Has Anyone Completed A Short Sale On A Property In The Redemption Period?

I am curious if anyone has completed a successful short sale on a property where the first had already foreclosed and the owner was in the redemption period?

I got a call today from a lady that is in this situation. I am getting the authorization to release information so that I can gather the facts - but in the mean time I wanted to check to see if anyone has done this and if so find out any thing that is different than doing it prior to the foreclosure sale.

Thanks in advance

Comments(8)

  • loon25th September, 2004

    Short Sale after the Sheriff's/Trustee's sale...I've been hoping to see some info about this too; there's a house right now that I couldn't work out a deal on before the Sheriff's sale 3 months ago (6 mo. redemption period here), now it's just sitting empty, I've been wondering if I should call the bank and ask about it, just make an offer--would they consider it?--or what. I could probably get a Quit Claim Deed and Authorization to Release from former owners. Anyone?

  • JohnMichael25th September, 2004

    It all depends if the property is a buy back from the lender or was purchased by another party.

    A short sale is workable during the redemption period only if the lender was the high bidder and will be dependant upon the equity position, if it is still owner occupied and how long the homeowner has delayed the foreclosure process (using forbearances and or bankruptcy).

    If purchased by anyone other than the lender you will not be able to work out a shortsale.
    [addsig]

  • myfrogger25th September, 2004

    "If purchased by anyone other than the lender you will not be able to work out a shortsale." is not correct.

    You can do a short sale but whether or not they will consider it is a different story. If the bank is owed $100k total, they bid $100k, and the winning bidder bid $102k, then the bank stands to be paid off in full so there is no reason to short sale.

    If the bank is owed $140k, they bid $100k, winner bid $102k, there is still an opportunity to short sale---but not for less than $102k as they are set to get that money back at the end of redemption.

    All junior liens will definatly short because they will be released after redemption which will limit what they receive (if anything).

    GOOD LUCK

  • JohnMichael25th September, 2004

    myfrogger

    Of course any one can take a short sale!

    It is true that the lender, now the legal property owner can do anything it wants with the property, rent it, keep it, whatever. It can also sell the property for any amount it so desires.

    But tell me this, why would another person other than the lender who purchased a property at a foreclosure sale want to sell for less than their purchase?

    This just does not make since, why would I purchase a property at a foreclosure sale and sale it for less than I paid for it what would be my benefit other than not being able to sell it!

    Now keep in mind the question was has anyone completed A Short Sale on A Property in the Redemption Period?

    I am just trying to understand why you would believe someone other than the lender would take less than they invested during the Redemption Period.



    Quote:
    On 2004-09-25 14:33, myfrogger wrote:
    "If purchased by anyone other than the lender you will not be able to work out a shortsale." is not correct.

    You can do a short sale but whether or not they will consider it is a different story. If the bank is owed $100k total, they bid $100k, and the winning bidder bid $102k, then the bank stands to be paid off in full so there is no reason to short sale.

    If the bank is owed $140k, they bid $100k, winner bid $102k, there is still an opportunity to short sale---but not for less than $102k as they are set to get that money back at the end of redemption.

    All junior liens will definatly short because they will be released after redemption which will limit what they receive (if anything).

    GOOD LUCK
    [addsig]

  • myfrogger25th September, 2004

    At this point, after the sheriff or trustee sale, and during the redemption period, title is still vested with the homeowner.

    I don't know about the laws of other states, but in Iowa when you purchase property at auction where there is a redemption period you only receive a certificate of deed or something of that nature. Frankly, you must pay for your entire purchase in cash but you receive no rights to the property until the redemption is over and you bring your certificate thing to the sheriff and trade it for a deed.

    My short sale went something like this:

    1st mortgage total due $38k
    2nd mortgage total due $18k

    1st is foreclosing. Sold at auction to 3rd party bidder for $45k. They receive certificate of deed or whatever it is called.

    I go to original owners and strike a deal with them. I pay the 1st off in full as their interest was 100% covered. I shorted the 2nd to $5k. Sure they were entitled to receive $7k from the overage of the sale but they agreed at $5k because they got their money about 4.5 months sooner.

    At this point, we close, the 1st gets the full $38k, the 2nd gets $5k, and the original bidder at auction gets his money back as the property was redeemed.

  • JohnMichael25th September, 2004

    What a great deal you made, but tell me this, why would another person other than the lender who purchased a property at a foreclosure sale want to sell for less than their purchase?

    This just does not make since, why would I purchase a property at a foreclosure sale and sale it for less than I paid for it what would be my benefit other than not being able to sell it!

    Now keep in mind the question was has anyone completed A Short Sale on A Property in the Redemption Period?

    I am just trying to understand why you would believe someone other than the lender would take less than they invested during the Redemption Period.

    Even you paid the high bidder in your deal the full amount and you stated this time you had to.

    I said "If purchased by anyone other than the lender you will not be able to work out a shortsale."

    You said "is not correct".

    Then why did you not short sale with the high bidder?

    _________________
    John Michael
    Success one deal at a time!
    [ Edited by JohnMichael on Date 09/25/2004 ]

  • blackburnri25th September, 2004

    My understanding is that in the redemption period the owner can still pay in full what is owed to cover the mortgage. They are not required to pay the overage. Also it is my understanding that they have to pay off the original mortgage holder and not the person that bought the property at auction. This being said to me it makes sense that there still is some room there to negociate with the original mortgage holder on the property.

    Thanks so far to all that have replied - your replies have been helpful.

  • JohnMichael25th September, 2004

    blackburnri

    During the redemption period if an owner redeems the subject property they must pay the high bidder the full amount of the bid along with any other fees that a state will allow like interest etc.

    If the high bidder is a 3rd party they must pay off the 3rd party as their investment is secured.

    Please note myfrogger's last post on one of his deals he had to pay the full amount of the high bid and he did a short sale on the 2nd.

    Sorry for the misunderstanding, but we want to be sure you understand the process properly.
    [addsig]

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