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Old 03-03-2009, 06:34 AM
 
Location: Pocono Mts.
9,483 posts, read 10,741,486 times
Reputation: 11370

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be careful that the "modification" doesn't end up as a "forebearance agreement"
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Old 03-08-2009, 11:19 PM
 
Location: Trinity Florida
7,886 posts, read 17,374,889 times
Reputation: 1959
Quote:
Originally Posted by Donn2390 View Post
A short sale is selling your home for less than you owe the bank for the home. You have to get permission from the bank to do so.
If the difference isn't to great, it's in the bank's best interest. It's better to lose a little than a lot..!
If you owe $400k, and you can find a buyer for $350k, the bank loses $50k, but they don't lose $400 k, and they don't have to go through all entailed to repo it.
It's a dance to try to get all the parties on the same page with all of this, but i's better for all concerned.
They used to tax you on the money you shorted the loan on. In other words, using the example above, the seller would have to declare the $50 k they save, as income and pay taxes on it, because technically you made $50k.
A couple of years ago that practice was changed because there were so many short sales and people couldn't afford to pay taxes.
Quote from "“Mortgage Forgiveness Debt Relief Act of 2007"
Until now (12/07), if the value of your house declines and your bank/lender forgives a portion of your mortgage (via a short sale or deed in lieu), the tax code treats the amount forgiven as ordinary taxable income. For a borrower already financially strapped, this makes a bad situation worse. When you’re worried about making your payments, higher taxes are the last thing you need to think about.

On December 20, 2007 the “Mortgage Forgiveness Debt Relief Act of 2007” became Public Law No: 110-142. The law is retroactive to January 1, 2007 and will extend until December 31, 2009. The passing of this bill creates a three-year window for homeowners to either refinance their mortgage or sell, and pay no taxes on any debt forgiveness that they receive.
Google Mortgage forgivness act, and learn a bunch...
thank you so much, so here is another question? if I hire a realtor and lets say sell for 15k less than I owe, who pays the realtor since we cant afford one at this point???? and do the payments have to already be behind before they speak to you about approving a short sale? and just a few more questions? do u have to have an offer before doing a short sale? and do u have to leave the home? and 1 last question, how long from when the bank approves the short sale to the home going into forclosure or does it NOT go into forclosure because it will be sold as a short sale??

thank you so much in advance
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Old 03-09-2009, 01:32 AM
 
Location: San Jose (Willow Glen)
180 posts, read 627,921 times
Reputation: 96
Quote:
Originally Posted by berryjuice4life View Post
thank you so much, so here is another question? if I hire a realtor and lets say sell for 15k less than I owe, who pays the realtor since we cant afford one at this point???? and do the payments have to already be behind before they speak to you about approving a short sale? and just a few more questions? do u have to have an offer before doing a short sale? and do u have to leave the home? and 1 last question, how long from when the bank approves the short sale to the home going into forclosure or does it NOT go into forclosure because it will be sold as a short sale??

thank you so much in advance
if I hire a realtor and lets say sell for 15k less than I owe, who pays the realtor since we cant afford one at this point????"
The lender includes closing costs and Realtor commissions in the amount they are going short. So you don't pay anything at closing.

"nd do the payments have to already be behind before they speak to you about approving a short sale?"

No they don't. You do, however, have to prove a hardship that shows that you can no longer afford the payment due to your current financial situation.

"do u have to have an offer before doing a short sale? "
Your Realtor can do it one of two ways. They can get the short sale package (all your financial documents, hardship letter, bank statements, tax returns, pay stubs, etc..) and submit it to the lender without an offer. Some lenders will review the documents and approve the hardship. However, it won't get assigned to a negotiator and an appraisal ordered until you have an offer. The key is to have your realtor price it properly to make sure you get an offer asap.
The hard part is keeping the buyer on the hook while the offer is being approved by the lender. This is why I like to get the short sale package approved up front vs. waiting for an offer so that the time between offer and acceptance by the lender is minimized and the buyer doesn't walk.

"and do u have to leave the home?"
You only have to leave once the transaction closes

"how long from when the bank approves the short sale to the home going into forclosure or does it NOT go into forclosure because it will be sold as a short sale??"
If the loan is in the short sale department, the lender will typically halt the foreclosure proceedings until which time the short sale is completed (in which case you avoid foreclosure) or the short sale request is denied, in which case it will go to the modification or foreclosure department.

Hope this helps.

Last edited by AndrewSoss; 03-09-2009 at 01:34 AM.. Reason: edited to add formatting
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Old 03-09-2009, 10:53 AM
 
Location: Trinity Florida
7,886 posts, read 17,374,889 times
Reputation: 1959
Quote:
Originally Posted by AndrewSoss View Post
if I hire a realtor and lets say sell for 15k less than I owe, who pays the realtor since we cant afford one at this point????"
The lender includes closing costs and Realtor commissions in the amount they are going short. So you don't pay anything at closing.

"nd do the payments have to already be behind before they speak to you about approving a short sale?"

No they don't. You do, however, have to prove a hardship that shows that you can no longer afford the payment due to your current financial situation.

"do u have to have an offer before doing a short sale? "
Your Realtor can do it one of two ways. They can get the short sale package (all your financial documents, hardship letter, bank statements, tax returns, pay stubs, etc..) and submit it to the lender without an offer. Some lenders will review the documents and approve the hardship. However, it won't get assigned to a negotiator and an appraisal ordered until you have an offer. The key is to have your realtor price it properly to make sure you get an offer asap.
The hard part is keeping the buyer on the hook while the offer is being approved by the lender. This is why I like to get the short sale package approved up front vs. waiting for an offer so that the time between offer and acceptance by the lender is minimized and the buyer doesn't walk.

"and do u have to leave the home?"
You only have to leave once the transaction closes

"how long from when the bank approves the short sale to the home going into forclosure or does it NOT go into forclosure because it will be sold as a short sale??"
If the loan is in the short sale department, the lender will typically halt the foreclosure proceedings until which time the short sale is completed (in which case you avoid foreclosure) or the short sale request is denied, in which case it will go to the modification or foreclosure department.

Hope this helps.
wow thank you so much yes this information was exactly what I was looking for...now do I need to find a realtor that specializes in short sales?? and what do I look for??
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