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jerry
Moderator
Joined: 17 Oct 2005
Posts: 1778
Location: MICHIGAN
266.03 Dollars($)
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Hi KH,
The deficiency will not affect your credit score. It is the short sale that affect your scores. If the deficient amount is forgiven by the lender, your credit will not be hurt, but you will have to pay taxes on the forgiven amount. This forgiven debt is seen as an income by the IRS and is hence taxable. However, you may claim exemption from the taxes under the Mortgage Forgiveness Debt Relief Act.
Thanks,
Jerry |
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Elmo
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Post subject: short sale |
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| I have 2 mortgages. My first is for 150 K, my second is for 100 K, My house has lost it value and is currently worth aprox 180 K. Which lender approves a short sale? They are differnt lenders. |
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gmakerley
Community Mentor
Joined: 09 Nov 2007
Posts: 7405
Location: bloomfield, ct
62.63 Dollars($)
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elmo, i suggest you broach the subject with both lenders, as your approximate value isn't necessarily going to end up being a sales price. even if it does, you'll have expenses of closing (real estate agents' commissions, tax, legal, etc.). although your first mortgagee ought to be in good shape, the second mortgagee can expect to receive very little, if anything, for their loan.
if you work with an attorney now, i'd hope that the attorney will have some experience with short sales and can advise you further. barring that, you will want to find a realtor who is conversant with short sales - someone who (again) can advise you.
_________________
George M. Akerley
Loan Consultant
860-221-5044 |
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Fresno broker
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Post subject: Foreclosures |
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| Hi everyone. If you are upside down In your house and can not make your payments do not kill yourself stressing about it. George bush passed a lwa that is on effect till 2012 that If you foreclose on your primary residence the banks can not come after you at all for any remaining money owed. I have more then 5 friends foreclose on advice of a finacial advisor because they were over 100k upside down. Also the credit only gets ringed about 120 points or so on foreclosure not 250. Lots of wrong advice on here and don't let it scare you if you are in a bad spot walk away and I'm 2 years you can be approved for an Fha loan no problem. Short sale is worse to my knowledge because the banks can try and come back after u for remaining balmce. ( not 100% on that though) the banks were given billions in stimulous money to help home owners instead they are making you run through hoops to try and get you to fold to there rules. They banks created this mess they can fix it or get stuck with 100s of thousands of foreclosures. |
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gmakerley
Community Mentor
Joined: 09 Nov 2007
Posts: 7405
Location: bloomfield, ct
62.63 Dollars($)
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hold on there, broker: "if you are in a bad spot walk away" isn't going to work for everyone...and "i'm (sic) 2 years you can be approved for an fha loan no problem" is blatant foolishness. no problem? do you realize how tight lending has become all across the country? yes, i recognize that there are a pocketful of lenders who'll say "no problem" to everyone that comes in the door, but are these going to be favorable? fha may be more forgiving than fannie and freddie, but that's not going to make underwriters take on excessive risk for their lenders.
i just can't get over "no problem" - it's as if it never happened, right? please.
_________________
George M. Akerley
Loan Consultant
860-221-5044 |
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turfbird21
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Post subject: short sale credit score |
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| Our bank said that a short sale would only affect our credit score 40-50 points, while a foreclosure would drop the credit score to the low 400s. Were they sugar-coating the short sale drop?? |
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jenkin7
Joined: 04 Jun 2007
Posts: 3430
Location: Hawaii
514.35 Dollars($)
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Hi turfbird,
A short sale indeed has a less damaging effect on your credit than a foreclosure. As far as I know, a short sale drops your credit by 75-100 points, whereas a foreclosure drops your score by 250 or more points. However, if there are late payments prior to the short sale, you can expect your credit to drop more than 100 points. |
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help
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Post subject: Short Sale |
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| Does it apply to land (property) only. There is no dwelling on the land. I have a mtg on land that has gone down in value by 3/4. HELP |
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brownwalter09
Joined: 10 Aug 2009
Posts: 37
0.72 Dollars($)
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| it is applicable to all type of properties. |
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kriskay
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Post subject: short sale |
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| looking to short sale due to transfer(u.s. govt employee). have been getting mixed info regarding whether i need to miss a payment or not in order to get attention of the bank. have not missed payments. house is severly upside down with an adjustable due in 5 years (no way house comes back for possible re-fi). I realize short sale will damage credit but also seems like only option. just dont want the short sale to drag out. any advice would be appreciated. |
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legalbeagle
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| I have recently put my house up for a short sale. I have one bid into my mortgage company for consideration. I am continuing to make the mortgage payments while I await an answer. I know that the short sale will effect my credit score I just don't know how much. Before this happended my credits scores were all in the 800's. Any answers. |
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sunnyca2009
Joined: 04 Aug 2009
Posts: 1737
36.13 Dollars($)
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If you continue to keepmkaing payments and go forward witht eh short sale process then you are probably lookign at 50 - 100 poitns. But it should be atleast 50 points
But if you stop makign payments then ti is a different ball game, it can go down pretty bad
Make sure to do what you are doign now, and once the bank compeltes the short sale, then you shoudl be ok
Also remember if you do not negotitate the deficient amount this upfront, they may come after you for the deficient amount
So makesure ti is covered |
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leeelliot61
Joined: 13 Sep 2009
Posts: 189
20.14 Dollars($)
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you need to continue to make payments. in that case you will get hit in the range of 75 - 100.
But you will be answerable for deficit amount |
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legalbeagle
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| How can they come after me for the deficit amount when I soon will not be able to pay the mortgage. How can the come after you for something that is not a capital gain? |
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savior70
Joined: 25 Mar 2009
Posts: 1422
Location: Florida
168.75 Dollars($)
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To legalbeagle,
Had there been a capital gain from the sale of the house, IRS would have come after you for the taxes. But since this is a short sale and there will be a deficiency, it's the lender who will come after you. But they can also forgive your deficient amount and may choose to not come after you. It's entirely up to your lender which way they'll go.
To kriskay,
It is not advisable that you should miss payments in order to get approved for a short sale. The short sale will affect your credit negatively for sure. Now, on top of that, if you miss your payments, it is further going to affect your credit scores. You have a strong reason to prove to your lender why you need to short sell. You're short selling not because you cannot afford the payments, but because you need to transfer for the sake of your job. This reason ought to be enough for your lender to approve the short sale. You can write them a letter, providing proof to your transfer and requesting them to accept the short sale. |
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