|Posted on November 6, 2009 at 8:21 PM|
Short Sale Warning!
Before you sign papers for a Short Sale...Stop and read this, before you make a move.
I'm extremely concerned about the short sale madness that is going on.
First of all a Short Sale means: that whatever you don't pay...they pursue you legally for.
So in essence you've just given away your property below the actual value, and you're still going to be sued for the remaining balance. What a great deal for the people, right?
Why would I know this to be true? I handle them every day, all day. I believe it is a very negative result for the people, and I do not find it to be the answer to any of the problems at hand. How is that better, or even close to a solution for the people? It's not. Unfortunately our current society, (that has collapsed) is scrambling to recover from their own original actions.
I'm handling a case in NV. (one of hundreds on my desk). The balance on the loan was around $300k+, and the first mortgage was around $350k. The value on appraisal was supposedly enough to support the loans. Today?...Comparables are $64k - $120k. Not a good situation. The bank is suing the individual, and the individual does not know what they could possibly do. The conclusion is, she demands a settlement. Which is all she really can do, unless she can sell it for what she owes.
A short sale would be the wrong choice, because if she can only sell it for $64k - $120k, that means that she would still be responsible for the remaining balance on the loans. Which is already with an attorney, ready to pounce. Standard operating procedure.
The best way to resolve any delinquent mortgage situation is to find a way to incorporate income to support the debt. Try to find family, or a partner with better income. While you're negotiating for a Modification. Request Reducing the principle to $10k below the real value, 3% or less on the rate, and below half of the original payment. ($3500 pmo=$1500 pmo new pmt) A rewritten loan is much better to afford yourself the opportunity to rebuild, revamp, relocate, what ever comes next, on the schedule of life.
All Foreclosures can usually be stopped through Bankruptcy. Chapter 13 is a repayment plan. You must show income, and be able to make the payments. Otherwise they Dismiss it. You can file Pro-Se, meaning: you do not need an attorney to file. You can also negotiate a modification this way. This would be your: "Push comes to shove, scenario".
The joint aspect with the Short Sale madness, is the mass settling of debt. Really, Really Really Bad Move. This alone is going to have tremendous impact on the middle class, and upper middle class. To the tune of jail time possibilities. I'll explain how.
Once you settle any debt over $600 for less than the full balance, the amount you don't pay is reported to the IRS as additional income for the year. You are taxed on this additional income by way of 1099 Self Employment Tax. This will completely offset ones life.
Many of these people are unaware of this, and are jumping at the opportunity to settle their debts. They're thinking everything is just fine now. Well guess what, it's so not fine, it's scary! People are collectiong these settlements without even mere mention of this so incredibly injurious fact. A regular collection firm, whether it be a collection agency, or law firm they all have the same rules.
The IRS on the other hand, has all the power. Much more than a regular firm. This creates a personal "Invite" to the IRS, to suddenly be in your life, in an attempt to collect a debt, and any information obtained will be used for that purpose. That's your mini-miranda statement, when you speak to people. In the the regular collection world. The IRS has the ultimate power to collect, much more than a regular firm.
The point is: Make a sensible monthly arrangement, and stick to it. Don't think by settling you are off the hook. Do not think that debt services are helping, very few are. I saw a case yesterday, where a judgment was entered against her, and they never tried to stop it, or tell her about. She still has no idea...Yet.
I see hundreds of very sad, disturbing cases on a daily basis, and it is imperative to get the people educated on how to deal with this, correctly. The way that this is being handled, is NOT correct. It's literally burying the public, in an even worse situation than already existed!
You're (3) Three Paragraphs Away From a Mortgage - Loan Modification:
Paragraph (1) One: States what happened, (short/brief/no emotion). (Including if you were given a fraudulent high rate mortgage, or loan). 80% Loss of income. Lost Business, Working only Part Time, Disabled, or on a fixed income. What ever the situation is, explain briefly.
Paragraph (2) Two: States The Appropriate Demands. Principle Reduction to $10k below the "real" Value, a 3% Rate or Less, and the Payment cut in half of less.
Paragraph (3) Three: States how this will correct the situation, and allow you to resume making the payments on time, affording you the opportunity to re-establish yourself, and your life, in this market. It's really that simple. Providing you have an income. A Family member, or friend can also join in the ownership of the building/home. One that does have an income.
Print out 3-4 Comparables from zillow .com, (by putting your address in the search bar), include these with your letter. This is what the bank will do during foreclosure, you'll be saving that time, and doing it yourself. This is what the bank needs in order to make a decision to modify the loan. They need to know the "todays" value, in order to know how much to settle for. This is how they arrive at this decision. Your request should compare to the other homes-buildings around you that are sold, or selling. Typically they will not do an appraisal.
Everything is possible, if you know about it. Comments and Emails are welcomed here.
May the Light reach you...and the power be bestowed upon you to advance beyond what you see. Gain Our strength, and energy by joining with our Mother Goddess Earth...she empowers you.
May the Love we feel, reach your heart, and never leave...Ama'