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Real Estate Short Sale Questions and Answers |
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Question: How do you get out of a mortgage by doing a short sale without being in foreclosure ?
Because of decreasing property values and lots of homes in foreclosure in my area, we would like to get out of our current mortgage. We have no late payments and are not in danger of defaulting on our current loan, but it is interest only and houses are on the market (exactly like ours) for half of what we currently owe. Does anyone know how to do or have you done it ?Answer: you can't do a short sale without the cooperation of the ...
you can't do a short sale without the cooperation of the mortgage company.
and if you're not under financial pressure, they'll not agree.
***
btw, the amount of loan forgiven in a short sale is taxable income to the homeowners. [so far.]Answer: You have to call your current lender and apply for a short ...
You have to call your current lender and apply for a short sale. They probably won't be willing to do one right away since you haven't been late. Typically they start to deal with you when your have been 60 days late. It doesn't hurt to ask.Answer: Contact the lender. They have to approve a short sale.
Contact the lender. They have to approve a short sale.Answer: I've never done it, but from what I ...
I've never done it, but from what I understand........
Let's say your mortgage is $100,000 and you find a buyer who is willing to pay $90,000 for your home. You then go to your mortgage lender and tell them that you have a buyer and that you'd like to do a short sale for $90,000. The bank has to approve the short sale. If they do, you walk away without having to pay the $10,000 that you were short.Answer: YOu don't want to do this. It isunderstanding that ...
YOu don't want to do this. It isunderstanding that doing a short sale is almost as damaging to your credit score as a foreclosure. And as the others said, you would have to get the lender to approve the short sale. If you are not in financial hardship, they are not going to approve a short sale.
It sounds like you have buyers remorse and are trying to squirm out of this purchase without financial implications.
Why don't you talk to your lender about moving into a fixed rate loan?Answer: if your not in foreclosure why would you want to ?
even ...
if your not in foreclosure why would you want to ?
even if your lender would agree to it, which is doubtful, they will ding your credit for 7 years and which if your employer does semi annual credit checks could dismiss you from your job because of it then you would still have to pay the income tax on the amount.
I ask you again why would you want to ? You bought a home based on what you could afford and decided to make it a home for you and your family. Do not worry about the rest of the world. Convert it to a fixed rate and enjoy
If you purchased a box of Bran Flakes at the grocery store last week, enjoyed half the box then they were on sale the following week would you go back and get a refund on the half you did not eat yet ?Question: Is it illegal to pay a homeowner in a short sale deal with a separate contract?
Is there any legal way for me to pay the homeowner and/or for the realtor to get paid?
Or is this illegal altogether? Does anyone know what the law explicitly states?
Thanks!Answer: In a short sale, the mortgage lender agrees to accept the ...
In a short sale, the mortgage lender agrees to accept the proceeds of the sale as full settlement of the mortgage. The Realtor DOES get paid. The former owner does NOT get cash, but they ARE paid in the form of no longer having debt. A separate contract means you LIED to the mortgage company about the actual sale price. Even without a specific law, that is FRAUD. It is illegal EVERYWHERE in the US.Answer: If you are hiding it from the lender I would iinterpret that ...
If you are hiding it from the lender I would iinterpret that to be fraud.Answer: Each state may have laws that govern this situation. But in ...
Each state may have laws that govern this situation. But in most cases, if the house is listed as a "short sale" the lender has the final acceptance responsibility. It is not longer up to the realtor nor the homeowner. So if you want to buy a home that is on a "short sale" you will have to deal thru the realtor to the lender.Answer: NO, it is NOT legal.
The Real Estate Settlement ...
NO, it is NOT legal.
The Real Estate Settlement Procedures Act (RESPA), states that ALL monies that are involved in a real estate transaction must appear on the HUD-1 settlement statement at closing.
Anything else is considered paid "outside of closing"...which is fine, as long as it appears on the HUD...but if it's something that the bank doesn't allow, and you work out a deal outside of the closing, it is a FELONY.
1. The contract is non-enforceable in court b/c the court systems won't enforce an illegal contract....a judge would ask you to produce the HUD that matches the property.
2. The Realtor would lose their license.
3. The bank, if discovered, can sue the homeowner for what was paid out.
4. Everyone that touched illegal parts of the transaction can be charged with a Felony.
RESPA IS FEDERAL....so that it is in effect in ALL STATES.Question: Short Sale or Bankcruptcy?
I owe more on my house than my house is worth, but I have to move out of state for job reasons. I can't get my mortgage paid in full with renting it out and will take a 750.00 loss each month if I am renting it out. It will be hard on us be we are going to try and stay afloat. Could we see if we should short sale and ask to carry the remainder of the portion we owe on a regular loan or something. We want to pay back the remainder or what is left on the loan after we sell it. Can we do something like that? We are not looking to take the easy way out, but we are in a bad situation. Our credit is good but our debt to income has been dramatically effected by our ARM. Any suggestions?
I have not listed the home yet because I am not sure what we are going to do yet.Answer: You can see what the lender will do for you. I would find ...
You can see what the lender will do for you. I would find out who to contact and write a letter detailing your situation. Have you listed the home for sale?
Dana (attorney)Answer: Don't forget about that extra you have been paying each ...
