HELP! Expert in short sales question

[blimeylimey]

Hello,
desparately need some advice.
I have been approved for a short sale. The bank will only lose 27,000 off, VS most people hundreds of thousands.
I am in a nonrecourse  state(hope that is the right lingo) Arizona. They cannot sue for a deficit under foreclosures,
however I heard they can in short sales. (they have 7 years, and can often sell it to collectors)
My mortgage company will not change the verbage, releasing my deficiency. We have tried everything, and they
will not budge.

What are the odds of them selling it to a collection company/or trying to sue years after we foreclose?
Would you foreclose rather than running the risk of this happening with a short sale?

ADvice please!!!

[Bluemoon06]

I would stay in the house and continue to make payments.  One day you will amortize the loan to the point that you can actually sell the house or in about 30 years from now you will own the house free and clear.

[jducey1234]

Did you submit your hardship letter? Was there an appraisal done that is close to what the banks is going to take.

The chances are small that they will come after you for the debt. However in all short sales, the bank leaves that option open. However in a foreclosure they can attempt to recalim the debt as well if they choose.

[torojd]

Hi,

I've been on a similar situation. 

Remember, you are making the offer as the investor.  Either they play by your rules or there's not deal (assuming you're offering them a "Cash Deal".  If they want this non-performing asset off their books they need to play according to your terms, not theirs. 

One thing you may do is let a few months go by and come back to the batting plate and come in harder and stronger.  Do a comprehensible CMA (comparative market analysis) take pictures of other distressed homes in the area and your story must be a solid.  Have them play by your rules.

[mcwagner]

generally the bank will accept the SS as "full and final payment."  This language should be in the contract somewhere.

then they 1099 you for the cancelled debt.

[jbarry5]

did you submit a CWR? this has been helpful in getting the bank on board with short sales and stop being so difficult.

[brianr1980]

I had a sale in 48 hours and they postponed the sale while they helped me with the modification just try calling the National Association of Homeowner Advocates, a friend recommended to me and they helped me for free no upfront fees and very helpful.. they had very knowledgable staff when I called in
I tried for almost 2 years with BofA to get a loan modification and they got my delinquent payments caught up and reduced my payment down almost 40%
(877) 867 9052

[Carla Hailey]

Never forget to conduct your own market analysis and research of the area and your property.

[ClevelandSlim]

The ONLY expert you should be seeking in this situation, is a lawyer that has authorization to practice law in your state. The short sale is a tool meant to be used for those that have a genuine need to seek this avenue. If other options are available to you, such as paying off the mortgage, then maybe that would work out better?

Just sayin...

All the best,
~Slim~

[DEADHORSE]

You'll forgive e but I'm still unclear as to weather you are a HO in default of an investor looking to short a property. Since I've no experience in the former let me offer you this as an investor. I've had great results simply adding the section; Lender waives any and all rights to deficiency judgements related to this transaction, et al et al. In 160-170 SSs no lender has ever jumped ugly about this. Now they may have failed to signoff for OTHER reasons but never about the DJ. I hope this has helped somebody out there in SS land:)

[Dave Reynolds]

There is no guarantee of the sales price the bank will accept. The recommendation would be for you to submit an offer based on the price that you are willing to pay. If you submit an offer around $300K the bank is likely to counter again. With skillful negotiations you should be able to get a contract price lower than the BPO of $350K.
   

[Gold River]

Hi,

   In Arizona Non Recourse means they can not come after you, if you remain an Arizona Resident they can not collect a short fall in a short sale from you on your owner occupied property or on your rental property!

If you took out a large HELOC or Cash Out loan and spent it weeks or months before the short sale the lender is entitled to go after the borrower to collect that cash money whether a short sale or a foreclosure, however at this time there are maybe one in 500 or 1000 HELOC's or cash out's that were large enough to make sense for lenders to pay legal cost's to collect in court!

Small HELOC's or Cash Out's of say less than $100k are not even being chased by lenders as there to small to yield returns!

If you remain Arizona Residents they can not come after you for the short fall unless it is a HELOC loan or Cash Out Refinancing so provided you did not borrow money on a HELOC or Cash Out a few weeks or months prior to default then your OK. They can not file a lawsuit unless they can show the court you are a HELOC or Cash Out borrower and they can not garnish your wages or show ongoing debt on your credit report unless they file and win a lawsuit!

Arizona is one of my primary investment states so I am very aware of state laws concerning real estate, there was a new law that was introduced in 2008 that basically would have stripped Non Recourse Protections on real estate; however it was reversed by referendum prior to initiation of the new law!

Arizona Remains a Non Recourse State Today!


                          GR

[ryanpal]

I agree, I would definitely seek the advice of a local attorney.  I saw two responses in this post that worried me.

1. claiming that most lenders will not seek deficiency judgment is NOT correct. this totally depends on the lender and as a matter of fact, some lender do everything they can to recoup some of their loss (especially DJ)
2. not all short sale approvals have "paid in full".  once again, this depends on the lender and isn't always present on the short sale approval.

[torojd]

If I'm correct I'm pretty sure that when president Bush signed into law HAMP/HAFA.  It gave H/O's (homeowners) until 2012 that the IRS cannot come after the H/O for a taxes on the deficiency part.  So not to worry there however I agree with them playing on your terms.  After all, you are the investor paying CASH.

[Jade456]

If the bank is only losing 27k, they may not think it is worth the time to come after you....  BUT if that is all, before short selling I would try for a loan modification to lower your payments. Because of the low value difference, they may go for it.

Before you go ahead with a short sale, talk to an attorney.