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I recently learned that my neighbor who makes a very good living (150k+ a year) is in short sale process.
He bought a new home, waited for close of escrow and then put up his old home for sale (short-sale).
I said to myself, if he can do it, so should I!
So about my home...
I would be dealing with Seterus of the 1st loan and American Home Mortgage AHMS for the 2nd.
Value of property is a buck fifty, so the second is a wipeout and the 1st would get half the value.
My question is can I negotiate "effectively" with the 2 banks to forgive and not go after me with a deficiency judgement?
I know the standard line...see an RE attorney. Or should I talk to those RE experts that claim to manage the short sale process getting you "no future judgments" (re attorneys that streamlined the process). I really dont want to spend thousands of dollars on them to just advise me or the 100s of stories that people got taken for money and wasnt provided squat.
I guess if I try the short sale and the second place lien holder does not agree to release me from liability, I would then let the home go into foreclosure and risk them going after me later in which I would then have to declare bankruptcy.
Now remember boys, I'm gonna try and buy another house first with my good credit and finances.
The unknown in all this is, will the second lien holder (AMHS) release me from further liability ?
Last edited by forestgump; 01-08-2012 at 05:28 PM..
It was pretty common in CA during the RE bust in the 90's.
My understanding is lenders cracked down on the practice early in this bust though. They generally require that borrowers qualify to make payments on both properties, and without the benefit of potential rental income on one of the properties. Not sure how many folks can do that.
Well Zippy, someone didn't tell him and his loan officer!
So, are you saying that anyone underwater on their house cannot or lenders won't lend to them?
But it happened, this guy is now enjoying a brand spanking new house with a low interest rate.
Your neighbor's situation could be different than you expect - if the property was "sole and separate" in a spouse's name, they might have qualified on the other spouse's income.
It wouldn't surprise me to see you are 100% correct, and this neighbor "worked the system".
But it isn't "victimless" - the banks are only servicers, the real bagholder in the deal might be your mom's pension fund, or even you.
But it isn't "victimless" - the banks are only servicers, the real bagholder in the deal might be your mom's pension fund, or even you.
Likely the " we the people" government guaranteed the loan via FHLMC, FNMA or GNMA, meaning we the people eventually pay when someone decides it is no longer convenient to honor their obligation to repay their loan.
Your neighbor's situation could be different than you expect - if the property was "sole and separate" in a spouse's name, they might have qualified on the other spouse's income.
It wouldn't surprise me to see you are 100% correct, and this neighbor "worked the system".
But it isn't "victimless" - the banks are only servicers, the real bagholder in the deal might be your mom's pension fund, or even you.
zippy hit a potential nail on the head with the spouses idea. keep in mind forest that being in the SS process is no guarantee of a successful SS, and then where are you? probably FC or BK.
RE attorneys are not necessarily the same thing as an "attorney" working as a modification specialist. in fact, many are not attorneys and those that are...well suffice to say my two friends that are attorneys (tax and RE respectively) will not (1) work on any home modification issues and (2) will not refer anyone to a so called home mod specialist. they're referrals are all to BK attorneys.
wish my pride or whatever had allowed me to talk to them about a year ago. a bk attorney could have helped me out since filing a bk does not mean you actually go thru with it.
now re: your situation...you need both the 1st and 2nd lender to agree on a SS. good luck getting the 2nd to accept nothing. this is where a BK attorney could help. if you live in a state where the FC process eliminates potential for a deficiency judgement, then you may also have some room to negotiate with the 1st to take a lesser amount so the 2nd gets some. all goes back to getting a quality attorney and getting everyone to talk.
i know, i'm rambling. your issue in particular - you live in NV. the chance the (1) your 1st will go through with a SS without the 2nd in agreement is low, (2) the chance that a lender will loan a buyer money where your 2nd is not in agreement (i.e. a lien will exist on the prop) is pretty much non-existent, and (3) you better have an air tight document from the 2nd releasing you from liability or you might find that they go after you for a deficiency anyways or sell it to a collector who goes after you.
so pretty much...my 2 cents...your 2nd will not release you from liability.
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