Don't forget about that extra you have been paying each month in the form of "private mortgage insurance" which covers up to 20% of the loan.
Ultimately it is your primary lender's call to allow you to short sell the property. Still you also need to be aware that the fed cut 3/4 of a point today so there may be refinancing options to you too. Bankruptcy should be your absolute last resort.Question: How does a short sale show up on your credit report?
My husband lost his job a while back and because we had literally just gone to court for rights to his child from a previous relationship and that I had just had a baby, it affected us a great deal. We fell behind in our mortgage payments and tried numerous times to apply for hardship programs and whatnot. We were rejected for everything and ended up going into foreclosure. However, we listed our house right away during all that in hopes of selling before a foreclosure actually took place. It?s been 4 months, we?ve had no court date yet for our foreclosure and we finally have had a decent offer come through on the home that the bank has approved. So we close on the house in about a month or so, maybe less?..
We?re so pumped about this because we lucked out to put it mildly. I?m just curious how this shows up on our credit now. Do they post it as a short sale? I know that it?s better than being foreclosed on and now that Bush passed this law we don?t have to pay the difference of what we owe versus what the house sold for. I don?t know the details of the law, but our realtor did say that we lucked out and we?re in the clear. Does anyone know how this affects our credit or how it?ll post to our credit?
And to those that will comment: We?ve made drastic changes since all of this so that this doesn?t happen again. I?ve taken on more hours at work for more money, my husband has changed his job from residential to commercial, we?re moving closer to my job so we?re not both paying crazy amounts on gas, and paying rent at an affordable price rather than a mortgage that we can?t afford with increasing taxes and insurance. We?re just not ready and have some paying off of other debts before we can go that route again. But I?m MUCH more confident now after dealing with this and I know we?ll be okay from this point on. It?ll just take time. So no flames with that please, if possible.
Thanks!
I'm well aware of the 1099 form situation. But I've had at least 3 people, a realtor and accountant being two of them, tell me that there's something in the works of being passed regarding that exact thing. Where we wouldn't be paying that difference if it was 100% financing and a short sale. I don't know the truth behind this and I honestly have no clue where to even check into it. Maybe it's just in our state? Maybe it's national but we don't know? Any way I could try to look into this? And also, just in case it wasn't true, I've already been putting extra money into federal since about 4 months ago. To lessen the blow so to speak....
Just to clarify: the law that just passed through Congress is called mortgage debt forgiveness. Typically you sell for X amount and the balance owed is done through 1099 form. Claimed as income. And it says right here that before 2007, the difference is taxable. Now, for 2007, 2008, and 2009, that it's not taxable income.Answer: I'm not sure which law you are referring to, but nothing ...
I'm not sure which law you are referring to, but nothing that Bush has been pushing lately has anything to do with short sales at all.
The new laws designed to help people in subprime mortgages help CURRENT homeowners, not people that have already sold their homes, and it is also a VOLUNTARY program for lenders, they are NOT required to participate...they are just given alot of benefits by the gov't if they do.
Short sales, if approved by the bank, the BENEFIT is not getting a deficiency judgement....that is the whole purpose of doing one...the bank will take less.
On your credit, it will be reflected as a settled amount which is a negative hit on a major account, which is going to hurt.
That is in addition to the lates that you probably alread had.
For future lending purposes with banks, it will be treated as and must meet the seasoning requirements of a foreclosure.
Even if it's not reported as a "settled" account, underwriters will specifically look at all previous mortgage accounts for signs that it may have been a short-sale.
Tell-tale signs are mortgages that were opened and closed quickly and the "payoff" was drastically lower than what could have conspired with the payments.
The underwriter will simply pick up the phone and call the bank, and they will tell the underwriter it was a short sale. Underwriters can do this because on ALL loans you sign a standard Borrower's Authorization form that gives the bank permission to research ALL accounts and employment information.Answer: The bank accepts the lower payment as paying off the loan ...
The bank accepts the lower payment as paying off the loan BUT!!!! they also issue you a 1099, which is unearned income. You will be liable for the taxes due on the difference Federal, State, and Local, as this is in effect money you received as a bonus. Would advise paying on this because they will garnish wages etc, and owing the government, or should say not coming to terms for payment is a little different and stays on your credit report for 10 years.Question: How do realtor commissions work in short sales.?
From what I understand - if a buyer's agent is showing property to a client - and the property is a short sale - there is no commission % offered by the selling agent. It's up to the lender - right?
When does the lender decide how much commission will be paid to the the agents - and what is it based on?
When in the process does it happen?
To give you some background....
I know of a buyer's agent who has already made an offer for his client - but has no idea how much commission he's working for. Is this the norm with short sales? Why would a buyer's agent get involved?Answer: A buyer's agent protects the interests of the buyer, ...
A buyer's agent protects the interests of the buyer, regardless of the case. In a short sale, the listing agent usually negotiates the total commission with the lender, which is then split with the buying agents.Answer: No, why would a buyer's agent even attempt to sell a REO ...
No, why would a buyer's agent even attempt to sell a REO if they weren't going to get paid?
The rate is typically negotiated, but both the sellers agent and the buyers agent are paid a commission. I have never heard of a REO going lower than 4.8% to be split between the agents. |
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