Short Sale/Foreclosure Deficiency Judgments
Hello All!
A little bit today about going through the pain of foreclosure and whether you have any other “better” options. I’m still putting the final touches on my first newsletter. Stay tuned.
If you’re a seller trying to decide whether to let a home go through foreclosure versus attempting a short sale, salvaging your credit may not be an advantage to doing a short sale. According to “Score Factor Code #22, there’s no credit score advantage to a short sale over a foreclosure.” The only advantage is being able to buy another home within two years over the three- to five-year period required for foreclosures. But seek legal and tax advice before making that decision.
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The lender has sole discretion whether to pursue a deficiency judgment in those instances when the judgment is permitted. To determine whether a pending foreclosure or short sale is subject to a deficiency judgment, talk to a real estate lawyer.
The bad news is a seller could be subject to a deficiency judgment for the difference between the loan amount and the amount paid. In California, purchase money loans are not subject to deficiency judgments; however, hard money loans, equity loans and refinances are. Some other states have laws regarding personal guarantees, which could also result in a deficiency judgment, if the home owner is held personally liable for loan repayment.
You can’t just wake up one morning and decide you’re going to sell your home at a loss by asking for a short sale. It used to be that lenders wouldn’t even consider a short sale if your payments are current, but that has changed. However, realize that lenders will be more agreeable to negotiation if your payments are in arrears. Plus, if you have cash assets, the lender might try to tap those accounts.
Doing a short sale is not for the faint of heart.
But Tamathy, what IS a “short sale”? I’ve no idea.
*Tama girl,
What about a “quick claim” deed or title or
something. When does that come into the play?
The rules have changed greatly since 1982….
so whatever you can do to let the folks know
what their final, final responsiblity might be
after “foreclosure” in these economic times,. might be helpful.
“Quit claim”
Here’s some current event trivia: Ben Bernanke’s childhood home was recently bought at a foreclosure sale by a young banker. The family that lost the home to foreclosure was headed by a military veteran.
Here’s a poem that seems timely:
Through no fault of my own, I wanted a home
where I could raise my kids until they were grown
I had a good job, the same one for so long
and the bank would loan to me, so what could go wrong?
Then along came George Bush, a budget surplus he had
Surely the future would not be that bad!
He gave out tax cuts, that helped out the rich
I got six bucks a week….thanks, you sonofa******
The deficit came, and with terror attacks
Republicans spent hundreds of billions on Iraq
building their schools and universal health
while the US middle class lost all their wealth.
Then Bush gave billions more to the bankers who loaned
but they won’t refinance the loan on my home
See, my job is now gone and I’m serving hash
While Citi and Halliburton got my cash.
So now Obama says that he’ll help me out
and the rich Republicans scream whine and shout
because for once, money isn’t going to the richest of all
So guess what? You all can just go suck my b***s!
Depends on whether your home was ever refi’ed.
Red,
I think you are streaching your hatred for Bush a little bit, But I can appreciate the effort.
Just because you are a banker does not make you a criminal, and just because you are a veteran does not make you a saint, just because you are wealthy does not mean you stole it or screwed people to get it, and being poor does not make you noble.