, they WILL REVIEW your short sale request the same way they review all Short Sale requests, only you will need to prove that your income is not enough. They will see your case so move forward with it as soon as possible and you may get the approval!
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October 10 2010
Some lenders won't even consider a short sale on an investment property. Even if they did, they might come after your other assets to cover any deficiency. If the property is producing income, then you can likely sell it to another investor. The only issue is if you owe more on the note than what the property is worth. Then, you might have sell it with a mortgage wrap. (If legal in your state). I would consult with a real estate attorney before exploring this route.
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October 04 2010
Profile picture for sunnyview
In most cases, no hardship means no short sale. The bank will not allow you to stick them with your underwater mortgage while you happily collect rents during a protracted short sale. You can read about qualifying hardships here.

You took the risk on your investment property, and the bank should not foot the bill for your mistake. Transferring assets to protect them from the bank would be fraud so you need to be aware of that. Your primary residence is generally not vulnerable even if the bank forecloses, but you would need to get specific legal advice to see if that is the case for you. Please don't make the mistake of compounding a bad investment and foreclosure with bank fraud.
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October 01 2010
I'm lost on your logic. If the property has "considerably big income", why can't you just sell it? 

Short sale is not an option.
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October 01 2010
In addition to financial hardship MEDICAL hardship is a valid reason for consideration for a short sale.  If that is not your case...you may just have to rent it and be upside down for a while until the market comes back...or sell it and take the loss against your income, on taxes.
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October 01 2010

If you stop making payments when you are fully capable of making them you are doing what is called in the lending industry as a "strategic default".  This can have horrific consequences upon your credit rating and future ability to get a loan.  Be very careful....

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September 28 2010
Good income and investment property-not a good combination to qualify for a short sale.
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August 31 2010
You just can't request a short sale. There has to be a need/hardship. The bank will want to see your bank statements, w2s, check stubs and a hardship letter stating why you can no longer make your payments. If you don't qualify, they will reject the short sale.
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August 30 2010
Based on what you describe, any bank would be crazy to agree a short sale.  If you want to get rid of it, then sell it and be prepared to write a good sized check at closing to pay off the mortgage.

If you bought a mutual fund on the same day you bought this property, would you expect the fund to make up the difference if it was now worth less?  Why is an investment in real estate any different?  Sorry, but the adage, "the value of investments can go down as well as up" applies to real estate also.
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August 26 2010
If you find youself unsuccessfull with a shor sell.  You may try approaching your lender for a loan modification.  Perhaps an adjustment in the interest rate will make it more managable for you.
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August 25 2010
The first requirement for a short sale is a hardship--if this property has "good income", why would you want to sell it?

Strategic defaults are being very carefully weeded out by the banks now, and when there are so many homeowners defaulting on their primary residences, I see the future of short-selling investment properties becoming more and more of a difficult proposition.

If you have more than one loan on this property, you will be required to come to closing with a contribution, and even if you do it may only release the lien--the bank may still reserve the right to pursue a deficiency down the road.

Why do you "need to get rid of" this property?
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August 24 2010
Profile picture for wetdawgs
If you have a big income and stop paying, they are very likely to come after you.   One of the qualifications for short sale is hardship, and you are not describing a hardship in your post (perhaps there is).  

Transferring it to your husband won't help. 
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August 24 2010
Where it is an investment property you are at a disadvantage over if it was your home already. If you are receiving rents and then stop paying the mortgage it may not help your cause. You should meet with an agent who is well experienced in short sales and has a professional negotaitor who can guide you through the short sale process and answer the specific questions that come with income property. You may want to meet with a real estate attorney at least for the first free meeting to get some direction.
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August 24 2010
The short sales I dealt with the bank wanted to see financial hardship which is easy when there is no income due to loss of a job and no other assets. In your case I would contact a Real Estate attorney because you could cause yourself some serious misery.
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August 24 2010
 
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