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Maybe I'm spending most of my time in the land of fraud (aka State of Florida) Fraud everything, including mortgage. Yeah, it's true. Florida does lead the nation in healthcare fraud, mortgage fraud, insurance fraud etc).
Now I pose a simple question. Everything since Congress passed the mortgage forgiveness act in Dec 2007, short sales have become quite too common. Because people know the banks won't issue them a 1099 form at the end of year for the difference forgiven in the mortgage. Everything little Government intervention seems to the housing market worse, not better. Even Obama's making home affordable program hasn't helped more than 50K homeowners when he promised to help at least a couple of million homeowners.
I've known at least 5 homeowners who sold the short sale route. All of them are not living paycheck to paycheck. One of them even went as far as pay off his 90K BMW car loan, liquidate his 50K in cash savings in the 6 months proceeding the short sale so he can "appear" to look poor to the bank.
Why don't the banks force people to sell off the majority of their hard assets furniture, extra cars, children's college savings? Yeah, I think retirement accounts should be exempted but most people have assets who own homes.
Seems to be a large minority of people (my best guess is up to 30% of short sellers) have cash assets to cover the sale of the mortgage but want to to take advantage of the temporarily law Congress made for mortgage forgiveness.
So to the realtors involved in short sales, are your clients really "broke?"
I've been involved in a number of short sales and in every case they involved owners who didn't have enough income to pay their mortgage due to job loss, illness expenses, ARMs resetting to a higher level, or poor choices of loan products when they bought the home. In each case, the bank did a fairly thorough due diligence on the owner's assets, liabilities, and income to determine if they qualified for a short sale. Whether or not this due diligence would uncover purposely hidden assets is another question. I would not be surprised if there are some people who have learned to game the system just as they did when they bought the house.
They are in the short sale listings I take. I don't just take listings...especially short sale listings...just because they're offered to me. If anything seems fishy during my interview with the Seller, I'll refer the Seller to an agent I don't like. LOL just kidding!!!
While the case of your neighbor can happen most of the short sales are true hardship cases. One I'm dealing with she can't pay for the electric bill.... now mind you her financial issues are likely her own fault. She had more shoes in the closet than i have ever seen. her son had a triple stack of Nike's as tall as I am. while a few thousand in shoes makes little difference it may reflect as to how people get themselves in over their heads.
the OP's neighbor took the equity out and in effect sold their home when they did it now they want to screw the bank because the market didnt keep rising to keep up with their spending levels. There are some people like that for sure and they will screw the system but most are not.
Here are some simple rules. make sure your house payment is 25% or less of your gross income.
DO NOT REFI in order to pull equity out!
Use a 15 yr mortgage term.
Have no more than 2 credit cards and keep the balance paid off. use it to get your flight miles but pay it off every month
If you have a 30 yr note send them an extra $100 / month and make sure they point it towards principle.
Put a block on your credit so direct approval for a credit check must come from you.
avoid on-line places that "compete" for your business... they run your credit too much
Work with agents you like and trust,
So to the realtors involved in short sales, are your clients really "broke?"
Owners are required to disclose their assets and make legal representations as part of applying for a short sale. I have no doubt that some sellers move money around well before selling short to appear destitute. When the goal is fraud, real estate agents and the lenders are not likely to detect this.
There are no consequences associated with walking away from debt, beyond a blown credit score. What additional help does anyone need?
Well, I don't like the idea of the Feds temporary forgiving short sellers the tax liability (I think until 2011) on the 1099 they would have gotten at the end of the year for the amount they shorted the banks.
Sure, most short sellers are "broke" However, you guys know as well as I do that there is a significant minority of short sellers who see an opportunity to game the system put their homes on the market.
The way I feel about any government intervention (in this case short sale loan forgiveness) is that they make the housing situation much worse. You put even more distressed homes on the market and there's a major fraud opportunity for people to get out of their homes for "free", with a lower credit score. But who cares if you don't have to pay the tax liability on 100-200K? Right?
Tell my realtor that!. Our house isn't selling and she suggested short sale route but we ARE making mtg. payments every mo and aren't broke! She had the nerve to mention this I assume for a quicker commission. Scary.
Tell my realtor that!. Our house isn't selling and she suggested short sale route but we ARE making mtg. payments every mo and aren't broke! She had the nerve to mention this I assume for a quicker commission. Scary.
I remember your story. As you portray this agent, she sounds misinformed - incompetent.
In any event, most short sales do not close. Failure to close means she does not get paid.
I cannot believe that people in this day and age keep an agent around once the incompetence and ignorance of this very complicated business has been revealed. That is like no representation at all....
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