National City Short Sale Help

[tripster1972]

Hi, I'm new but read through a lot of posts already.

National City is my 1st and only lien holder. We owe almost $105 K on it, and worth maybe $80K. Similiar comps for the same condo show sales near $80K within the last year. My husband and I are meeting with a real estate agent tomorrow to place it on the market for a short sale. He has done several so I am not worried about that.

Here is some info on my situation:

- I am current on the mortgage and have been all along

- I was hospitalized for 6 months while pg with my multiples last year. I only got 60 % of pay, so we lived off savings during that time period.

- I endured severe post-partum and was told (by doctors) to move closer to family for more support- We lived about 2 hours for the nearest realitive.

- We rented out the property, but could only get $700 per month.. our mortgage payment is $945 per month (taxes, etc...) plus $78 HOA fees

- Our rent on our new place is $800 per month

- Our child care is $800 per month

- My husband's student loans will be coming due early next year ($400 per month).

We won't be able to afford the payments for much longer. That is why we are trying a short sale.

Here are my questions/concerns--

- Realtor said we do not have to be past due to do a short sale- but I have been reading that banks will not consider one without being past due-- I do not want to stop paying because I want to salvage the credit I do have.

- Do I have a "hardship"? I mean, we still have a job, but with the medical bills and child care costs we have been wiped out. We have a negitive cash flow every month and not much left in the savings....I hear pregnacy isn't a hardship- but I didn't work from April to December of last year because of my medical conditions.

- Will National City approve a short sale? I have been searching for days and only come across stories where NC was the 2nd, not the 1st and only.

- Since we don't physically live in the property, will we be responsible for the short fall if approved? I don't get the whole "primary residence". I mean, we can move back in for a short time if needed so we don't get hit, but I wonder since we don't own any other real estate if this is still considered our primary. Any one know?

I guess my fear is that we will place it on the market, get a buyer, and the bank will turn us down and will be forced to walk away with it. I do not want a forclose because I want to be able to buy again and not have my credit tanked. I am afraid to file bankrupcy because I do not own my cars outright and I need to drive to work! I am so worried I have made myself sick!! We have good paying jobs, just with everything at once, and a half year hardly any pay it was really hard to keep afloat! My husband didn't have any income while I was off and he needed to be with me (non-paid FMLA).

My renter knows what's going on and she is ok with it. Actually, she said works better for her because she was having trouble making rent anyway.

Thanks in advance to anyone who can either ease my mind or help in anyway.

[jjdreamer1]

I recently built a house for an investor with a National City loan. The Nat City loan was in 1st position and was the only loan on the property. The house ended up as a short sale. The loan amount was approx $625,000 and the house sold for $450,000. Take out the closing cost, commisions, etc., the deficiency was over $200K. National City didn't agree to a "no deficiency" clause, so they may come after the investor later. I would fight to get a "no deficiency" or "satisfied in full" clause in any negotiation with the bank.

The same process is happening on some other house I built with Nat City loans, but they haven't closed yet.

Hope this helps.

[KSLVEG]

Hi Tripster1972, I am new as well and I came across your posting which prompted me join this forum. I will do my best to answer your questions, but you should re-verify the information I provide.




Your realtor is correct and you don’t necessarily have to be past due in order to apply for a short sale approval.

- Do I have a "hardship"? I mean, we still have a job, but with the medical bills and child care costs we have been wiped out. We have a negitive cash flow every month and not much left in the savings....I hear pregnacy isn't a hardship- but I didn't work from April to December of last year because of my medical conditions. Are you able to currently meet your monthly obligations? Do you have any savings to pay for them? Is this a temporary condition? From what you are saying here, you have negative cash flow and your savings are wiped out due to medical bills and child care costs. If you feel that these conditions will continue, then probably you are facing a financial hardship.

- Will National City approve a short sale? I have been searching for days and only come across stories where NC was the 2nd, not the 1st and only. Sorry, Tripster1972! I can’t help you on this one as I have not worked with NC yet on a short sale. I am about to submit one to them and will find out soon.

- Since we don't physically live in the property, will we be responsible for the short fall if approved? I don't get the whole "primary residence". I mean, we can move back in for a short time if needed so we don't get hit, but I wonder since we don't own any other real estate if this is still considered our primary. Any one know? If you are asking whether you will be liable to the lender for the short fall, it will depend upon the settlement. Some lenders have forgiven the balance, which makes it a taxable event. (see IRS Form 982 for more information). Others have asked for a combination of a small lump sum payment and/ or a signing of a promissory note.


