Posted by JT-IN on October 28, 2003 at 20:22:12:
A small local bank with a judgment, who I offered essentially 40K for their position; about a 200K judgment. They said Nah, baby Nah… The property went to sale a few days later, now they are getting about 10K, if that…
Of course this Bank is in some financial trouble… No wonder, making financial decisions like that one…
JT-IN
Short Sale - Consequances - Posted by Marie
Posted by Marie on October 28, 2003 at 12:40:49:
Hello,
I am a realtor and just picked up a listing wich I am hoping to sell subject ot lender’s approval. The sellers are all right with the payments but they owe what it is worth. They want to sell and move out of state.
If I find a buyer willing to buy - what are the consequances for the seller?
They wil not be able (or don’t want) to come up with any money.
The question is - will if affect their credit history?
I would think - this folks took on a risk when buying this property, the bank took the risk when landing on it - why the borrower solely should be responsible for the falling prices?
Any help would be appreciated.
marie
Paticipating Mortgage… Not really - Posted by JT-IN
Posted by JT-IN on October 28, 2003 at 20:33:41:
Marie:
You posted:
“I would think - this folks took on a risk when buying this property, the bank took the risk when landing on it - why the borrower solely should be responsible for the falling prices?”
NOw if the seller was selling for a 50K profit, would the Lender be entitled to a) 10%, b) 20%, c) 0…?
Of course you said C; ZERO… So why should the Lender share in the poor decision of the Buyer, if they wouldn’t share in any upside, if it existed…? What you describe is an equity shared mtg… which does exist.
One last thought… Lenders do accept short sales, as previously discussed, which essentially does end up sharing the downside. They don’t always accept them, and it may be doubtful here, due to a current loan scenario. Additionally, Lenders are held responsible all the time for falling prices, in the form of foreclosed properties, where to property is truely worth much less than loaned… A very common occurance… which ends up costing all of us, in the end…
Just the way that I view things…
JT-IN
Re: Short Sale - Truth, or Consequences - Posted by TheShortSalePro
Posted by TheShortSalePro on October 28, 2003 at 13:35:39:
Consequences? If the Sellers maintain their monthly payment, their credit won’t experience an adverse impact. You should request (in your short sale proposal) that the mortgage is recorded as, Paid As Agreed. The difference between what the mortgagee is owed and what it accepts as payment in full will be reflected in an IRS form 1099. The sellers will probably incur an exposure to pay income tax on that amount…
Won’t happen that way - Posted by DaveD (WI)
Posted by DaveD (WI) on October 28, 2003 at 15:36:50:
It’s a performing note, SSPro! Why would the lender take less? A lender won’t stab himself in the eye on purpose, will he? It’s not even on their radar until it has been well seasoned with a default. Heck, half the time they won’t take less all the way to auction. Stupid, for sure, but I see it all the time.
As long as it is paying on time you can’t hardly begin to cry hardship.
Re: Short Sale - Truth, or Consequences - Posted by Marie
Posted by Marie on October 28, 2003 at 14:13:23:
Thanks a lot.
I wanted to email you directly with the initial post, but decided post it here.
The sellers are just normal folks working and paying in time. In order to sell for FMV they I will need to short sale.
The bank is Wells Fargo.
Will we have to show they are in trouble financially?
Re: Never say never - Posted by TheShortSalePro
Posted by TheShortSalePro on October 28, 2003 at 15:45:31:
I’ve done one. The mortgage was current, and in fact, had never been paid late. The home was in excellent condition, too. The Sellers, fully employed, just wanted out. Initially, I rejected their request to facilitate the short sale. But they persisted, and I wanted to do the listing broker a favor. Long story short, the mortgagee accepted the Proposal, about $30,000 less than was due on the performing mortgage.
The Sellers were prepared to pay income tax on the forgiven debt, and they did.
Better dust off my shortsale guru book - Posted by DaveD (WI)
Posted by DaveD (WI) on October 28, 2003 at 18:11:53:
My previous response was given to you in real time. Just shaking my head over something I failed to put together TODAY!
2nd mortgage holder called me Friday asking me if I buy forclosures. Sure, tell me more. Going to sale next Wednesday. I jumped into the car, drove by (yuk), met him at his office and advised him his idea of market value was “optimistic.”
He thought he was doing me a favor cluing me into a upcomming auction, knowing I could save his position purchasing this bargain. He’s in the 2nd position. I told him the best way out was for him to sell me the paper. Long story short, his boss at AmGenFin said “We don’t take less.” OK, so tomorrow instead of a few bucks, his position is worthless since he will be wiped out. The owners head is still in the sand too. Whatever.
I Told You So… - Posted by phil fernandez
Posted by phil fernandez on October 28, 2003 at 19:49:39:
… will be Dave’s comment to the holder of the 2nd. It does often amaze me of the hard headedness of some mortgagees. Especially the holders of 2nd’s where they will often receive zip.
Short Sale Pro. I have never heard of a mortgagee holding a performing 1st ever willing to discount. My question to you would be why would they take a discount on a performing loan.