Bankruptcy Question
I have a homeowner that is in bankruptcy (Chapter 13). He is now 3 months behind with the bankruptcy payments and the bank has asked the bankruptcy trustee to dismiss the bankruptcy. I am stuck between the bankruptcy trustee and the mortgage company. I want to do a short sale, but the mortgage company says that the bankruptcy attorney must allow it and that the homeowner cannot do anything without going through the trustee. Should I wait until the bankruptcy is dismissed before trying to buy the house? Once the foreclosure proceeding start, I am not sure I will have time to request a short sale because in GA it only takes 4 weeks to forelosure. The homeowner also haas a VA loan, does that affect doing a short sale? Another question, if I wanted to do a subject to, can you do that with a VA loan? I know it is a lot of questions - sorry.
The house is work 175K. It currently has a septic system, but it has a leak and needs repair or replacement. I figure worst case senario is about $10K for the septic is it needs replacing $3-5 if it needs repair
I got them thanks.
FYI - I completed a short sale with HSBC a couple months ago and they would not agree to not pursue a deficiency with the homeowner. They were adament that they always go after the homeowner for the shortfall. The homeowner agreed to go forward because they weighed it against their other options and still felt it was in their best interest.
I agree, they even told me they woul have their attourney garnish wages if they had to.
Quote:
On 2006-04-13 23:01, PMP wrote:
FYI - I completed a short sale with HSBC a couple months ago and they would not agree to not pursue a deficiency with the homeowner. They were adament that they always go after the homeowner for the shortfall. The homeowner agreed to go forward because they weighed it against their other options and still felt it was in their best interest.
SSPro,
What is your opinion? or advice? Do you or have you ever asked for this in writing?
Quote: How often can you get mtg co to waive this on a short sale?
[ Edited by REOguru on Date 04/13/2006 ]
I explain the risk of a deficiency judgment and a 1099 to the homeowner orally and in writing. I also tell them that, based on my experience, I have never had a lender not accept the contingency of not pursuing a deficiency -- except HSBC. They are adament that they will pursue a deficiency.
In most cases the lender is going to issue a 1099 for the deficiency. Its difficult for the lender to obtain a deficiency judgement against a homeowner if they agreed to take less than full payoff of the loan. You must disclose to the homeowner the deficiency situation. Explain to them upfront that if their is a deficiency either by you working with the lender on a shortsale or if the property goes to sale by sheriff the homeowner will be the only one responsible. You must have an Agreement of Deficiency document signed and notorized by the homeowner. Explain to the homeowner that a 1099 is most likely and its better to pay tax on the deficiency than have to pay the entire deficiency amount as a judgement. Hope this helps...
"its better to pay tax on the deficiency "
as we know, in most short sale situations, the "income" is exempt from tax