Silly Short Sale Question
Do banks require you to have cash before they accept your short sale offer? Can you use a bank loan to finance the transaction?
If a margage is 100K and the bank accepts 50k what happens to the other 50k, is the home owner responsible?
thanks
A mortgagee asked to consider accepting a short sale payoff will want to make certain that the named Purchaser has the ability to close... meaning, that they have the needed funds in cash, or have been preapproved for an acquisition mortgage loan. Typically, a prequal letter is included in the short sale application.
In some cases, the former homeowner would still be responsible for paying the difference between the payoff, and the amount of the total debt.
If the mortgagee forgives the remaining debt, the former homeowner may incur an exposure to a liability to pay income tax on the portion of debt that was forgiven (IRS views forgiven debt as taxable income).
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When you are trying to buy a preforeclosure from somebody on a shor sale. I know you can buy the second mortgage real cheap how about the first mortage can you bargain with them too?
Thanks for the info. What is an acquisition mortgage loan?
The loan that you'll use to acquire the property.
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I had an interesting experience recently regarding proof of funds. I made a SS offer through National City on a house that needs lots of rehab (needs about $65K or work to get it ready to sell). National City never asked me for proof of funds before approving the short sale.
Now I had made a couple previous offers on other houses through the same loss mit rep but I'm not sure she remembered me. I guess if the lender is desperate and it's a junk house they get much more flexible.[ Edited by daveh on Date 05/12/2004 ]