Want to short sell...Where do I start?

[jstylez]

First off I would like to say that this forum contains some of the best information I have seen regarding the housing crisis. Any input in regards to my situation is greatly appreciated.

Here is my information

Home purchased: Oct 2007
Purchase Price: $345k
Lender: Wamu
Loan: 30 year fixed with PMI (5.5% rate) (100% loan, just payed closing costs)
Current Value: $225k or less
State: FL


So like many others my wife and I purchased our first home when times were good and business was booming. Since then my business has dropped by almost 50% and my wife has had her hours cut substantially. We went through our savings and we have been living off of credit cards to make up the difference and now it's time to stop before this gets way out of hand.

Our goal at this point is to short sell the house and get out because at this rate will will be up to our ears in credit card debt in no time. We are current on our mortgage up until this point in time and both have great credit.

I have some questions in regards to a short sale.

I know that most banks require that you be 90 days late to consider a short sale. Should we stop paying our mortgage for 90 days and then list the house for sale with a Realtor? (We would like to save as much as possible before it goes through given that we will be taking the hit on our credit anyway)

Since Florida is a recourse state (correct?), it has me a little worried that the bank will come after me for the difference. Given the fact that I have PMI and only the 1 loan with Wamu, do you think they will just collect the difference from the PMI company and leave me off the hook for the difference?

What is the general time frame for a short sale to close? I have seen some take as long as 6 or 7 months. What is this contingent on? The bank approving the offer or other factors?

If it does take 6 months for the short sale to pan out, will the bank go ahead with foreclosure proceedings even if we are trying to negotiate a short sale?

Thank you in advance for any insight you can provide.

[Moe Bedard]

Hello and Welcome to LoanSafe!

First off I would like to say that this forum contains some of the best information I have seen regarding the housing crisis. Any input in regards to my situation is greatly appreciated.

Thanks so much and that means a lot to me since I have a lot of blood, sweat and tears in the forum. But to be honest, without you all joining and sharing, it would be just another website. So than YOU for telling your story!!

So like many others my wife and I purchased our first home when times were good and business was booming. Since then my business has dropped by almost 50% and my wife has had her hours cut substantially. We went through our savings and we have been living off of credit cards to make up the difference and now it's time to stop before this gets way out of hand.

Smart. I see so many people waste through savings, chasing the mortgage dragon I would call it. I am glad you have seen the light that this is not such a good idea to kill yourself to maintain an unmanageable mortgage payment.

I know that most banks require that you be 90 days late to consider a short sale. Should we stop paying our mortgage for 90 days and then list the house for sale with a Realtor? (We would like to save as much as possible before it goes through given that we will be taking the hit on our credit anyway)

You're right, most banks will require delinquency before they will entertain a short sale and we cant really say for you to do that. But I can say from extensive experience and seeing about 300 short sales in my day, most every singe one was in foreclosure or close to. Maybe 5 were current and they had a lawyer and legal violations on their mortgage.

Since Florida is a recourse state (correct?),

Yes, they do judicial foreclosures also.

it has me a little worried that the bank will come after me for the difference. Given the fact that I have PMI and only the 1 loan with Wamu, do you think they will just collect the difference from the PMI company and leave me off the hook for the difference?

They could and this has yet to be seen because this crisis is so new and lenders are busy stopping foreclosure and selling the, maybe the lawsuits come later, I dunno.... Crystal Ball theory here.\

What is the general time frame for a short sale to close? I have seen some take as long as 6 or 7 months. What is this contingent on? The bank approving the offer or other factors?

Yes, it can take 3-9 months and several offers may come and go and the bank has the say so on what to accept or counter. You are just along for the ride.

If it does take 6 months for the short sale to pan out, will the bank go ahead with foreclosure proceedings even if we are trying to negotiate a short sale?

Think of foreclosure like a conveyor belt that does not stop. Yes, you can ask to be paused or something but for the most part it just keeps moving.

I hope that helps and please let us know if you have anymore questions.

[jstylez]

Moe,

Thanks so much for answering all of my questions.

I do have one more question.

In your experience in seeing almost 300 short sales, have you ever come across one where the bank was willing to include verbiage in the short sale contract that released the mortgage holder from liability for the difference?

Thanks again!!

[HopingtoFind]

Originally Posted by jstylez

Moe,

Thanks so much for answering all of my questions.

I do have one more question.

In your experience in seeing almost 300 short sales, have you ever come across one where the bank was willing to include verbiage in the short sale contract that released the mortgage holder from liability for the difference?

Thanks again!!

We have received an approval from our lender, Wells Fargo, on a Short sale, and it has the verbiage releasing us from liability. But we are in CA, non-recourse state.

[TrappedFL]

Originally Posted by jstylez

Moe,

Thanks so much for answering all of my questions.

I do have one more question.

In your experience in seeing almost 300 short sales, have you ever come across one where the bank was willing to include verbiage in the short sale contract that released the mortgage holder from liability for the difference?

Thanks again!!

If you have a legitimate financial hardship which is sounds like you do, with your wife's income cut, then it is more likely the lender will release you from liability for the deficiency. However, I would advise you to hire a local real estate attorney who can negotiate the short sale, to improve your chances.