Short Sale - California

[kaye_ca]

hi,

i am not sure if this is the right thread to put this in.

i do not know much about real estate. can somebody explain what this mortgage type means: FRHEL W/15 YR BLN.

thanks!

[kaye_ca]

hi,

has anyone used 3rd-party companies for loan modification and short-sale services?

What does the Advance Fee Agreement Listing of the Department of Real Estate represent?

can somebody shed some light on this? can anybody share their experience? does this guarantee faster results?

thanks so much for your inputs!

[Moe Bedard]

we would not have that information on the forum............we are a free do it yourself forum.............if you are contemplating using a third party you would need to check the bbb and/or google them to check on them.
United States and Canada BBB Consumer and Business Reviews, Reports, Ratings, Complaints and Accredited Business Listings

The loan type is a second lien.........
Fixed Rate Home Equity Line of Credit (FRHEL)...............most likely amortized over 30yrs. and due in 15yrs. causing the balloon (BLN)

[kaye_ca]

thanks ***...and thanks for merging my posts. will keep note of that moving forward.

[kaye_ca]

Hi,

I met a real estate agent today to start working on my short sale (Purchase Price: $499K, Current Comp Market Value: $300K, 2 loans both from one lender). Husband was laid off this month so we are losing 50% of our income and will no longer be able to afford a $3500/month mortgage payment.

Based on our discussion, he said that since I live in California, the following rules apply:

1. since I lived in the property for more than 2 years and I did not refinance and still in my original loan terms and it is a primary residence of the family, no deficiency judgement will be collected.

2. he also mentioned that purchase money loans get a $500K tax credit. So no 1099c either.

3. Short Sale process will take about 6 months on average....and notice of default will be received on average after 6-8 months since 1st missed payment...

Also, he did tell me that I do not need to pay anything for the short sale unless the bank asks me to cover some of the transaction costs (e.g. closing costs, etc). And, there will be no need for a real estate attorney since most likely there will be no court proceedings...

Can anybody confirm this based on their knowledge/experience?

Also, what is a purchase money loan? How can I know if mine is one?

Thanks for your help. Appreciate if fellow Cali residents can share their short-sale stories so I can learn more on the state short-sale laws.

[HopingtoFind]

kaye_ca... I have my doubts about this agent.

On your number 1... what you're actually describing is a Purchase money loan.. and if you have one then lender cannot pursue you for deficiency if the house gets foreclosed. Short sale is a different matter..everything is negotiable and there is a strong possibility that if you agree to it they can pursue you for deficiency.. you have to be careful and hire at attorney to look over all the documents you sign with the lender.

On your number 2...this has nothing to do with $500k credit... 1099 will always be issued after short sale, accept that due to the new tax forgiveness law taxes will be forgiven if it is your primary residence.

On your number 3... NODs (notices of default are usually issued 3 months after non-payment... has nothing to do with Short Sale...

Also, advice not to have an attorney to at least look over your documents is a really bad one. Especially considereing this agent doesn't seem to know what they are talking about.

[aurers]

Hi Kaye,

I too live in California and have been living in my condo for over 2 years. After 2 kids, a falling market, and a decrease in my husband's salary, I went to B of A for a loan modification only to get denied twice. I bought my condo at $585K (I live 5 - 10 minutes south of San Francisco). The current market value is $399K. Because of the situation, I have talked to my real estate broker to discuss a short sale and this is what she discussed with me:

1. No deficiency judgment will be collected because the home is our primary residence, we never refinanced our loans (2 loans both with B of A), and we live in CA and lucky for us, CA is a forgiveness state.

2. There will be a 1099c, but she said we will deal with that when the short sale closes escrow.

3. Short Sale process will take about 6 - 10 months on average depending on the lender. Notice of default will appear on my credit report after my 1st missed payment. So my agent said to stop payments for June, July and August. Then we will meet in August to get ready to put the house on sale in September. We may be out in March, depending if all goes well.

4) The bank will cover the costs and I do not need to hire a lawyer if I don't need to. She did tell me that B of A will harass me for payments, but she told me to tell them we are in financial hardship and that we were denied for a loan modification twice, so we are trying to get the money. When the house goes on sale, my agent told me to revert all of the B of A calls to her.

My agent is dealing with 11 short sales in the SF Bay Area, so I trust her. But like other people have posted, you can't go wrong by asking a lawyer to look at your documents.

Good luck!

[kaye_ca]

Hi Aurers,

Thanks for ur reply...it is very reassuring to learn about similar experiences from others...we will get through this

we are getting ready to list our house as well...we'll see how it goes...we bought the house for $499K and last comps report we got (last week) showed relevant prices from $250K-$280K...not to mention that all the houses that are on sale in our community are either in foreclosure or pre-foreclosure...but we are still optimistic! (because we have a cul de sac house which hopefully will be an advantage)

thanks again for ur reply and keep us posted on your short sale experience.

[HopingtoFind]

"1. No deficiency judgment will be collected because the home is our primary residence, we never refinanced our loans (2 loans both with B of A), and we live in CA and lucky for us, CA is a forgiveness state."

She is absolutely right in case where lender forecloses. With short sale all bets are off... so you have to be careful with what you sign..

"2. There will be a 1099c, but she said we will deal with that when the short sale closes escrow."

You'll definitely deal with it after short sale closes but it is good to ask questions and find out everything before...

3. Short Sale process will take about 6 - 10 months on average depending on the lender. Notice of default will appear on my credit report after my 1st missed payment. So my agent said to stop payments for June, July and August. Then we will meet in August to get ready to put the house on sale in September. We may be out in March, depending if all goes well.

NOD is filed aprox. 3 months after 1st missed payment. Don't see the need to miss almost 4 payments, unless that is what the lender requires... I would definitely confirm with your lender.
4) The bank will cover the costs and I do not need to hire a lawyer if I don't need to.

Bank often pays for attorneys.... why not hire someone to protect your rights. Realtors will not protect your rights... they are not attorneys.

[aurers]

Thanks for the updates. I'll talk to my realtor again. In the mean time, can anybody suggest a lawyer that has experience dealing with short sales in the SF Bay Area? Thanks!

[Moe Bedard]

for a referal you are going to have to go to your state's bar association...........we can not give a direct referal on the forum...........

or you can contact the attorneys that are authorized to be on the forum and see if they can help you with a referal in your area.........here is the link to their information.....
Short Sales | Loan Modification Attorneys

[SKimball]

Hi,

My wife is in a similar situation, but we can't seem to get a straight answer from anyone. We've spoken to a real estate broker, an attoreny and a CPA and all have told us very different things.

The Facts:
My wife and her sister bought a condo in Orange County for $315K in 2003. Because prices were rising so fast, they almost immediately did a cash-out refi of about $15-20K to do the floors. When her sister got married in 2006, my wife did another cash-out refi of about $65-70K to pay her sister off. Today the loan stands at $426K with a first and a second, both with Countrywide / BofA. The condo is worth $275K-300K. The loans are interest only.

Like I said, we've heard different things from everyone. The broker says we won't be 1099'd, the CPA says we will be and the attoreny says its negotiable.

The broker also said we will be asked to take on an unsecured note by BofA, but he isn't specific about the amount.

My wife is $125-150K upside down, but we still can't afford a $50K liability between a 1099 and an unsecured note.

Has anyone been in a similar situation? We need help!!!

Scott