Comments on: How Will A Short Sale Affect My Credit?

By: Nicole

Nicole — Sat, 14 Nov 2009 01:25:28 +0000

I need some advice on a rental property that i have. We lose 300 a month on it and we don’t know what to do with it. It is in a really bad area and a bad school district. We moved here from new york and did not know what we were getting ourselves into. We just bought a new house. Any ideas that will not kill my credit???

By: Why Lawyers Say What They Say ::

Why Lawyers Say What They Say :: — Fri, 09 Oct 2009 16:22:14 +0000

[...] 2. Short sales are less damaging to your credit. Short Sale Credit Issues [...]

By: Dean Herbertz

Dean Herbertz — Fri, 02 Oct 2009 09:19:31 +0000

Hi Lanita, this reply is probably a little late but if you are doing a short sale be ready to move quick. Once it closes the new owner can take possession.

By: Dean Herbertz

Dean Herbertz — Fri, 02 Oct 2009 09:16:15 +0000

Hi My, Just to be clear I think a lot of people on this blog seem to forget the purpose of a short sale. #1 You have to be behind on your mortgage and have some kind of hardship to justify why you are in your current situation. If you have equitable assets somwhere else then a short sale is no the answer because it will never be approved. This will come out in your financials. Talk to a Real Estate attorney but my profesional opinion is if your married these are still joint assets. It is all about complete disclosure. Good Luck…Dean

By: Dean Herbertz

Dean Herbertz — Fri, 02 Oct 2009 09:06:36 +0000

Hi mplsgrl2004, ( I am not the Debt Kid) You are correct in that it is not a myth. The lender has the right to file a defeceincy judgment against you, not that it happens all to often because they know you just went through a short sale because you had no money. I personally require the lender to provide a letter stating they will waive any such recourse when we negotiate short sales. And no it is not better to just foreclose because they can still do the same thing on a foreclosure as well. Another thing they may do however is 1099 you for the deficeincy (this happened to me personally) The current tax code gives you one freebee for this on your personal property so it wil not be added as income. you do need to consult an accountant for tax implications however. Good luck….Dean.

By: Dean Herbertz

Dean Herbertz — Fri, 02 Oct 2009 08:55:29 +0000

Hi Susanna, first of all I specialize in Shortsales and Carlos is incorrect on a few counts. #1 The presumption in a short sale is that you have a proven hardship and are behind on your 1st mortgage. In this case the bank is approving a HUD 1 specifing the cost of the sale which comes out of the sale price approved. The seller niether pays closing costs nor receives any monies from the sale. #2 If you have equitable assets such as your 35 acer lake property then this will not get approved. The attitude of the bank would be liquidate your asset and pay us. Again there is not enough information listed here to determine whether or not you would qualify for a short sale or even if it is your best course of action. Should you have further questions feel free to e-mail me acdcbike@comcast.net see my post below to Nathan regarding short sales.

By: Dean Herbertz

Dean Herbertz — Fri, 02 Oct 2009 08:35:25 +0000

Hi Frank, this is a tough one. Obviously if you are adament (I am not a good speller so excuse any mistakes)on keeping your home and the bank is working with you and most importantly you can afford it then continue doing what you have done. However should the bank not come back with a modification you can afford you will have to make some tough choices. If you have enough equity to sell the home in the currrent market to cover the mortgage then by all means this would be your next recourse. Loan modifications are generally a temporary fix to a long term issue. I understand 100% what you are dealing with, I had a BK and lost 5 properties, do not however blame yourself. Banks like to say in ther ads how they are making 4% loans to people now who have been responsible…what a load of garbage. They were not responsible when they and many unsrcupulous Mortgage brokers made bad sub prime loans to millions of people who could not afford them. Read my reply below to Nathan for some answers to short sales. Let me know if I can answer any further questions. Good luck…Dean

By: Dean Herbertz

Dean Herbertz — Fri, 02 Oct 2009 08:18:03 +0000

Hi Amber, wish I would have read this earlier. However this is not a Bankruptcy and no one is going to take money out of your account on a short sale for a deficeincy. The short sale package that went to the bank would have included all your financials, tax returns, bank statements and so on. The determination of the short sale is based on these items as well as a banks assesment of value..BPO. If there were a deficeincy the bank may come back and file a judgement for this at a later date. Besides the fact that they require your last 2 years returns anyway. It is also a good idea to have professional handle a short sale for you if you are not familiar with the requirements or the process. Either a realestate agent or an Investor like myself that specializes in these. Good luck to you…Dean

By: Dean Herbertz

Dean Herbertz — Fri, 02 Oct 2009 07:54:31 +0000

Hi Ashley, if you are not deliquent you will not be able to short sale. My suggestion would be keep your credit intact, find someone to lease the house to until a time when the market may recover to swing your equity situation in a positive direction. If you are not able to manage the property yourself and there is room in the lease amount hire a property management firm, they generally charge between 8-10% of the gross rent. On the second part of your question anything negative regarding the credit used to obtain the loan will affect your co-signer as well. Good Luck…Dean

By: Dean Herbertz

Dean Herbertz — Fri, 02 Oct 2009 07:44:22 +0000

Hi Nathan, Before I go any further just let me state that I am not an attorney and that you should consult with a professional to answer any legal questions. I am however a real estate investor that specializes in short sale and over leveraged properties with a team of seasoned loss mitigation and negotiating professionals. We locate sellers who require our expertise and then work with realtors as our buyers agents. We give immediate offers on the property then negotiate with the bank to get an accepted offer. I ironically got into this business because I was a hard property investor that lost everything between 2006 and 2007 when the market ate all my equity. At the time I had never heard of a short sale and as such it cost me a lot regarding my credit. I accidentally ran into a Broker that suggested this course of action and I was able to get this accomplished on one property I had. So I know your frstration first hand. As far as your current personal situation is concerned it all depends on a few main factors, #1 It is irrelevant wether you are living in the home or not, What is relevant is the current status on your payments. Are you current or deliquent (have you recieved a Notice of deliquency ?) Foreclosure procededings generally start at 90 days past due. #2 Are you over leveraged on the home (you owe more then it is worth) #3 Do you have a difinitive hardship (which we must prove to the bank). If you are laid off with no income that is a good reason. So Nathan these are a few criteria regarding short sale, many people who proceed with a short sale have already vacated with the assumption that they would just let the property go back to the bank. This is more common then some may think. As far as what you should do, this is completly dependent on the questions I posed above. Not all properties meet all criteria for a short sale. Obviously if you had equity of any kind it would benefit you to find a cash buyer. In the current market this is not that easy unless you have room to negotiate on price. Foreclosure is absolutley the worst option..I know, and it should be avoided at all cost. One thing we do when negotiating with the banks is that we insist that there be no recourse to the seller for any deficencies in the future and we get this in writing. Many lenders will still issue a 1099 to you for the deficency amount which you would turn in with your taxes, the current code allows you to do this once on your personal property and be exempt from the amount. Again I am not an accountant either and you should consult one regarding tax implications.