Short Sale offer??

[snook]

I just received an offer to short sale my investment condo....It has declined in value so much, I do not know how the bank will respond....I owe 160,000 and was offered 65,000.....this is the going deals in this area....if the bank accepts the offer, what happens to balance?? can they sue on a short sale or do they issue the balance as a 1099?? thanks

[HHM]

It depends...typically, the bank will issue a 1099. But some banks have become a little sneaky about that issue so you want to make sure that in the documentation the bank is obligated to forgive the deficiency.

[AngelinaCat]

Hi All:

My offering to this post is that I heard part of a conversation that I heard on Clark Howard’s show last evening. The woman calling was interested in a ‘short sale’. I am not sure whether she was trying to buy or sell. There were two mortgages involved; a first and second mortgage.

The gist was that it seemed like a really good deal. The only problem would be that the first and second were handled by entirely different companies. If the first and second mortgages were handled by the SAME company, then there was a good chance that everyone would come away from the deal happy.

But if the two mortgages were handled by two different companies, then you had the chance of navigating that stream, the same as navigating the TITANIC through the ice field.

[erinmi]

Yes, they can sue you on a short sale if you do not have WRITTEN documentation that the lender forgives the difference.

We got stuck in this situation even though we thought we were in the clear up until closing when the title agent had a document from the lender we had to sign in order to close. Instead of stating that the amount had been forgiven, it stated that we would be responsible for the difference. Needless to say we did not have the difference nor the ability to pay on the difference. In the end, we filed CH 7 about 7 months later and only after filing did we receive notification that they had filed suit but the case had been dropped since the automatic stay prevented us from being notified and halted the lawsuit.

It is a mess. Honestly, I would just let the place go if you are planning to file anyway. It isn't worth the effort of getting a short sale approved....