Anyone sell their house as a short sale?

[ssclulow]

If you can find someone to rent your house and have someone nearby to keep an eye on the situation with the rental, I would recommend doing that. The bank isn't going to allow you to short sale your house if you are not behind a lot in your payments and no one I know has been able to get a loan modification as promised by the federal government's pumping money into the banks. ComSense's experience is not unusual. I know many people who are in the same situation. The banks have slammed them against the wall. Beware of moving out of your house and leaving it empty. Your homeowner's insurance will likely not cover any claims made while the house is not being lived in.

[FloridaHawkeye]

Every story I have heard of people working with the lender seems to show the lenders unwilling to modify the loans.

[ognend]

Originally Posted by FloridaHawkeye

Every story I have heard of people working with the lender seems to show the lenders unwilling to modify the loans.

And that surprises you? What's their motivation? The banks already got bailed out. I never understood why it took them so long to process all the loan information, especially at this age of technology and computers. But, as you know, you got to have a bank account so banks act as if you exist for them, not the other way around. It's a travesty but what are you going to do.... Wanna job? Need a bank account...

[Delray Patty]

I would definitely try and rent out the house through a realtor. That's your best bet in this market. Have someone regularly check on it and by all means screen the renter (or the realtor can do this perhaps). Good luck.

[Bette]

Originally Posted by FloridaHawkeye

From my understanding:
1. You stop paying your mortgage (so yes your credit will be affected)
2. You want to continute to pay your insurance/hoa - less chance of being forclosed on sooner
3. Have a lawyer involved or work with a realtor who has a good lawyer

As far as time to buy a new house I have heard a year later for some people.

You do not have to be behind on your mortgage to qualify for a short sale.

Example:
I have a client who short sold his condo. He was never late. His credit was hardly affected. That was in January 2011. He just bought a home and got a mortgage (reason: he was never late and had the short sale approval letter).

If you bought your current home between April 2005 and July 2007, you may be eligible for the Mortgage Debt Forgiveness Act of 2007 also. A true gift.
(Form 982 with the IRS).

[Bette]

Originally Posted by ssclulow

If you can find someone to rent your house and have someone nearby to keep an eye on the situation with the rental, I would recommend doing that. The bank isn't going to allow you to short sale your house if you are not behind a lot in your payments and no one I know has been able to get a loan modification as promised by the federal government's pumping money into the banks. ComSense's experience is not unusual. I know many people who are in the same situation. The banks have slammed them against the wall. Beware of moving out of your house and leaving it empty. Your homeowner's insurance will likely not cover any claims made while the house is not being lived in.

Also, rents are going up - it may be easier to just rent your home out.

[lovessun]

Renting is an option. The house is a big property over 5,000 square feet. I would prefer to get rid of it with the way the market is going. I will try a FSBO and list it on the MLS before the short sale.

[FloridaHawkeye]

Originally Posted by Bette

You do not have to be behind on your mortgage to qualify for a short sale.

Example:
I have a client who short sold his condo. He was never late. His credit was hardly affected. That was in January 2011. He just bought a home and got a mortgage (reason: he was never late and had the short sale approval letter).

If you bought your current home between April 2005 and July 2007, you may be eligible for the Mortgage Debt Forgiveness Act of 2007 also. A true gift.
(Form 982 with the IRS).

Interesting and kind of an oxymoron that you can prove to the bank that you have financial hardship to pay for the mortgage. Do banks simply write off the debt owed via the difference the short sale went for? Do banks use the amount owed vs. current market value as a reason for a short sale? My friend is 250k under water and has considered a short sale but could not endure not making payments a moral decison.

[FloridaHawkeye]

FYI from yahoo article on boosting credit score

5. Protect Yourself in a Short Sale
After a short sale, the mortgage lender often will report to credit bureaus that the home loan was settled for less than the full amount. In addition, it can also note the amount of the deficit as "balance owed" on the credit report, even though the obligation has been finalized and no additional money is owed.
In other words, if you have a $300,000 mortgage and sell your house for $250,000, the bank could report a balanced owed of $50,000.
While the short sale will damage your credit score dramatically (as much as a foreclosure, according to examples recently released by FICO), you can mitigate the damage slightly by arranging with the lender not to report a balance owed.
The best time to negotiate this with the lender: before or during the short sale process, says Ulzheimer. While you can attempt it after the fact, that's not as practical.
"After it's been paid, the lender starts to lose interest in speaking with a former customer."