Loan Modification Forum - LoanSafe.org - View Single Post - Looking for clarification--short sale on investment property

CaliforniaDreamin · 01-04-2009, 03:21 PM

I may already know the answer to this, based upon my detailed readings of many posts here over the past couple weeks, but I'd like confirmation, thoughts, and perhaps some advice.

I purchased an investment property in the California foothills in May 2007. Purchase price $300K. First mortgage for $240K, 10-year interest only at 6% with CitiMortgage (Investor is Freddie Mac). Second mortgage for $30K at 8.25% P&I with Chase.

Due to a variety of factors that I will not bore you with, none of which would really be considered hardships, I have come to the conclusion that keeping this property is not possible. Keeping the property would seriously jeopardize our ability to stay in our first home.

That brings me to the possibility of a short sale. I spoke to Citi, and their specialist essentially said that was my only real option. I may try to modify, but that is really only delaying the inevitable. My best guestimate of FMV on the short sale is $200K.

If this short sale were approved in this scenario, I believe that Chase will file a judgement in an attempt to get their $30K back. While both loans were purchase money, in that they were the original loans used for purchase, they are not "purchase money" in the legal sense, correct? Thus I am subject to a potential judgement from Chase.

My primary residence is also in California, and also underwater, though I can afford it for the foreseeable future. I also own an unimproved lot which is unencumbered. FMV on the lot is just about impossible to determine, as it was on the market for the last 2 years with no activity.
My question here is whether or not Chase can place a lien on the unimproved lot or any of my other assets (pension, retirement fund, vehicles)?

I will be seeking professional legal council, but wanted to bounce this off a few of the pros who check in here. Thanks in advance!

01-04-2009, 03:21 PM	#1 (permalink)
CaliforniaDreamin Member Join Date: Dec 2008 Posts: 21 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Looking for clarification--short sale on investment property I may already know the answer to this, based upon my detailed readings of many posts here over the past couple weeks, but I'd like confirmation, thoughts, and perhaps some advice. I purchased an investment property in the California foothills in May 2007. Purchase price $300K. First mortgage for $240K, 10-year interest only at 6% with CitiMortgage (Investor is Freddie Mac). Second mortgage for $30K at 8.25% P&I with Chase. Due to a variety of factors that I will not bore you with, none of which would really be considered hardships, I have come to the conclusion that keeping this property is not possible. Keeping the property would seriously jeopardize our ability to stay in our first home. That brings me to the possibility of a short sale. I spoke to Citi, and their specialist essentially said that was my only real option. I may try to modify, but that is really only delaying the inevitable. My best guestimate of FMV on the short sale is $200K. If this short sale were approved in this scenario, I believe that Chase will file a judgement in an attempt to get their $30K back. While both loans were purchase money, in that they were the original loans used for purchase, they are not "purchase money" in the legal sense, correct? Thus I am subject to a potential judgement from Chase. My primary residence is also in California, and also underwater, though I can afford it for the foreseeable future. I also own an unimproved lot which is unencumbered. FMV on the lot is just about impossible to determine, as it was on the market for the last 2 years with no activity. My question here is whether or not Chase can place a lien on the unimproved lot or any of my other assets (pension, retirement fund, vehicles)? I will be seeking professional legal council, but wanted to bounce this off a few of the pros who check in here. Thanks in advance!