Need some legal advice

[lolie]

Why would you go in for a Short Sale with the lender, if your intention ultimately is to surrender?

I'm looking for the legal strategy behind this. Thanks.

[keepmine]

I can't think of a reason I'd go to the trouble of a shortsale if, I was surrendering the home in bk.

[newbie2]

I don't know about legal strategy, but it would keep a foreclosure off your credit report if the lender agrees to a short sale.

[lolie]

After doing research, I found that doing a short sale would benefit over a surrender or foreclosure. I think we were not able to pass the means test if we surrendered the house and that's why our attorney advised us to go with a short sale. Personally, I would rather surrender and not go through the hassle of a short sale, but I guess I'll have to just wait and see what happens.

Has anyone ever asked the lender to do a short sale and got denied? We have never been late on payments. Not sure how the lender is going to deal with it. What's the lender's options if we are still making payments?

Our attorney may tell us to stop paying once we file. Doesn't that open the door for the lender to foreclose instead of a short sale?

[Jamescott]

I ended up selling a home with a short sale in 2007. Not to cause you stress, but it was a very difficult process. The lenders didn't work well together, we had a couple of buyers end up walking because the process took a long time, I had to resend the same paperwork over and over again. It was brutal. What was worse is they would not forgive the shortage. I had to sign a promissory note, and that note is why I'm posting on this forum today.

I'm not sure if the short sale was worth it in the long run. I was trying to honor my obligation and I didn't feel right accepting foreclosure. However, once I lost my job, it all became a moot point. I have to file for BK to erase the promissory note, along with a credit card I used while still trying to make mortgage payments.

Not sure if I helped you at all, just know that others have gone through the situation you're facing. Also, that no matter how bleak it seems, you can get through it in the end.

[lolie]

James,
Wow. Sorry to hear what you went through and your situation is not much different than a lot of the posts I have been reading. A lot of which would have never done a short sale after going through it. At least yours sold. I'm hearing of people trying for the short sale and not getting the banks to cooperate and they end up foreclosing after all that work.

I think what might happen in our case, is that we will offer to do a Short Sale with our lender AFTER we file for Chapter 7. Our first and second are with Chase, so we don't have the hurdle of a second lender. My feeling is that if they don't approve a Short Sale they will have motion to lift the automatic stay and foreclose on us.

I would love it if we could just surrender our home and get out of it, but then again nothing could be that easy right?

Oh well, I'll take what I can get at this point. As long as we get out of it and can start over, I will be happy.

Good luck to you and I'm sure we will both come out of this much better off, and smarter. I don't know about you, but it will be a long time before I ever consider a credit card or loan of any kind. I'm not very happy with our banks and creditors at this time, especially since we have been unbelievable customers to have. We are proof, that it doesn't matter how good your credit score or payment history is, the banks will still squeeze every penny out of you that you will allow.

Sorry, just my two cents... and they have that too!

[Jamescott]

Sorry, just my two cents... and they have that too!

At least we still have our sense of humor!

[StartingOver08]

Just a heads up, the new rules for short sale go into effect next month, April 2010. The new rules require the banks to respond to a short sale offer within ten days. Here is the entire 43 page supplement for your review https://www.hmpadmin.com/portal/docs...cer/sd0909.pdf

The banks already are responding much more quickly than they have in the recent past.

I don't understand though why your attorney would suggest a short sale rather than a surrender in Bk. Is your attorney also a real estate attorney or is a member of a large firm that has both BK attorney's and real estate attorney's? There are some pretty hefty fees that the attorney's charge today to close the short sale transaction so this may be one of the reasons he has asked you to do a short sale and to file BK. These fees are paid by the bank and are in addition to whatever BK fees you pay.

The only other reason I can think of for doing both the BK and the short sale is to get the property transferred to another party more quickly then in a surrender. But if you risk not being able to file a Ch 7 because of the short sale, I wouldn't do it. JMO. Did you ask why he is suggesting the short sale and the BK?

[lolie]

Oh dear!We haven't been late on a payment yet and I don't think that gives the bank much choice other than to approve a Short Sale. We fail the means test without our mortgage, therefore we can't do a surrender. Ugh! I hope the Short Sale goes quicker than a surrender. We have over 200 homes in our neighbor alone that have foreclosed or are in the foreclosure process and over 400 in the neighboring city. Chances of our house selling quickly are slim.

Thanks for the link. I will check it out.