Following a loss of income and several other unforeseen circumstances we find we can no longer afford to pay our two mortgages.. We have been making partial monthly payments on both since January of 2009 but have had to pursue a solution via a "short sale". One of the banks involved sent us a letter saying they would not accept a partial payment. We are currently "listed" and need to know if we should continue to send partial payments to both banks and what will happen if we don't send them a payment?
Thank you for your help.
Real Estate Attorney
You are not alone. Go to www.makinghomeaffordable.gov for help. Most of your questions will be answered. While the site seems to indicate it will be easy to solve your problem, remember it is the government talking.
The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the Commonwealth of Pennsylvania. Responses are based solely on Pennsylvania law unless stated otherwise.
You are not required to have legal counsel to negotiate a short sale, but having someone who knows what they are doing with the negotiations, might well shorten the process. Also, if you are delinquent on your mortgages, you may well find yourself in foreclosure, at which point, you really should consider legal counsel.
As residents of Illinois there are some things you should consider with your short sale:
1. It is unlikely that the banks can take partial payments because there is no way for them to apply a partial payment. The short sale will do the less damage to your credit than a foreclosure or a deed in lieu of foreclosure, but lenders are reluctant to agree to short sales if they think that you can afford to pay your mortgage.
2. You need to keep on top of your lenders because the squeaky wheel DOES get the grease when it comes to getting an answer on short sales. The lenders depend on your waiting patiently for an answer and will just keep your file at the bottom of their pile. It is to their advantage not to close your file - the sooner they close it, the sooner they have to take the tax write-off. If you have someone negotiating the short sale for you , keep on them to keep questioning the lender.
3. Be prepared to keep your financial information current with the lender. They will want to see your bank statements and current pay check stubs to prove that you cannot afford to pay the mortgage.
4. Don't ignore the papers if a foreclosure is served on you. The department handling the short sale and the department handling collection do not talk to each other until the loan is paid by the short sale. At that point, the lender will stop collection proceedings. It is maddening and makes no sense, but that's the way it is. You may also want to hire counsel if you are served with a foreclosure. Lenders make mistakes. There might be one in your loan documents which might give you some leverage to get your short sale negotiated more effectively.
This answer does not constitute legal advice and does not and is not intended to create an attorney-client relationship. The law may vary depending on the state in which you reside. It is intended only to give some direction in which to seek assistance.
General Practice Lawyer
While a lot of people try to get through a short sale without an attorney, I firmly believe that you are most likely to succeed with the help a law office can offer. The fee should be approved as part of the short sale, so hiring an attorney may have little or no financial impact on you personally.
The detailed answer above is excellent and I will not take the time to be redundant. If Ms. Minchella handles closings in your area, I encourage you to contact her. Otherwise, my office would also be pleased to assist.
The suggestion to consider a loan modification is also excellent, but your attorney should be able to help you explore everything: modification, short sale, deed in lieu of foreclosure, and, as a last resort, bankruptcy (which sometimes can help you get to the point of a sale).