Realtor approached me to go short sale over foreclosure

[Blue_Ray]

All,

I posted this earlier : http://www.bkforum.com/showthread.php?t=35289

And then the other day…………….

I was approached the other day about going w/ a short sale over foreclosure and
from the knowledge that was provided to us the realtor has been working on short sales since 2002 and been claiming it is better to short sale then to foreclose on a home. He stated that if I was to short sale that my credit will be better then a foreclosure on my credit and said that it could take up to 7-10 years to ever own a home, but with a short sale, I could be in a home in about 2-3 years...

Also stated that I should not pay any fees or taxes going short sale instead (1099).

The realtor said they cannot make me pay anything (once short sale is done) and for the 2nd mortgage they can call all they want even if we were to proceed to foreclosure the 2nd would be waxed away with small sum of money to settle when home gets sold.

Is any of this true?

We just want to move on and now if we we’re to sell (put on the market due to going short sale) we’ll have to upkeep the home. I was advised the short sale is the better route. Is it?

Thanks all,

[BK2008]

Are you currently in BK?? If so, are you still active or has it been discharged??

If you are still current in BK, there is really no benefit to your short saling, as the house would have been included in BK if you chose that method. Once your credit score takes a hit from the BK, a foreclosure won;t make much of a difference in your score.

If you still have time, you could include it in your BK and be done with it. The 2nd will lose, and the 1st will have to deal with the mess.

As for these realtors, I don't believe a word they tell me. I still have one contacting me constantly, and it's been over 8 months: This is what the contact via e-mail looks like:


Looked at the house, and since you owe more on it than what
we can pay, we either need you to make up the difference at
closing, or...we can ask your lender to simply lower the loan
balance a so you don't have to bring money to closing.

Which do you prefer? If you want to go with us negotiating with
your lender, then we'll do it at our own expense.

We'll maintain the house and handle the taxes. We'd need to
some basic papers from you to work with your lender.

My workload is such that I can take another file on right now.
If you're interested just email me back and I'll get the paperwork
to you to get started, or just call me at xxx-xxx-xxxx ext 1
and we can talk.

Thanks,

XXXXX.COM
p.s. if you get my voicemail then leave a message and I'll
get right back with you

And I want to shortsale with this joker?? I think not.

[Blue_Ray]

Are you currently in BK?? If so, are you still active or has it been discharged??

Our BK was discharged back in May 08

So that is a no go

[StartingOver08]

I am a realtor too. If you are in a BK, there is no reason to do a short sale. Also, no one really knows which is better for your credit, short sale or foreclosure. But the consensus is they will both impact your credit the same.

In our area (Palm Beach Cty, Fl), short sales have a very small chance of actually closing. Only 4% to 7% of all short sales in our area close. There is a high percentage that go under contract, however, the short sale normally does not close because:

1) The lender does not accept the sale price or
2) The lender wants the seller to sign a note for the difference or some large amount and natually that is not good for the seller or
3) The lender takes so long to respond (90 to 120 days) that the buyer walks away

I have heard the banks are a little more cooperative now in the last few weeks, but I have not seen an increase in short sale closings yet.

[Tbornetun]

Our BK was discharged back in May 08

So that is a no go

Did you sign a reaffirmation agreement for your mortgage during the course of the bankruptcy? If you didn't then forget about the short sale and walk away from the house.

[Blue_Ray]

Did you sign a reaffirmation agreement for your mortgage during the course of the bankruptcy? If you didn't then forget about the short sale and walk away from the house.

Ok; While we did bk (chpt 7) back in 2007 and discharged in early 2008, we did not reafirm the 1st mortgage, but did on the 2nd. I hope this clears any confusion. So what direction should I go?

Thanks all

[StartingOver08]

How much did you reaffirm on your second and are the payments reasonable?

[Blue_Ray]

How much did you reaffirm on your second and are the payments reasonable?

The 2nd mortgage is about $31k (home improvement loan). I talked to them the other day and they dropped their APR% 1.75%.


If I make the payments it would be about 250.00 and it is a 12 year loan. IMHO - the rate is still too high.

Why you ask?

Suggestions?


**** also forgot to mention****
While I was out w/ my son @ football practice this AM, my wife told me a realtor came knocking on my door to help do a short sale. Hummmm...
Now I am wondering if this short sale scam is something that realtors are starting to approach to their next step in making money it is a shame.

