Foreclosure/shortsale
Situation: Divorced, ex-wife got the house. She was ordered to refinace to remove my name from mortgage. She quit paying mortgagae and then filed Chapter 7 bank ruptcy without refinancing. I got house back in Oct'03. House is in foreclosure. Priciple balance =$120K. Back payments & fees = 18K. Current value = $130-135K.
Questions: What is realist value the mortgage company would except for a short sale? As the owner (seller) - what do I need to look out for after a short sale? Am I responsible for the deficiency or do I need to file bank ruptcy or do I pay income tax only on the deficiency?
First, I am not an attorney. There my disclosure.
Theres is no set formula on what a Lender will accept on a short sale, but it usually is based on an offer coming from some one other than the person on the loan. You will need to convince the Lender that the property in its current condition is worth "x" amount of dollars, that is would be in there best interest to settle, and that to persure a foreclosure will only incurr more debt and cost to them. Last but most important, that you the owner, are in a hardship situation and have no other options.
Keep in mind that if you persue to purcahse this property under you name it is not a purchase, it is really a refinance and there fore a Short sale will probably not work.
The deficiency is dependant on the state that you live in and in California they do not go after you for a deficiency judgment.
You are possibly looking at a tax issue, because if the property is sold for less than what is owed, the difference is considered a "debt relief" There are ways to fight this but it is not easy.
I would say, list the property with some one who know how to do a short sale. If you are in California, call me.