Anyone done a short sale?

[Rafiki31]

Personal experience please. Tell me about it, the good the bad and the ugly. Was your credit ruined? How long did it take? Do you pay the mortgage the whole time? Anything I need to know? Meeting with a lawyer this week.

 

[kacaju]

we did about 16 years ago. DH bought a condo back in 89 (we sold it in 96) and the builder ended up bankrupt, never finished the units and then a lot of drug dealers were moving in (section 8 housing) they had pit bulls guarding the hallways. It was horrible. Once our baby was sick and needed to go to the Dr. There was *something* going on in the parking lot and a neighbor had to escort my dh to the car. Shortly after that I was out walking the dog with the baby and a police officer came and said he was here because of a report of gun shots. We left after that!!

We paid the mortgage the whole time we had the place up for a short sale. We moved in with my parents because I refused to live there any longer!! In our case it did not ruin our credit and as soon as we sold it we bought a new place within 2-3 months after that closing. The whole process took almost a year.

My FIL had just retired so he was the one who did all the work for us. I know we had to write a hardship letter to out bank. Our case was different because we wanted out due to the conditions of the neighborhood..not that we couldn't afford it.

 

[usnuzuloose]

I did one in 08. It was a process as in ca they require you to stop making the payments and submit paperwork to show why you cant make them. In our case I was not working and so not enough income. We put it up for a short sale in june and it sold in sept 3 months later.

We had a bidding war as one lady really loved it and then started buying furniture and we told her to stop because the bank had not said we could sell it for the price yet. Then a man came and went over 20 thousand more than what the bank said it was worth. The other lady got really angry along with the realtor and was yelling at everyone for not telling them someone else bid on it. We are not allowed to say that. But the time came for this guy to sign the closing papers and we still did not get an ok for the bank. We emailed them and 2 days later they gave the ok. That was a fast short sale.

We moved out but I maintained everything, the pool, lawn, I cleaned the house. I came so people could see it. It has not affected our credit in anyway. Ca says that we had to wait 3 yrs to repurchase. We are now looking again. My suggestion is to maitain it, a person who wants to buy looks for the best. The foreclosures are horrible looking. So maintain it so it will sell faster. Let me know if you have any other questions.

 

[tlenzendorf]

I did in 2008. Divorced and couldn't afford the house payment. I lived there with my kids and didn't pay the mortgage for 5 months. The house sold, we had to claim the short sale amount as income on our income taxes. It had no effect on my taxes however.

 

[tolemommy]

Thanks for the good information, I may be facing a similar situation due to a mandatory salary reduction (state cut our salary), future loss of spousal support, and an increase in benefit costs. Getting harder and harder to make ends meet.

 

[erincon23]

Be sure to list the house with a distressed property expert -- realtors can get a CDPE designation (Certified Distressed Property Expert) - they've undergone specific training in this situation and know exactly what the bank needs, how to guide you through the process, etc. I work for a CDPE realtor, and she has a whole packet of info about short sales. If it's a concern (and this was something I found interesting, although it has no effect on my personally), if you go through a foreclosure, it could affect any security clearance you may have, but a short sale is not reported on your credit report, so it doesn't affect security clearance.

 

[DianeV]

We closed on a short sale last October after trying to sell, renting and then trying to sell again. We did have to stop making payments because BOA wouldnt even talk to us about a short sale if we were current. Of course the late payments do show up on your credit (as does the short sale by the way)

It wasnt that difficult and with the new laws most qualify to not be responsible for the difference or tax issues like it used to be

I think for the first 6 mos. it must have affected us because Chase would not increase our credit card $500 we asked for while on vacation at WDW and that was the only thing on there. Of course it was only 2 1/2 mos. since it closed

We purchased a used car beginning of July and were able to get a very good interest rate so I am thinking it cant be as bad now and I think our credit score is pretty good considering

We do have a current mortgage with BOA that we have never been late etc on and everything else on our credit is good

Hope that helps a little

 

[Natalie's Mommy]

i'm a realtor in NY and it really depends on your bank, the state you live in and how short you will be.....alot of banks are actually not approving short sales (especally here in NY) but are signing a lein release with an agreement that the seller can be held liable for the difference between the purchase price and mortgage amount. Talk to your mortgage company and see what they have to say....it's usually a LONG process to get short sale approval if you can get it at all

 

[Princesca]

If you do get them to agree to the short sale, make sure you have it in writing, and push for language that says that you will not owe them the remainder. I think the "default" is that they can come after you for the variance unless you have language in the agreement that says something to the effect of the short sale standing good for the full amount you owe.

