likelihood lender schedules sheriff sale during shortsale negotiation?

[Tom_Mi]

Hi All,
I welcome all guesses and 'gut feelings', because I know that I'm asking for what can seem an arbitrary decision for a mortgage servicer.


My last house pmt was Aug1. In Michigan they 'could' have scheduled a sherriff's sale anytime after Nov1....they have not.

So I called today asking about a 'short refinance', and if they'd consider it. The CSR on the phone didn't know anything, of course....but she's sending me a packet to fill out. I'll get it back to them ASAP...then start calling.

So once the returned packet is in their system, is this communication 'likely' to stave off a sherriff sale?


If you'd like more details: The home's note was bankrupted, discharged Apr '09. Home would resale at approx 165k, 1st note: 224k. (2nd note of 39k is bankrupted, I assume I could probably negotiate a release for <10%).


Thanks!
-t

[Tom_Mi]

(I'll start a second thread if nobody sees this, don't want to clutter the board)

Question 2: What motivates Servicers to auth a Short Sale vs. foreclose? Does a bankrupted property help/hurt my chances?
I know foreclosure makes servicers more money, but am wondering if my BK helps my position.

-Did they get "foreclosure-like" tax advantages from my BK Discharge which might make them more willing to deal with a short sale? (short-refi actually)

-Did they get PMI or whatever other goodies servicers get at discharge..and would that make

-If they can't send me a 1099 for the short amt, can they still claim whatever losses they want on their end? (thus helping my case)

[justbroke]

Forget all the questions. I think you are going to have a problem with "shorting" on a refinance or a discharged debt, when there's a second mortgage. The bank holding the first would probably want you to get the lien released by the 2nd first, or pay the 2nd out of the proceeds of the first.

This sounds way too complicated and risky for the 1st lienholder. The only way the 1st lienholder can assure that the 2nd lienholder is "off their back", is to foreclose the 1st at a loss.

This negotiating the 2nd away, is what makes this risky to the 1st lienholder and why I'm not directly answering your question.

[325Falcon]

I am just about in the same boat as you. I was dicharged in feb 08 and have no second.


I only want to stay in the house as long as possible then leave and build new. I am looking for way to put off the sale and drag this out. I am finding it hard to get ideas. I am thinking of asking for the banks to produce the orginal note that we signed I figure this should take the bank a while to find. Then after this plays out asking the bank about a short sale or some kind of short refi then bailing at the last minute etc etc

[Tom_Mi]

Justbroke, the bank couldn't draft something that says they promise to approve it on the condition that I prove the 2nd is released?

[justbroke]

Justbroke, the bank couldn't draft something that says they promise to approve it on the condition that I prove the 2nd is released?

They wouldn't need to do that. They just wouldn't refinance you if the second isn't released. That doesn't change the contention, which is, the 2nd mortgage actually being released.

[bulletproof77]

Plus there is always the problem that by foreclosing the first note, it wipes the second off the deed, thus clearing the way for the first to sell the house and recover some of their funds. I had a similar problem (although house was in California) and the first lender (Bank of America) really had every incentive to foreclose to obtain "clean" title to the house, which they have done. The lenders look out for their interests, not yours. Also, most banks foreclosure departments do not communicate with the underwriting departments, so foreclosures can and do proceed at the same time they dangle a loan mod in front of you.

[HakunaMatata]

Gut feeling...a short refi isn't going to happen. Evidence...the CSR is conceptually clueless and is likely sending standard mod paperwork. Short-refis are extremely rare.

Debt forgiveness (principle reduction/short refi) seems like a logical route to help rectify the foreclosure crisis. However, the advent of such could spur a wave of formerly dutiful debtors lining up to have mortgage debts shaved.

Don't forget...once a NOD has been received in Michigan, you're entitled to mod negotiation and housing counseling assistance (this will be outlined in the attorney's paperwork you receive). Your request must be received within 14 days. This action will delay the Sheriff Sale by three months regardless of the mod outcome and will not have an adverse effect on your redemption period.

[Tom_Mi]

Thanks guys. I'll see what happens. I think several of you thought I was asking for a loan mod. ...By short-refi, I meant with another lender. The bank would get their money, even more than if they foreclosed.

[HakunaMatata]

The key to getting a short-refi is to prove benefits outweigh foreclosure for all stakeholders (first, second, mortgage insurer). I've only read of attempts with first lien holders, not outside lenders.