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Old 12-25-2008, 09:14 PM
 
2,838 posts, read 8,527,304 times
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Hello. We are going through the ordeal of a short sale on our home in Florida, and I'm finding conflicting information.

We bought the house as our primary residence. We only had the one traditional mortgage on it, through Wachovia. My husband lost his job, was offered another up north, we moved, couldn't keep up with the mortgage payments, and were served foreclosure papers. I contacted a realtor, who suggested doing a short sale. We received an offer, the bank counteroffered, and now we are expecting that the potential buyer will agree to the counteroffer.

If the bank accepts the lesser amount (which is $100,000 less than what we owe), I understand taht they CAN come after us for the balance? But that they "most likely" will not? No one, including our agent, seems to have a solid answer, and the bank people are next to impossible to get ahold of. Does anyone know if this is the case? I also read something about deficiency judgements only pertaining to second mortgages, which we don't have.

I have the paperwork with the counteroffer sitting here, and we don't know whether this is the right path to take. Originally, we were drawn to the short sale because we were told we would be able to buy another house in 2-3 years, as opposed to 5 or so years if it goes to foreclosure, but if we're going to owe the money to the bank, then perhaps foreclosure would make more sense? We have no other debt other than our one car payment, so I don't know that bankruptcy would even be a possibility.

Any suggestions or answers are welcome. Thanks!
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Old 12-25-2008, 10:02 PM
 
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Anytime you have assets that they can come after they are likely to eventually. That is because lawyers will eventually make the decision and that is what they look at;can they get the money or part of it from you.Many times they will get a judgment so that they can collect in the future also if they think it is worth the trouble. 100,000 dollars is a good amount. These things differ from state to state and I would consult a attorney before making any decision.
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Old 07-19-2010, 09:39 AM
 
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Hi There,

I am in similar situation now. Can I know what happened to your file. Did the bank waive the deficiency judgement and were able to close the shortsale.

Thanks,
KK
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Old 07-19-2010, 12:52 PM
 
Location: Louisville, Kentucky
1,448 posts, read 4,056,995 times
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It's been my experience they will waive it if you push, but I agree this is an exceptionally large deficiency.
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Old 07-19-2010, 02:24 PM
 
640 posts, read 1,498,516 times
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Quote:
Originally Posted by TouchOfWhimsy View Post
I have the paperwork with the counteroffer sitting here, and we don't know whether this is the right path to take. Originally, we were drawn to the short sale because we were told we would be able to buy another house in 2-3 years, as opposed to 5 or so years if it goes to foreclosure, but if we're going to owe the money to the bank, then perhaps foreclosure would make more sense? We have no other debt other than our one car payment, so I don't know that bankruptcy would even be a possibility.

Any suggestions or answers are welcome. Thanks!
TouchOfWhimsy, you DO NOT want to go the foreclosure route without trying to negotiate the Short Sale deficiency with your bank first.... With a short sale, at least you have a little bargaining power (with the bank and your buyer).

If the foreclosure sale goes through, you are completely at the mercy of what the bank wants to do... and if they don't feel like they want to come after you, they will sell your deficiency to a collections agency.... which will make your life hell until you claim bankruptcy or agree to a settlement.

Foreclosure DOES NOT wipe out the possibility of a deficiency judgment.
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Old 07-19-2010, 04:31 PM
 
2,085 posts, read 4,031,152 times
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Quote:
Originally Posted by volk2k View Post
TouchOfWhimsy, you DO NOT want to go the foreclosure route without trying to negotiate the Short Sale deficiency with your bank first.... With a short sale, at least you have a little bargaining power (with the bank and your buyer).

If the foreclosure sale goes through, you are completely at the mercy of what the bank wants to do... and if they don't feel like they want to come after you, they will sell your deficiency to a collections agency.... which will make your life hell until you claim bankruptcy or agree to a settlement.

Foreclosure DOES NOT wipe out the possibility of a deficiency judgment.
Whimsy's post was in 2008.... I'm sure it's done now. I just wish folks would follow up with the outcome when they post these things.
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Old 07-21-2010, 01:21 PM
 
704 posts, read 1,669,032 times
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Quote:
Originally Posted by volk2k View Post
TouchOfWhimsy, you DO NOT want to go the foreclosure route without trying to negotiate the Short Sale deficiency with your bank first.... With a short sale, at least you have a little bargaining power (with the bank and your buyer).

If the foreclosure sale goes through, you are completely at the mercy of what the bank wants to do... and if they don't feel like they want to come after you, they will sell your deficiency to a collections agency.... which will make your life hell until you claim bankruptcy or agree to a settlement.

Foreclosure DOES NOT wipe out the possibility of a deficiency judgment.
volk2k is correct, at least in my state.

OP: This is the way it works in my county and state:
I've been watching and going to the monthly foreclosure auctions.
The bank always makes the 1st bid. They can ask for a "deficiency" judgment if they think that the house won't get them what they want through the auction.

If they think, or know, the former owner-occupant has assets, they may ask for a deficiency judgement.

If the bank wanted $75,000 and the auction brought $65,000, and they asked for a deficiency judgement, they go after the previous owner for the other $15,000.

The same sample numbers could apply to you: The bank wants $75,000, the best short sale offer is $65,000, they can come after you for the difference.

The bank knows what they want out of you, or your house. It may be close to what you still owe on the house. What you owe may be higher than market value. I had an agent tell me on a $38,000 foreclosure ($38K was the debt owed) that I should pursue a short sale and she thought the bank would let me have it for $30,000. That would have been a 21% drop to give you an example of what banks might accept from a short sale offer, % wise. They do not want to have to take your house to auction. They want to settle with you or complete a short sale, or they would not have agreed to a short sale.

So, if a short sale offer on your house, falls short of what the bank wants out of it (maybe close to market value or what you still owe them), they can come after you for the difference.

Good luck and do what you can to stop the foreclosure process.
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Old 07-21-2010, 01:57 PM
 
5,066 posts, read 7,534,543 times
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Quote:
Originally Posted by naeem5 View Post
I had an agent tell me on a $38,000 foreclosure ($38K was the debt owed) that I should pursue a short sale and she thought the bank would let me have it for $30,000. .
This makes absolutely no sense at all.

None. Zero. Ziltch. Nada.
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Old 07-21-2010, 02:15 PM
 
Location: South Carolina
11,899 posts, read 15,833,553 times
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did you also know that a short sale shows on your credit report as a foreclosure as well even though it was not one ? that is the legal term for a short sale is foreclosure so you have to explain that one too to everyone you want credit from too cause they see that and they go ape poop over it .
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Old 07-21-2010, 02:29 PM
 
704 posts, read 1,669,032 times
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Quote:
Originally Posted by phonelady61 View Post
did you also know that a short sale shows on your credit report as a foreclosure as well even though it was not one ? that is the legal term for a short sale is foreclosure so you have to explain that one too to everyone you want credit from too cause they see that and they go ape poop over it .
Here is an interesting article that discusses the point made by phonelady61.

Short Sales Affect Credit - How Short Sales Affect Credit Reports
some comments from the article:
"Short sales happen when a lender agrees to accept >> less << than the amount owed against the home because there is not enough equity to sell and pay all costs of sale. Not all lenders will negotiate a short sale."

"there is less damage to a credit report after a short sale involving late pays than a foreclosure. Moreover, another advantage for those with delinquencies on their credit is the ability to buy another home within 2 years over the 5- to 7-year period required for foreclosures".
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