A primary home is one in which you have lived in at least 2 years of the last 5. If your question concerns debt forgiveness and taxes, you may want to refer to IRS Form 982 regarding debt forgiveness and taxes. It has some helpful information. Debt forgiveness on your primary home may be exempt from federal income taxes. Debt forgiveness on an investment/ rental property has something to due to personal insolvency. It would be best to consult a qualified tax accountant regarding the tax implications of debt forgiveness.

I guess my fear is that we will place it on the market, get a buyer, and the bank will turn us down and will be forced to walk away with it. I do not want a forclose because I want to be able to buy again and not have my credit tanked. I am afraid to file bankrupcy because I do not own my cars outright and I need to drive to work! I am so worried I have made myself sick!! We have good paying jobs, just with everything at once, and a half year hardly any pay it was really hard to keep afloat! My husband didn't have any income while I was off and he needed to be with me (non-paid FMLA). Tripster1972, I understand the dilemma you face and you have my sincerest best wishes in overcoming current hardship.

My renter knows what's going on and she is ok with it. Actually, she said works better for her because she was having trouble making rent anyway.

Thanks in advance to anyone who can either ease my mind or help in anyway.

[faith]

Originally Posted by tripster1972

Hi, I'm new but read through a lot of posts already.

Originally Posted by tripster1972

National City is my 1st and only lien holder. We owe almost $105 K on it, and worth maybe $80K. Similiar comps for the same condo show sales near $80K within the last year. My husband and I are meeting with a real estate agent tomorrow to place it on the market for a short sale. He has done several so I am not worried about that.

Here is some info on my situation:

- I am current on the mortgage and have been all along

- I was hospitalized for 6 months while pg with my multiples last year. I only got 60 % of pay, so we lived off savings during that time period.

- I endured severe post-partum and was told (by doctors) to move closer to family for more support- We lived about 2 hours for the nearest realitive.

- We rented out the property, but could only get $700 per month.. our mortgage payment is $945 per month (taxes, etc...) plus $78 HOA fees

- Our rent on our new place is $800 per month

- Our child care is $800 per month

- My husband's student loans will be coming due early next year ($400 per month).

We won't be able to afford the payments for much longer. That is why we are trying a short sale.

Here are my questions/concerns--

- Realtor said we do not have to be past due to do a short sale- but I have been reading that banks will not consider one without being past due-- I do not want to stop paying because I want to salvage the credit I do have.

- Do I have a "hardship"? I mean, we still have a job, but with the medical bills and child care costs we have been wiped out. We have a negitive cash flow every month and not much left in the savings....I hear pregnacy isn't a hardship- but I didn't work from April to December of last year because of my medical conditions.

- Will National City approve a short sale? I have been searching for days and only come across stories where NC was the 2nd, not the 1st and only.

- Since we don't physically live in the property, will we be responsible for the short fall if approved? I don't get the whole "primary residence". I mean, we can move back in for a short time if needed so we don't get hit, but I wonder since we don't own any other real estate if this is still considered our primary. Any one know?

I guess my fear is that we will place it on the market, get a buyer, and the bank will turn us down and will be forced to walk away with it. I do not want a forclose because I want to be able to buy again and not have my credit tanked. I am afraid to file bankrupcy because I do not own my cars outright and I need to drive to work! I am so worried I have made myself sick!! We have good paying jobs, just with everything at once, and a half year hardly any pay it was really hard to keep afloat! My husband didn't have any income while I was off and he needed to be with me (non-paid FMLA).

My renter knows what's going on and she is ok with it. Actually, she said works better for her because she was having trouble making rent anyway.

Thanks in advance to anyone who can either ease my mind or help in anyway.

Hello and welcome to this forum,

In California if you have a Purchase Money Mortgage and never refinance there is an Anti Deficiency Judgment called California Section 580b meaning your lender can not pursue any deficiency judgment once the house forecloses or sold. If your home qualified as a principal residence and has purchase money mortgage then if you do Short Sale, the balance owed called deficiency judgment is covered under CA Section 580b.


A deficiency judgment may be awarded to the mortgage issuer if the borrower fails to repay the entire mortgage when the home is sold. If the home’s value drops and the borrower cannot sell the property for at least the money due on the mortgage, a deficiency judgment serves as a court order to the borrower to repay the difference between the home’s sale price and the remainder on the mortgage. This is also known as “recourse on the loan.