I'm pretty sure it dings your credit but not much. What hurts your credit more is any delinquent payments before the short sale is agreed upon. Most banks won't allow a short sale scenario unless you have already demonstrated that you cannot pay - usually by stopping payments altogether. THAT's what really hurts your credit, and they will report it.

Foreclosure is much worse on your credit score.

It can be a very long, frustrating process from everything I've heard. I'm looking at it from the point of view of a lender. We gave a third mortgage to the person who bought our house. The thief never paid us a cent. In the end, we lucked out that the bank agreed to a short sale because we had to release our claim on the house, so in order to accomplish that, we at least walked away with something. But it was less than 10% of what we were owed. I know thief is a strong word, but it's how I feel. He never made an attempt to pay us anything, or work out any kind of alternate arrangement, or contact us at all. IMHO, he should be in prison.

But I digress. Just be careful, do your due diligence, get a good lawyer to go over all the documentation. A bank is going to try to hold you liable for the difference, if possible, so you have to be aware of that. Also, there's some dishonest stuff going on in some short sales where there's money changing hands that isn't disclosed on the HUD agreement. You can Google that too. Just make sure everything is clear and above-board.

 

[DisGirl819]

We tried to short sale our house. The bank would not allow it because we were making all our payments. You have to stop making payments and write the mortgage company a hardship letter. We still struggle to pay that mortgage but its not as big of a deal as it was a few years ago. So essentially, talk to your bank and find out about a short sale and their requirements before you attempt one. Good luck!

 

[Alexander]

I guess I am missing something...

If you are current on your payments, why not just put the house on the market and sell it the old fashioned way? Why opt for a short sale which is so much more complicated and drawn out?

I understand if you cannot make your payments, that is a whole different situation.

PS--I love the posts where people are struggling to pay their mortgage but have WDW trips or cruises planned! Sorry, I digress.

 

[labdogs42]

This thread is interesting to me because we are trying to BUY a short sale property right now. I wish I understood the process better. Does anyone know how long it might take the bank to let us know if they will be accepting our offer?

 

[cats mom]

I guess I am missing something...

If you are current on your payments, why not just put the house on the market and sell it the old fashioned way? Why opt for a short sale which is so much more complicated and drawn out?

I understand if you cannot make your payments, that is a whole different situation.

PS--I love the posts where people are struggling to pay their mortgage but have WDW trips or cruises planned! Sorry, I digress.

First I should preface this by saying my comments may have absolutely nothing to do with anyone in this thread, I have no idea what their reasons were/are.

In my location I see the same things over and over...
1. People who used risky loan products like the 0 down, intrest only nonsense that was so prevalent. Still don't understand how those folks are "home owners". But I digress.
2. People who used their home as an extra wage earner since every time they built up a little equity they pulled it out via HELOC. I've seen folks whose house have doubled in price since they bought, but they still ended up as a SS or foreclosure. It's crazy.

 

[tlenzendorf]

First I should preface this by saying my comments may have absolutely nothing to do with anyone in this thread, I have no idea what their reasons were/are.

In my location I see the same things over and over...
1. People who used risky loan products like the 0 down, intrest only nonsense that was so prevalent. Still don't understand how those folks are "home owners". But I digress.
2. People who used their home as an extra wage earner since every time they built up a little equity they pulled it out via HELOC. I've seen folks whose house have doubled in price since they bought, but they still ended up as a SS or foreclosure. It's crazy.

