Do your research with your CPA before your decide on a short sale
Print This Post The Wall Street Journal recently ran a couple of articles on the unforseen impacts that short sales can have on homeowners who use short sales to avoid foreclosure. Many Prescott and Prescott Valley homeowners facing foreclosure are under the impression that there are no consequences when the bank “agrees’ to a short sale.
Sadly, this is not always the case. Here’s an excerpt:
Some homeowners are finding that when they sell their homes for less than the outstanding mortgages — a so-called short sale — their mortgage companies are going after them for some or all of the difference. Mortgage companies are also sometimes taking legal action to recover unpaid amounts after a foreclosure is completed.
In a growing number of cases, holders of mortgages or home-equity loans are requiring borrowers in short sales to sign a promissory note, which is a written promise to pay back a loan or debt. Real-estate agents and attorneys say they have seen an increase in requests for promissory notes as mortgage companies look to short sales as an alternative to foreclosure.
In many states, lenders have always had the right to pursue former homeowners for unpaid mortgage debt. Yet until recently, most borrowers who ran into trouble were able to refinance or sell their homes and pay off their loans. Now, falling home prices are widening the gap between home values and mortgage balances, and the number of homeowners who can’t make their mortgage payments is rising as the economy has weakened. More than 3.8 million homes will be lost in 2009 and 2010 because borrowers can’t make their mortgage payments, according to forecasts from Moody’s Economy.com.
Mortgage companies are sometimes going after unpaid debt after a short sale or foreclosure.
Here are some factors they may consider:
How big was the unpaid debt?
Was the property purchased as an investment?
What are the borrower’s assets and income?
What is the policy of the investor or mortgage insurer?
It’s true that in Arizona your primary residence is USUALLY subject to the anti-defficiency statutes, but there are exceptions. Bottom line: before you call an agent who specializes in short sales, call your CPA and spend the $150 to find out if a short sale will leave you shorter than your think.
See this post: Common questions about short sale tax consequences
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Tags: cpa, deficient, mortgage, short sales, wsj 
Categories: Arizona State Laws, Foreclosure Wiki, Prescott Foreclosure Info, Prescott Short Sale| | 
Thanks for your comment, Robert. I think if you read the entirety of my blog you will see that I try to post the current news and views about the market. You are welcome to post your analysis of what the market will do. My readers welcome input from all sides.
Thank you! This is just what I was looking for. Keep up the great work!
[...] How to help speed up a short sale tips [...]
Great blog post. The media will never pick up on this because it is more complicated than a soundbite.
If I may add that with the number of outstanding loans that are scheduled to reset in the next couple of years, decreasing home values and stricter lending guidelines, the rate of foreclosures are on track to peak in 2010. Short sales have become a growing niche for Real Estate Agents to sell homes before they become bank owned.
short sales | short sales education | short sales success
1/3 on the market are foreclosed or short sales – wow. It’s nice that you research this information. The agents who represent home sellers prob don’t share that info with buyers. Take care.
Dear Patrick,
Great article! I agree with you. I also would like to add couple more alternatives to those homeowners who want to stay in their homes.
There are two products those aren’t widely knowing and common in the market place. Trsutee Foreclosure Delays and Loan Re-Write.
Did you know that Homeowners are illegally being foreclosed on especially in Trustee States?
In Judicial Foreclosure states, a judge reviews the legality of the foreclosure proceedings to ensure the homeowner is being protected against greedy lenders and yet still the lenders are not properly following the foreclosure laws correctly (see this article: http://www.nytimes.com/2009/08/31/nyregion/31judge.html?_r=2).
In Trustee States, lenders employ a “third party” trustee company to replace the legal function of a judge and orchestrate the foreclosure process. If banks are not legally foreclosing when they know a judge reviews the case what do you think they are doing when they only have to go through a trustee that they pay? And what is more interesting, the trustee company is liable for the foreclosure proceedings but who is going after the trustee companies to review the legality of these foreclosure packages? You guess it! Yes, No one is..!
Did you know that a loan Re-Write program has the ability to reduce homeowner’s current loan balance down to the current market value at prime + 3%?
Here is an example: You owe $500K on your home but it is only worth $350k. Investors will bulk purchase the note from your current lender and re-write it back to you at $350k, saving you (the homeowner) over $150k!
I hope this helps!
To find out more about our services you may want to visit http://ASNDinc.com/
Yamen Elasadi
yamen@ASNDinc.com
Arizona Unemployment Trends – September 2009
Arizona Unemployment Trends Visualized as a Heat Map:
Arizona Unemployment in September 2009 (BLS data)
http://www.localetrends.com/st/az_arizona_unemployment.php?MAP_TYPE=curr_ue
versus Arizona Unemployment Levels 1 year ago
http://www.localetrends.com/st/az_arizona_unemployment.php?MAP_TYPE=m12_ue
[...] How to help speed up a short sale tips [...]
[...] How to help speed up a short sale tips [...]
This is good news… Foreclosure market needs movement to make more money and start leaving this situation
that’s good to hear. when you are experiencing foreclosure, you need the help of reliable real estate agents. when you are looking for them you may visit this site:
REALTOR
[...] How to help speed up a short sale tips [...]
[...] How to help speed up a short sale tips [...]
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Considering, finding the right foreclosure home is the most essential step involved while buying a foreclosure some research should be done ahead of time before finding the most affordable home.
[...] See: Why short sales aren’t always a good deal. [...]
[...] Considering making an offer in today’s distressed home marketplace in Prescott or Prescott Valley? See: Top 10 tips to win the REO multiple offer game. [...]
[...] Foreclosures are still cranking in the U.S [...]
[...] 31% of Phoenix area home sales are foreclosures in March down from 51% in Feb [...]