short sale after discharge? Is it possible

[mickeyme]

Has anyone had their short sale approved after Ch7 discharged, without reaffirmation?
We want to get the condo out of our names asap & be able to purchase sooner then later, is short sale the fastest route? or should we just walk away?

[imoverit]

We had one during the CH7, closed about a week before discharge. The bank was soooooo slow but as soon as they got notification that the relief of stay was granted we got an answer within 2 days and it was an all cash deal so it closed about a week or 2 after the relief was granted. Our Realtor called our mortgage company weekly to get a status update and usually got the run around. Just an FYI...we had a 1st, 2nd and PMI... so a successful short sale is possible!

[moneytrouble]

Can anyone state the reason for a short sale after your home was included in Chapter 7 bankruptcy? I thought nothing could be listed about your mortgages on your credit report, after your bankruptcy discharge date, other than it was included in Chapter 7. Why would I do a short sale after? How can this improve my credit if the mortgage company cannot legally make any changes to my credit report regarding the mortgage, as it was already listed as Chapter 7. Is there something I am missing? Reading other posts, a short sale after Chapter 7 with mortgage included, only benefits the mortgage company and not you.

[StartingOver08]

There might be an instance where a short sale could benefit you after a Ch 7 discharge - that is the transfer of the title is a known date that is much quicker than the foreclosure process. In that case your tradeline (mortgage) would still read "zero" and iib on your credit report but the date of transfer begins much earlier so you can qualify for a new mortgage that much earlier. Of course, you would still have to list the BK and the short sale info on any mortgage application you provide to a future lender.

[moneytrouble]

Okay thanks. I don't think anyone would short sale my house right now, like many people, my home is deep underwater. Worth about 35% less than what is owed.

[StartingOver08]

That actually is the point of a short sale. You sell it for FMV (Fair Market Value) which is less than the outstanding mortgage. The bank may or may not accept the short sale, its up to their descretion. Part of the short sale package is showing the current Fair Market Value either with a recent appraisal or a CMA. Don't spend the money on an appraisal since you have discharged your debt in BK. Your only benefit would be to get the house transferred out of your name quicker IF the bank accepts the short sale offer.

[ItsJustMe]

We are considering this as well. I wondered if anyone had sucess short selling on a home w/two mortgages. The second has about $40K equity (but I imagine it would cost about that to sell???).

[StartingOver08]

Equity is the amount of actual value of the property over and above any and all liens and encumberances placed on the property.

The second mortgage is a lien on the property for $X. If your second is a HELOC for $X and you have only used a portion of the line of credit, then the amount of the lien is the outstanding balance + fees (if any). If you are behind in payments, there will be lots of fees.....

[ItsJustMe]

Right. Sans the cost of actual sale (realtors, etc) if we sold today the first would be paid in full and the second would I'm sure get something. Our home would sell for about $40K above what we currently owe on our first (including late fees, etc). I've read that seconds generally won't work w/you on a short sale if there is no equity for them (upside down on the first), I wonder though if they would be willing to work w/us if they will get *something* (difference between $40K and whatever it costs to sell). I've not read anything about such a scenario and I wondered if it was even a possibility.

[StartingOver08]

Oh yes, it is definately possible. We negotiate short sales all the time where there are two mortgages, PMI payout due, HOA fees due, taxes due etc. Usually the second gets a very, very small amount in our area (typical payout on a 2nd $2k to 5k). I had a closing in Aug where GMAC accepted $16k on a $240k second. All the parties have to agree to make this happen. Yours sounds like it has a much better chance of actually closing because you are not that short....

BTW, a HUD is provided to the lenders to aid in their analysis of the deal on the table. The realtor fees, title fees and etc are calculated in the HUD so the lenders know exactly what they are netting. You, the seller, don't come out of pocket for any of the fees. If the lender asks you to come out of pocket, that is a counter offer and you can refuse.

[ItsJustMe]

Groovy. Thanks. So who pays for the sale (realtors, escrow, etc)? The second? Would the first get 100% and the second would get the difference between the first (295K) and whatever the home sells for ($340-350K est) minus whatever it costs to sell?

[StartingOver08]

The costs come out of the sale proceeds first (taxes, cost of sale, etc) then first mtg gets their share, then second and MI, if required.