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First Mortgage Exempt From Deficiency Judgment After Short Sale Starting Jan 1, 2011

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  • First Mortgage Exempt From Deficiency Judgment After Short Sale Starting Jan 1, 2011

    December 13, 2010


    A common question from homeowners exploring bankruptcy options is whether to attempt a short sale instead of filing for bankruptcy. This is a difficult question to answer in general as there are a number of factors to consider and weigh based on the needs and interests of the homeowner. For practitioners and homeowners alike, one of those factors will no longer be an issue, at least in California.

    Starting January 1, 2011, a new California law will prevent first mortgage lenders from suing individuals for any deficiency after the first mortgage lender accepts a short sale.

    To help a client decide whether to consider a short sale instead of a bankruptcy the practitioner should review the following factors.

    1.Does the homeowner have a second or third mortgage?
    2.If so, how much is owed on the second or third mortgages?
    3.Are there other debts and obligations? How much total?
    4.Is there consistent and steady household income that allows the household to meet its other monthly expenses?
    5.Does the homeowner have other assets? What are the value of these assets?
    6.What is the anticipated credit impact between a short sale and a bankruptcy? (many people have incorrect assumptions about the credit impact)


    The answers the client gives to each of the above questions will help a practitioner guide the client. However, it is incumbent upon the practitioner to help weigh the value of each of the answers provided. For example, wiping out a second mortgage of $15,000 in bankruptcy must be weighed against the homeowner being concerned about protecting his credit profile. However, wiping out a second mortgage of $150,000 in bankruptcy will very likely devalue the idea of protecting ones credit.

    As always, I never recommend going through the bankruptcy process without proper representation from a competent bankruptcy lawyer. However, having an understanding of the above mentioned factors will allow the client and the practitioner to be more prepared and confident about the appropriate decision.

    The new law will be found (after 1/1/11) in California Code of Civil Procedure 580e.

    http://blog.startfreshtoday.com/2010...ng-jan-1-2011/
    8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

  • #2
    good news for california short sales.....
    8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

    Comment


    • #3
      Good news? The lenders will just not allow short sales anymore. It's not like the majority of short sales contracts actually closed. It's quite the opposite. Actually getting a short sale contract to close is almost a miracle these days. I think the miracles, for Californians, has now been legislatively... reduced even further.
      Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
      Status: (Auto) Discharged and Closed! 5/10
      Visit My BKForum Blog: justbroke's Blog


      I am not an attorney. Any advice provided is not legal advice.

      Comment


      • #4
        LOL!!! i was being funny or attempting to be...at least or so...i thought...?


        you know jb...i really no of NOT a one person whom ever acquired a property via a "short" sale....a friend of mine in southern nj sales they are beginning to sell in the vacation spots....but truly i know no one that put an offer in that was even accepted by the bank!

        when we moved down here we attempted a "few" short sale purchases...they were bogus...the banks just purchased back the properties....and then of course we could no longer purchase because of our bk.

        it should be no surprise....california apparently leads the race when it comes to controversial legislative acts...begin born and raised there i have indeed seen some pretty strange laws pass!
        8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

        Comment


        • #5
          Believe it or not, here in NJ at least one bank- Chase! - has offered a $3000 bonus for completing a short sale. It's called a Home Affordable Foreclosure Alternatives or Borrower Relocation Incentive. Plus some other bonuses involved.

          It's like combining Cash for Keys with Short Sale. DH is working on a closing under this plan. Remains to be seen, of course, if it actually happens

          Keep On Smilin'

          Comment


          • #6
            Originally posted by keepsmiling View Post
            Believe it or not, here in NJ at least one bank- Chase! - has offered a $3000 bonus for completing a short sale. It's called a Home Affordable Foreclosure Alternatives or Borrower Relocation Incentive. Plus some other bonuses involved.

            It's like combining Cash for Keys with Short Sale. DH is working on a closing under this plan. Remains to be seen, of course, if it actually happens

            well my friend in jersey didn't say what it was called...just that they are slowly being to move???? wow...i guess FINALLY the banks may start moving the properties???? i know she was talking about the shore areas...where all the vacation homes were sitting empty...like ghost towns!
            8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

            Comment


            • #7
              HAFA is part of HAMP and as a program, it has totally failed. That's all I'm saying.

              The money comes from the TARP funds as part of HAMP and it has been highly unsuccessful.
              Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
              Status: (Auto) Discharged and Closed! 5/10
              Visit My BKForum Blog: justbroke's Blog


              I am not an attorney. Any advice provided is not legal advice.

              Comment


              • #8
                Originally posted by justbroke View Post
                HAFA is part of HAMP and as a program, it has totally failed. That's all I'm saying.

                The money comes from the TARP funds as part of HAMP and it has been highly unsuccessful.
                not surprising to hear....

                so, i'm so wondering what az, Nevada....nj shore area...many parts of florida...what ARE the banks going to do with ALL this inventory?????
                8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                Comment


                • #9
                  just broke is right. We just short sold our home successfully and real estate agent informed us that HAFA funds can hold up or even postpone indefinitely a successful short sale. We never got any 3k.

                  Comment


                  • #10
                    Originally posted by bladerunner View Post
                    just broke is right. We just short sold our home successfully and real estate agent informed us that HAFA funds can hold up or even postpone indefinitely a successful short sale. We never got any 3k.
                    at least your bank allowed the short sale to take place.
                    keepsmiling
                    Believe it or not, here in NJ at least one bank- Chase! - has offered a $3000 bonus for completing a short sale. It's called a Home Affordable Foreclosure Alternatives or Borrower Relocation Incentive. Plus some other bonuses involved.
                    we had chase in nj and they wouldn't go for anything!! at least not at that time. we got such a runaround...

                    first i call chase and ask can we do a short sale since the house was on the market 10 months with nothing....they give me to the short sale dept....i get all this info saying....just get a contract with a number on it and have your real estate agent summit it and we will decide...i asked them no i want to "lower" the price now since the listing price is just covering the mortgage and the commissions...chase said no...contract first...their decision second...and most likely their denial thirdly.....

                    well, after knowing that we just lowered the price anyway...thinking even if we had to come to the table and bring money.....chase said NO you can't do that either...but that was then...now maybe things have changed ...i know when we first thought about moving we checked out short sales since in this area the houses appears to being for nothing...however, after speaking with numerous real estate people in this area, they said either they never were working out or held up with the banks for months upon end....

                    i do hope maybe the banks might be beginning to allow and pre approve some of the inventory in this country for the short sales so no more places become ghost towns!
                    8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                    Comment

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