The bank can also seek a deficiency judgment against the former homeowner for the remainder of the money due on the home. Likewise, the bank can seek recourse if the bank sells the property through a means other than auction, and does not recoup the money still owed on the home. State law in Californial protects you from recourse on your original loan, but what about your second mortgage or lines of credit? The cash-out refinance you may have done is also not protected from recourse.
Your home must be your principal residence in which you and family lives. It includes the conventional single family home, condominium or cooperative, a mobile home or a duplex. If the taxpayer has more than one residence, it is the home in which the taxpayer lives most of the time.

When you sell your house via Short Sale you need to list your home with a Real Estate Agent with experienced doing Short Sale. You need to price your house right in order to get a buyer, because without a buyer your lender will not approve the Short Sale. The lenders will only consider allowing you to have the Short Sale if your house is already in the market within 60-90 days listed with a real estate agent, behind in mortgage payments within 60-90 days
.

Go to zillow.com to get the recent homes sold in your area. Your house should be priced within 85-90% of the fair market value. If you have PMI (Private Mortgage Insurance) the only way they approve the Short Sale is if you sign a promissory note to pay for the balance owed. This amount can be negotiated and you can make an offer to pay the balance owed within 5% to 10% of the balance owed, payable in 10 to 30 years and no interest. If you do Short Sale your credit will be hit around 73 to 200 points. My credit score before was 750 after Short Sale it went down to 677 points.
Time is the essence when you are doing Short Sale due to many factors: the buyers may back out due to long process, I have 7 buyers that backed out waiting for the lender to approve the Short Sale, It took 4 months and 19 days for the lender to approve the Short Sale. Note that my first listing expired where 6 buyers backed out and 1 buyer backed out on 2^nd listing. The lender may give stricter guidelines to approve a buyer that is 20% or more in down payment, credit score, and job security.
Maybe you should ask your lender to give back the house to the called Deed in Lieu. Deed-in-lieu is an option for avoiding foreclosure. A deed in lieu of foreclosure actually offers numerous benefits to both borrower and lender. The primary and most important advantage to the borrower is that it immediately releases them from most or all the indebtedness involved with the loan and default. A second advantage to the borrower is they avoid the proceeding and public knowledge of a foreclosure. Also, the borrower can often get better terms by going with a deed in lieu of foreclosure, than if they have a formal foreclosure.

The main advantage to the lender is a major reduction in the time and costs it takes to proceed with a non-judicial foreclosure and their can be other advantages to the lender if the borrower ends up filing for bankruptcy afterwards.
Please read the link below regarding Short Sale Outposts in this forum, there’s lot information in it that can really help you. http://www.loansafe.org/forum/short-sale-outpost/

[amiesheikh]

I have a client with Nat City as the 2nd lein holder. They are really hard to deal with. The lowest we could get them down (from owing around $150K) was $19K at closing. Or they wanted a prom note from the seller.

[nal67]

Wow, that is pretty good. We got an offer that would get them 35% or $125K out of $350K and they told us they would only do a lien release at $150K. They made us get 60% in order to not have to sign a promissory note. Our case was harder though as we had never been late and they thought we had more money than we do.

We were told it was the investor that was making the decision and our investor was one of the hardest to deal with. We asked but were never told who that investor is.

[faith]

Originally Posted by nal67

Wow, that is pretty good. We got an offer that would get them 35% or $125K out of $350K and they told us they would only do a lien release at $150K. They made us get 60% in order to not have to sign a promissory note. Our case was harder though as we had never been late and they thought we had more money than we do.

We were told it was the investor that was making the decision and our investor was one of the hardest to deal with. We asked but were never told who that investor is.

Nal67,
Negotiating is the key to sucessful short sale. You have to do a scare tactic, you normally make an offer from 10% first before you go to 30%, you have already made an offer of 35% and if the investor is not accepting your offer, tell them if they will not accept the offer then you will file for bankruptcy. When lenders hear bankruptcy they are afraid that they will not get anything, so taking 35% is better than nothing. Make sure it's payable in 30 years and no interest and they will put in writing that they will not pursue any deficiency judgment against you.

It really worked for me when I told my negotiator about filing for bankruptcy. I was approved, no promissory note, the balance owed was forgiven. Thank God.

