Does a short sell have a negative impact on your credit rating? If i were to someone buy my home through short sell, would i be responsible for the difference?
Presumably, the Seller of a property via short sale's credit is already in the toilet and it won't make too much of a negative impact... which is why I tell Sellers that future creditors will see that you (the Seller) acted responsibly, acted proactively in an attempt to mitigate potential losses by selling... instead of simply walking away and dumping the problem into the mortgagee's lap.
The deficiency (difference between what was owed, and what was paid) is handled differently by different lenders...
Either the debt is forgiven, or the debt will be pursued by the lender.
[addsig]
SSP,
My credit is ok, i'm not behind on my payments, i just want out before i get behind due to divorce. loss mitigations stated that i dont have to be behind inorder to have a short sale done could they be just setting me up for a denial? I can't get it refinaced because i'm upside down and i don't want to file chapter 7. Are there any other options?
Quote:
On 2004-08-19 08:07, TheShortSalePro wrote:
Yes, and possibly.
Presumably, the Seller of a property via short sale's credit is already in the toilet and it won't make too much of a negative impact... which is why I tell Sellers that future creditors will see that you (the Seller) acted responsibly, acted proactively in an attempt to mitigate potential losses by selling... instead of simply walking away and dumping the problem into the mortgagee's lap.
The deficiency (difference between what was owed, and what was paid) is handled differently by different lenders...
Either the debt is forgiven, or the debt will be pursued by the lender.
I did one awhile back. The Homeowner was current (never late) and had money in the bank. (for those of you who read AShortSalePrimer, it was case study "Never Say Never"
They did have a financial hardship, but it was an historic, not current, hardship.
The mortgagee approved a short sale forgiving about $20,000 or $30,000 of the debt, I can't recall.
The Seller received an IRS form 1099 reflecting the amount of forgiven debt... they wqere taxed on the amount of forgiven debt, ($7,000 or $8,000) which they gladly paid.
I was surprised... but it does happen.
If you don't have a bonafide hardship... a short will be tough. Or, if the short is approved, they may want you to repay the deficiency... or, issue an IRS 1099 to reflect the amount of forgiven debt.
You might want to consider leasing the house for awhile, building equity... then sell at a later time.
SSP
I have been talking with loss mitigation for a few days now and i explained my situation. There are alot of repairs to be made on the home and the interest rate is going up. Being a single parent of 2 there is not enough money left to make these repairs. In order to rent it out, these things would have to be fixed.
It seems that you may have the basis for a demonstrated hardship...
I could walk you through this, &/or you could read TheSSPrimer.
To lay the groundwork... gather and copy all applicable financial documentations... paystubs, tax returns, utility bills, credit card statements, bank statements, orders of support, alimony, and the dicorce decree.
You'll want to gather written estimates for emergency and necessary repairs from licensed contractors.... make sure that the scope of each estimate is similar (apples to apples).
[addsig]
SSP
Thanks SSP!!
What is a SSPremier? Where can I find a copy of this? Should I send these docucments to the mortgage company before the investor contact them or just wait until the began a reivew of the proposal?
Fantastic! Its coming clear. The seller has enough equity that I can do the backward equity demonstration ("I subtract the agent's commission, then the backpayments, and my offer for your equity is...".
Yep. Thank you, again Jeff. Where was my brain at the time!
Yes, and possibly.
Presumably, the Seller of a property via short sale's credit is already in the toilet and it won't make too much of a negative impact... which is why I tell Sellers that future creditors will see that you (the Seller) acted responsibly, acted proactively in an attempt to mitigate potential losses by selling... instead of simply walking away and dumping the problem into the mortgagee's lap.
The deficiency (difference between what was owed, and what was paid) is handled differently by different lenders...
Either the debt is forgiven, or the debt will be pursued by the lender.
[addsig]
SSP,
My credit is ok, i'm not behind on my payments, i just want out before i get behind due to divorce. loss mitigations stated that i dont have to be behind inorder to have a short sale done could they be just setting me up for a denial? I can't get it refinaced because i'm upside down and i don't want to file chapter 7. Are there any other options?
Quote:
On 2004-08-19 08:07, TheShortSalePro wrote:
Yes, and possibly.
Presumably, the Seller of a property via short sale's credit is already in the toilet and it won't make too much of a negative impact... which is why I tell Sellers that future creditors will see that you (the Seller) acted responsibly, acted proactively in an attempt to mitigate potential losses by selling... instead of simply walking away and dumping the problem into the mortgagee's lap.
The deficiency (difference between what was owed, and what was paid) is handled differently by different lenders...
Either the debt is forgiven, or the debt will be pursued by the lender.
I did one awhile back. The Homeowner was current (never late) and had money in the bank. (for those of you who read AShortSalePrimer, it was case study "Never Say Never"
They did have a financial hardship, but it was an historic, not current, hardship.
The mortgagee approved a short sale forgiving about $20,000 or $30,000 of the debt, I can't recall.
The Seller received an IRS form 1099 reflecting the amount of forgiven debt... they wqere taxed on the amount of forgiven debt, ($7,000 or $8,000) which they gladly paid.
I was surprised... but it does happen.
If you don't have a bonafide hardship... a short will be tough. Or, if the short is approved, they may want you to repay the deficiency... or, issue an IRS 1099 to reflect the amount of forgiven debt.
You might want to consider leasing the house for awhile, building equity... then sell at a later time.
SSP
I have been talking with loss mitigation for a few days now and i explained my situation. There are alot of repairs to be made on the home and the interest rate is going up. Being a single parent of 2 there is not enough money left to make these repairs. In order to rent it out, these things would have to be fixed.
It seems that you may have the basis for a demonstrated hardship...
I could walk you through this, &/or you could read TheSSPrimer.
To lay the groundwork... gather and copy all applicable financial documentations... paystubs, tax returns, utility bills, credit card statements, bank statements, orders of support, alimony, and the dicorce decree.
You'll want to gather written estimates for emergency and necessary repairs from licensed contractors.... make sure that the scope of each estimate is similar (apples to apples).
[addsig]
SSP
Thanks SSP!!
What is a SSPremier? Where can I find a copy of this? Should I send these docucments to the mortgage company before the investor contact them or just wait until the began a reivew of the proposal?
Jeff,
.
Fantastic! Its coming clear. The seller has enough equity that I can do the backward equity demonstration ("I subtract the agent's commission, then the backpayments, and my offer for your equity is..."
Yep. Thank you, again Jeff. Where was my brain at the time!
Alan