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I have an investor that wants to buy my house (short sale) if I list it with his realtor. Bad idea? Good idea?

Vista, CA |

My house is in preforeclosure. 1st and 2nd mortgages discharged in chap. 7 BK last year. Is it even worth the hassle of a short sale since I owe nothing to the bank? I know they say a short sale is better than a foreclosure on your credit report, but since I already have a BK listed, does it really make any difference? Ineligible for HAMP, but lender proposed their own modification with the three-month trial period. If I accepted that, is that like reaffirming the loan?

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Attorney answers 3

Posted

Has your lender provided you with written terms for the modification of your loan after the trial period? Did the Bankruptcy Court "strip" the second from the property? If the terms of a permanent modification of the first (and only) loan against the property either reduce the principal amount of the loan to the approximate current fair market value, or, if the monthly payment is reduced to the amount you would pay in rent for similar property, it might be worth considering the modification.

Asker

Posted

Thanks so much for the reply. The lender won't give anything in writing until after the three-month trial period....and then it's possible that the payment may go up a little bit (so says the lender rep I've been dealing with). The 2nd wasn't stripped in the BK as far as I know. Credit report shows both 1st and 2nd included in BK. On the credit report, the 2nd is shown as "bankruptcy discharged." Under the 1st, it doesn't say that. What do you think about an investor contacting me to buy my house short sale if I use his realtor? He's even using a local law firm to help with the short sale process, no charge to me. I'm just concerned if I do sign papers for loan mod, is that similar to reaffirming the loan (which I DIDN'T do in the BK). Thank you!

Shaun K. Boss

Shaun K. Boss

Posted

A short sale is somewhat better for your credit than is a foreclosure, however, as you pointed out in your previous posting, the bankruptcy has probably already done damage to your credit. With the short sale you will have to move out of the property at closing. If you wait for the lender(s) to foreclose, you will probably be able to stay longer. It would be important to know whether the second loan was originated at the time of your purchase. If it is a refinancing loan (placed on the property after you already owned it) the lender may have recourse against you personally if the first forecloses. You need to get the advice of a real estate attorney on these points. My comments should not be construed as legal advice since we do not have an attorney/client relationship.

Posted

It sounds as though you may have some confusion regarding the effect of your recent bankruptcy and whether or not you continue to owe on the property. This is entirely natural, as the process can be exceedingly convoluted and confusing. Unfortunately, this may be one of those questions which is not easily answered on Avvo. You may need to have a local attorney review your documentation and hear your side of the story before he or she can provide you with your options at this time.

Best of luck.

Of course, without having heard the whole story and reviewed the relevant documents, I can't give you advice, just my general opinion. If you're serious, you should contact a local attorney, rather than relying on any opining on the Internet. Jason L. Eliaser is licensed to practice law in California (State Bar number 248394.) This is a communication concerning my availability for professional employment within the meaning of California Rule of Professional Conduct 1-400(A). Viewing of this post does not constitute the provision of legal advice and no attorney-client relationship is formed by viewing or responding to this post.

Asker

Posted

Thank you for the reply. Appreciate it.

Posted

The big question is how bad do you want to keep your house. With that answer, you can answer the question of whether or not you want to take the modification. All BK pre-filing promissory notes would be discharged from personal liability, but without seeing the proposed post-filing agreement, I do not know if it is similar to re-affirming the loan or not.

Many short sale programs will give the borrower money. However, those programs must be offered by the Lender and it must all happen with the knowledge and consent of the lender through escrow. Avoid any money to be paid "outside of escrow".

Kevin A. Spainhour, Esq. Spainhour Law Group www.slglawyer.com.

Asker

Posted

Thank you for replying. Appreciate it.