[nal67]

We tried that but they didn't buy it. We gave them unemployment checks, negative asset spreadsheets, letters from the CPA, etc. They pulled our credit (which is stellar at this time) and looked at our background and high past earnings. Their argument was that we would be capable of making money eventually so they would just wait it out.

Since this was a second, they said they would not foreclose so the one action rule didn't apply (also not purchase money). They would wait for our first to foreclose if we stopped making payments and then come after us for the money with a deficiency judgement.

Several negotiators that we talked to said 60% was the magic number and we luckily got an offer that just made it. They wouldn't budge at the lower amount and our negotiator said it was an issue with the particular lender. If we didn't look so good on paper we might have had better sucess.

However, our offer just fell out of contract so we may have to go back to them if we can't get a similar offer. We might have to let our account go late if we are to get their attention.

[amiesheikh]

Most second trusts will settle for 10% of what you owe them. They just like to play hardball with you b/c some people fall for it.

[mbmullen]

Not to cause an argument, but there are lenders who will agree to a short sale without you going into default. Also, I have several listings under contract and about to close that were not listed for anywhere near 60-90 days. The rules are changing day by day and bank by bank. We just closed our personal home last week. The PMI took a $100K hit and did not ask us for a dime - no promissory note at all. Just make sure that your agent has actually closed plenty of short sales (not just listed them) and stay on top of what they are doing. That may mean that you have to call the lender yourself every week or so.

Good luck! This is a great source of information and support. I don't know what I would have done over the last several months without Loansafe. I even put a link on my website and have given quite a few potential clients the address who didn't know whether to modify or short sell.

[emc0317]

Originally Posted by faith

Hello and welcome to this forum,

In California Section 580b meaning your lender can not pursue any deficiency judgment once the house forecloses or sold. If your home qualified as a principal residence and has purchase money mortgage then if you do Short Sale, the balance owed called deficiency judgment is covered under CA Section 580b.


A deficiency judgment may be awarded to the mortgage issuer if the borrower fails to repay the entire mortgage when the home is sold. If the home’s value drops and the borrower cannot sell the property for at least the money due on the mortgage, a deficiency judgment serves as a court order to the borrower to repay the difference between the home’s sale price and the remainder on the mortgage. This is also known as “recourse on the loan.


The bank can also seek a deficiency judgment against the former homeowner for the remainder of the money due on the home. Likewise, the bank can seek recourse if the bank sells the property through a means other than auction, and does not recoup the money still owed on the home. State law in California if you have a Purchase Money Mortgage and never refinance there is an Anti Deficiency Judgment called Californial protects you from recourse on your original loan, but what about your second mortgage or lines of credit? The cash-out refinance you may have done is also not protected from recourse.
Your home must be your principal residence in which you and family lives. It includes the conventional single family home, condominium or cooperative, a mobile home or a duplex. If the taxpayer has more than one residence, it is the home in which the taxpayer lives most of the time.

When you sell your house via Short Sale you need to list your home with a Real Estate Agent with experienced doing Short Sale. You need to price your house right in order to get a buyer, because without a buyer your lender will not approve the Short Sale. The lenders will only consider allowing you to have the Short Sale if your house is already in the market within 60-90 days listed with a real estate agent, behind in mortgage payments within 60-90 days
.

Go to zillow.com to get the recent homes sold in your area. Your house should be priced within 85-90% of the fair market value. If you have PMI (Private Mortgage Insurance) the only way they approve the Short Sale is if you sign a promissory note to pay for the balance owed. This amount can be negotiated and you can make an offer to pay the balance owed within 5% to 10% of the balance owed, payable in 10 to 30 years and no interest. If you do Short Sale your credit will be hit around 73 to 200 points. My credit score before was 750 after Short Sale it went down to 677 points.
Time is the essence when you are doing Short Sale due to many factors: the buyers may back out due to long process, I have 7 buyers that backed out waiting for the lender to approve the Short Sale, It took 4 months and 19 days for the lender to approve the Short Sale. Note that my first listing expired where 6 buyers backed out and 1 buyer backed out on 2^nd listing. The lender may give stricter guidelines to approve a buyer that is 20% or more in down payment, credit score, and job security.
Maybe you should ask your lender to give back the house to the called Deed in Lieu. Deed-in-lieu is an option for avoiding foreclosure. A deed in lieu of foreclosure actually offers numerous benefits to both borrower and lender. The primary and most important advantage to the borrower is that it immediately releases them from most or all the indebtedness involved with the loan and default. A second advantage to the borrower is they avoid the proceeding and public knowledge of a foreclosure. Also, the borrower can often get better terms by going with a deed in lieu of foreclosure, than if they have a formal foreclosure.