Definitely not my case at all. Got divorced, the ex moved out. He still helped pay some towards the mortgage, but not half. He was renting from a friend and couldn't pay more. I got a roommate; her, ex and I each paid 1/3 of mortgage. Roommate moved out getting her own place and I couldn't afford paying 2/3. House had been on market over a year asking enough to cover loan, but with the housing market crashing we just couldn't get enough. They asked how much we could afford to pay if we short-saled the house. I said $100/month. We are repaying $10,000. Ex pays all due to how we split the bills, $200/month.

 

[punkin]

i'm a realtor in NY and it really depends on your bank, the state you live in and how short you will be.....alot of banks are actually not approving short sales (especally here in NY) but are signing a lein release with an agreement that the seller can be held liable for the difference between the purchase price and mortgage amount. Talk to your mortgage company and see what they have to say....it's usually a LONG process to get short sale approval if you can get it at all

Doesn't that defeat the purpose of a short sale? I thought a short sale meant the bank agrees to the purchase price and releases the borrower from the mortgage, writing off the difference...or am I wrong?

 

[Alexander]

Doesn't that defeat the purpose of a short sale? I thought a short sale meant the bank agrees to the purchase price and releases the borrower from the mortgage, writing off the difference...or am I wrong?

And welcome to the great state of New York where we don't make anything easy on the residents. Highest taxes, lousy government, and more people on welfare than not.

So not I NY. Can't wait to retire and more out of this state!

 

[ancestry]

Doesn't that defeat the purpose of a short sale? I thought a short sale meant the bank agrees to the purchase price and releases the borrower from the mortgage, writing off the difference...or am I wrong?

I do believe your understanding is incorrect. Traditionally (before the housing breakdown) you had to pay the difference between a short sale and the remaining balance on your mortgage. I.E. If you owed the bank $250,000 but the house sold for $200,000 you still had to make payments to the bank on the remaining $50,000.

However, since the mortgage breakdown things have changed and in some cases banks will accept the short sale as payment in full. But like a pp indicated you need to make sure you have that in writing up front.

Short sales are really used primarily when the house will only sell for less than what you owe on it.

 

[ancestry]

I guess I am missing something...

If you are current on your payments, why not just put the house on the market and sell it the old fashioned way? Why opt for a short sale which is so much more complicated and drawn out?

Most likely because most people now owe more on their houses than the houses can sell for. That is the case with us. Fortunately we can afford our mortgage with no problems but if we had to relocate for any unforeseen reason such as DH getting transferred we would have to opt for the short sale because our house lost nearly 50% of its value when the market tanked. Due to DH's relocation years ago we bought at the height of the market. Never in our wildest dreams did we think that the value of our house could tank so much.

 

[punkin]

I do believe your understanding is incorrect. Traditionally (before the housing breakdown) you had to pay the difference between a short sale and the remaining balance on your mortgage. I.E. If you owed the bank $250,000 but the house sold for $200,000 you still had to make payments to the bank on the remaining $50,000.

However, since the mortgage breakdown things have changed and in some cases banks will accept the short sale as payment in full. But like a pp indicated you need to make sure you have that in writing up front.

Short sales are really used primarily when the house will only sell for less than what you owe on it.

Educate the ignorant here, please. I never went through a short sale, but this is what I always understood:

If I owe the bank $250K and the house is only worth $200K. Why not just sell the house for $200K and pay the bank the difference? Why go through the rigamarole of a short sale and still wind up in the same place. I think the very purpose of a short sale is to get bank approval for selling for less than the mortgage.

 

[Natalie's Mommy]

Doesn't that defeat the purpose of a short sale? I thought a short sale meant the bank agrees to the purchase price and releases the borrower from the mortgage, writing off the difference...or am I wrong?

with the housing crash and mortgage crisis gone are the days of debt forgivement with a short sale. a short sale is defined as getting the bank to release the lein before the debt is paid in full

I do believe your understanding is incorrect. Traditionally (before the housing breakdown) you had to pay the difference between a short sale and the remaining balance on your mortgage. I.E. If you owed the bank $250,000 but the house sold for $200,000 you still had to make payments to the bank on the remaining $50,000.

However, since the mortgage breakdown things have changed and in some cases banks will accept the short sale as payment in full. But like a pp indicated you need to make sure you have that in writing up front.

Short sales are really used primarily when the house will only sell for less than what you owe on it.

what she said!