Short Sale AFTER Ch 7 discharge

[calgirl67]

Seeing Wells Fargo refuse to modify our loan to an affordable level, AND we are $150k upside down in the continually declining market, we have decided to short sale the house. We consulted several realtors who specialize in short sales and they all said the bank is going to want from us: bank statements, pay slips, financial worksheets, you know the usual stuff they want to SNIFF out where they can take more money from you.

SO: I told the realtors we will not be supplying that info as this is now a discharged debt and the bank requiring this would be akin to a collection activity.

I also added the information I am willing to provide is my CH 7 discharge statement from the court. That should prove my hardship.

What do you think?

ps. we only want to short sale so we can buy again in 2 yrs on an FHA loan

[SMinGA]

I see why you want the short sale: might be quicker than just waiting for them to eventually foreclose. Its in your best interest to get things over with, but it does not really change anything for the bank. (They have tons of delinquent loans happening all over the place, getting rid of one is not going to matter to them.)

I'm certainly not an expert... But as I see it - if you want it, you'll probably have to follow the lender's requirements.

[HHM]

You will need to supply the info. It is a system.

[calgirl67]

well if they are too stupid not to follow BK laws concerning collecting on a discharged debt, they can have the house back via foreclosure.

[BCA2009]

I am anticipating the same problem. Except that I am planning on trying to negotiate with the bank to get them to release the lien on my second. From what I have read, alot of banks want you to go thru the same process for that as for shortsales. My issue with giving them personal financial information is that my finances have improved alot since BK. So if I want to negotiate as low of a price as possible, I don't want them to know what my cash flow situation is.

Just thinking outloud but I wonder what negative ramifications could there be if you supplied them with "incorrect" information regarding your personal finances and about your hardship?

It's not like lying on a loan app. Maybe it won't come to that. But if I have to play by their "system", My "system" will be NOT to tell them I can easily afford to make the payments if I wanted to, nor how much money I have in savings.

In the end if they won't settle for a reasonable amount and they try to foreclose I'll walk away. I'm not going to make payments for ten years and still be upside down.

Good luck Calgirl67, I hope you are able to work something out with them. Keep us posted.

[HHM]

well if they are too stupid not to follow BK laws concerning collecting on a discharged debt, they can have the house back via foreclosure.

Well, that is not really the point. A short sale is a short sale regardless of the BK-7. The person wanting a short sale MUST prove a hardship. The dirty secret about short sales is that it is not enough to be simply upside down and no longer want the house. To approve a short sale, you must prove a hardship. For many banks, the chapter 7 BK accomplishes that. But the bank must be satisfied that you really cannot afford the mortgage.

Doing a short sale is not a right. If you want to do a short sale, you will have to jump through the hopes. Them asking you for financial information is in NO WAY a violation of the BK laws.

[calgirl67]

My attorney disagrees and advises us to provide them with no further information on the debt.

As for hardship: they denied us a loan mod 4 times - apparently because we could not afford a modified amount OR the original amount. Maybe I should refer them to their OWN documentation and denial letters to prove my hardship.

If they still are too stupid to take up our offer of selling the house for them, then my husband said fine: we will just let it foreclose and wait the xtra 12 mths (3 yrs) to get a new mortgage via FHA.

The ball is in their court. I know what they are going to do, everything they have done up until now has made no sense whatsoever so I don't expect them to change now. It will go into foreclosure.