The main advantage to the lender is a major reduction in the time and costs it takes to proceed with a non-judicial foreclosure and their can be other advantages to the lender if the borrower ends up filing for bankruptcy afterwards.
Please read the link below regarding Short Sale Outposts in this forum, there’s lot information in it that can really help you. http://www.loansafe.org/forum/short-sale-outpost/

Faith,
I refinanced to 1 loan and no cashback and in shortsale, does it cover with 580b or 580d? Thanks.

[HopingtoFind]

Originally Posted by emc0317

Faith,
I refinanced to 1 loan and no cashback and in shortsale, does it cover with 580b or 580d? Thanks.

In CA there is one option rule, if lender choses to go with a Trustee sale (non-judicial foreclosure) to foreclose they cannot pursue deficiency judgement. It is very rare in CA for lender to go judicial route in order to foreclose.
So if you only have 1 loan.... purchase money or not, you have little to worry about as far as deficiency judgement.

[emc0317]

Hopingtofind,

Thank you very much!

[jimbojones35]

mbmullen:
Are you located in CA by any chance?
Trying to identify a real estate agent with short sale experience in the sf bay area.
thanks!

[HopingtoFind]

jimbojones35....where are you in Bay Area, I might be able to help.

[jimbojones35]

I'm in Pacifica. Our current real estate agent is located in the South Bay though and doesn't seem to have much experience with short sales.

[mbmullen]

Jimbo, No, I'm afraid not. I'm in Myrtle Beach, SC. I would be happy to refer you to someone, though. Is there some way for me to get contact info to you so you could send me an email? I accepted your friend request, but I'm not sure how that works.

Moderator - any suggestions?

[jimbojones35]

mbmullen and hopingtofind: If you could please email me at jimbojones35@yahoo.com, that would be great. Your real estate referrals are greatly appreciated. Thx!

Yeah, I too am not entirely sure how the friends function works...

[barbarabarbzzz]

Originally Posted by jimbojones35

mbmullen and hopingtofind: If you could please email me at jimbojones35@yahoo.com, that would be great. Your real estate referrals are greatly appreciated. Thx!

Yeah, I too am not entirely sure how the friends function works...

Jimbo: I am an experienced Real Estate Short sale Specialist located in Daly City (Bay Area) who can help you with your short sale. I'll send you an email shortly.

I have been reading a lot lately on the site, but finally decided to sign up today, because I have had some tough investors with National City for my current short sale.

Specs: Purchase money Loan, 60k, was initially approved for 6k for full release of the loan, but 3 buyers backed out due to the litigation on the property's HOA. I was able to produce an ALL CASH buyer, and now they are asking for my client to pay for 50% of the loan, 30k to settle this property. It is ridiculous, and I have tried speaking with them time and time again, they will not budge. This is my first dealings with NC, am wondering if we should threaten to allow the 1st to foreclose and see what they say. Non-deficiency laws in CA are on my clients side, but of course, she does not want to foreclose.

Any dealings with NC lately? Please share your thoughts. I am leaning towards offering a little bit more to her from my clients to walk away, and then eventually walking away to see if they will budge.

[nal67]

Anyone else dealing with NC for a short sale on the second? Anyone having any success?

Our first is with a different lender and won't be short. Our second is with National City and is not purchase money. NC is playing hardball and would not take an offer that would get them 35%. That is to say they would offer a lien release but would issue a deficiency judgement for the balance. We got a subseqent offer that would get them 60% and they accepted that as paid in full. However, that offer fell through and now we are only getting offers that get them less than 35%.

We have never been late so they haven't been willing to take 10% like they do for many people. They keep saying it is the investor who is unwilling but they won't tell us who this investor is.

Seems like the more responsible you are, the less they are willing to help you out. My husband lost his job in Feb and I am half my old salary so we are running on fumes. Still trying to negotiate but will likely (unfortunately) have to go late to get their attention.

I have heard that many of the second lenders are getting worse instead of better as they realize they can still come after you for money as they wait for the first to foreclose.