[StartingOver08]

I am just thinking out loud...the second normally is in a bad spot, but in this case they are reaffirmed.

Normally the 1st would foreclose and the second gets nothing.
If you do a short sale, the first and the second have to approve (and MI if you have it on the property - you might have it and not know it if it was lender paid mortgage insurance).

1) You can walk away from the house and continue to make the payments on the second to preserve your credit.
2) You can walk away from the house and play hardball with the second to see if you can negtiate a settlement for a lump sum.
3) You can walk away from the house and let the second go to collections (ugg - especially after a BK)
4) You can stay in the house and continue to pay your second only while you do not pay on the first. This way you can accelerate your payment to the second and your credit will not be harmed.

I don't have any other ideas at the moment. You are in a spot. Maybe someone else has a better idea.

[Blue_Ray]

30K on the second is insane and not showing I have anything for the 30k loan due to being added to the home

I know I am screwed. I am just wondering if it really even worth going w/ the short sale route, its all I really need to know.

I just want all this behind us and move on

[StartingOver08]

I think the short sale route is a waste of time.

Like I said, I'm a realtor and very few actually close. The last thing I would want is a property that I have to spend time and money on - and at the end not make any money! So if you have realtors that are knocking doors to find short sale properties - they certainly can't have much experience unless they follow that old rule - (I hate to even say it on a public forum )
"Throw it against the wall and see what sticks" .....

I do not subscribe to that rule. I say, do what you have to do. Stay away from short sales. They don't work, as a general rule. And for you in particular, why waste your time???

Move on, get your fresh start and figure out how to handle the 2nd (maybe just walking away.....).

[Blue_Ray]

Thank you very much for your kind help and opinion!

My gut feeling seems to be the same. We just told our apartment lanlord we're still coming. That way we can rent a small trailer and slowly move things out from the home into our apartment w/o rushing since the auction date is still three months away.

** From what I read it seems that I do not need to do nothing in foreclosure procedure but just to send my keys to the attorney that my lender using and leave w/o turning back; right?

** as for the second mortgage; I think I will just ignore them and move on. With many people like us are in the same boat / situation, I think they all (banks) just need to accept the fact to move on (like we all are) and make better notes on how they do loan process and probably not jack around w/ crazy interest rates. As much as the 2nd took from me in the two years I had that loan, they should be happy and not worry about us! We're broke and I have to support my family and we lost everything!


.... and yea, a realtor knocking on my door about short sale help is pretty embarassing. It does seem like a red flag and a way from them to make money, but home owners still get screwed at the end.



Thanks

[Blue_Ray]

I also found this also and it seems the short sale is no diff then if I was to foreclose

http://homebuying.about.com/od/shortsale/a/052208SScredit_2.htm

But it did state this:

Facts About Short Sales and Credit Ratings

* There’s no credit preservation advantage to short sale over foreclosure.

* The nation’s two largest mortgage investors, Fannie Mae and Freddie Mac -- with certain exceptions -- won’t lend to you again for five years (foreclosure) and two years (short sale).

* A consumer's FICO score will take a huge hit either way until responsible credit behavior supplants the foreclosure / short sale over a period of time.


But for the fact that if I was to short sale; I could be a home owner after two-years vs. five-years going w/ foreclosure. HUMMMMMM

found this from another article:

Waiting Period Before Buying Another Home

* Foreclosure or Deed-in-Lieu of Foreclosure
Steep says a seller who wants to buy another home after foreclosure will end up waiting about 24 to 72 months before a lender will offer any kind of interest rate that makes sense.

Coy says, "The good news is a short sale will allow the consumer to obtain an institutional loan for a new home within two years".

For more information, see the Fannie Mae Selling Guide online. Click on the PDF link in the yellow box and see page 75.

* Short Sale
Some agents say the good news for short sale sellers is the wait is much shorter before buying another home, and new Fannie Mae guidelines make that a true statement.

Can a seller buy again under two years? Partially true, says Coy, "It's an utter myth that a consumer 'can buy again in about 18 months at a good interest rate.' However, new Fannie Mae guidelines now require only 24 months' seasoning, and that's good news for agents who specialize in short sales."

Note that Fannie Mae guidelines allow a seller to immediately apply for a new loan to buy another home if that seller kept the payments current and had no 60-day late pays or greater on record.