Going to try and negotiate a short sale.

[olysan]

Well I finally got a contract on my house today. It's been listed since November. Contract is for $435, I owe $419 on the first and $52 on the second so I will be short ~$35 and 5% realtor fees for a total of ~$55K. If The banks will do this I should be able to avoid bk. I'm kind of concerned because there will be 2 banks involved, so it will be complicated. This market really makes me sick. When we bought the house we put $100K down and paid $496. We put another $30k into the house after closing thus the HELOC. So this is a very painful loss.

Anyone have any advice on starting the process, or any good success stories?

[HHM]

Well, the bad news is, it can be very difficult to do a short sale when the 2nd is held by a different bank.

How long are the buyers willing to wait. Typically, you negotiate the short sale FIRST (or at least as part of the purchase), then bring in the buyers. Short sale negotiations typically take several months. If you are on a 30 day close or walk contract, you will probably not get this sale pushed through.

But, the fact that it has been listed for over 7 months helps and that the 2nd will apparently get something is also in your favor.

[erinmi]

We did a short sale on our house and ended up about $40,000 in the hole after realtor fees etc. We did not have HELOC or 2nd mortgage.

Our mortgage company took about 6 weeks to actually confirm the short sale was okay.

They did NOT write off the difference. Be sure you GET IT IN WRITING that they will forgive the difference if the short sale goes through. We thought we were in the clear but did not have it in writing. Needless to say, we didn't have the $40,000 along with our other debt, and we ended up filing bankruptcy because they were going to sue us for it.

[olysan]

The fact that they did not write-off the shortage is interesting, and I'm glad you made me aware of that potential issue.

I don't see that the mortgage companies have much choice here as the only alternative is to file bk and let the house go back. I guess we'll see what they say.

[HHM]

I don't see that the mortgage companies have much choice here as the only alternative is to file bk and let the house go back. I guess we'll see what they say.

Don't fall into the trap of thinking like that because that is not how mortgage companies approach the issue. The fact is, most short sales are NOT approved. Also, the mortgage company is usually limited by the way they have securitized the mortgage for secondary sale.

[olysan]

Well I was pretty much resigned to filing chap 13, so if that is what it comes to so be it. In some respects I come out ahead in that scenario.

[sick of debt]

In my opinion I would just file BK. we attempted the short sale route. We also had 2 mortgages from 2 different lenders. Heard this makes it very difficult We also got ridiculously low offers from buyers. It was sooooo insulting

[olysan]

I am going to give the short sale option a chance, but if it doesn't work I won't loose any sleep over it.

I wasn't that insulted about the price we were offered, but I was very offended by the fact that asked for us to leave some of our personal property.

[spell]

Is your realtor experienced in negotiating short sales?
If not, get in touch with his branch manager to get someone ontop of this that is experienced.
It's not much more complex with two banks, it's the HELOC that takes the hit.
Your first mortgage is in a strong position, they have little to no reason to accept much less than the full balance.
Your second mortgage will be presented with the option to accept $16k now vs. getting $0 at foreclosure.

But this is an involved process with the loss mitigation folks at the bank. Your realtor will need to petition them for his commission.