California Short Sales | California Short Sales | | Print | |
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Absent specific contractual agreements some California Homeowers are better off taking a foreclosure than agreeing to do a short sale. Other California Homeowers may be better off setting up a short sale rather than taking a foreclosure.
For most upsidedown California homeowners there are three major goals to consider: 1. Elimination or Mimimization of a deficiency and therefore protection of remaining assets including salary or other income streams; 2. Elimination for Minimization of COD or forgiveness of debt income form the IRS; (If you are $100,000 short, you may be obligated to report the forgiveness of debt to the IRS, even if your lender does not send you a 1099. A large COD could bump your tax bracket and result in a large tax bill. Also, please do not forget there will be other tax considerations if you took cash out. 3. Protection of Credit - if possible. To do a short sale properly you need a Realtor to help you price, list market and sell your property. But, you also need a lawyer to protect your interests. Many times the banks will not agree to release you from your obligations under the note. The lender may never mention this condition until you show up at the closing table. Or, perhaps you will not know until you get a collection letter in the mail. Do you have a recourse or non recourse loan. Do you have to fear a sold out junior. Is your Heloc or second loan entitled to purchase money protection. Will there be a merger of your two loans if the lender forecloses. Will you be protected from sold out junior liens? What effect will the bill in Congress have on your residence of 1-4 units. What if you are upside down on your second home? Our solutions - We are Realtors and Lawyers. Our lawyers are located in San Diego, but we are currently working with Realtors all over California. Of course we would like to effectuate a a short sale and recieve a referral from the Realtor, but, we will not advise you to do a short sale unless the bank agress in writing to maintain your status quo or improve your situation (vis a vis a foreclosure.) Since we have lawyers on the team we have other negotiating levers. If you desire, we will request documents from the lender relating to predatory lending claims, or RESPA violations, or Truth in Lending violations. (If you have an option arm this is especially important.) Conclusion As stated earlier, sometimes it is better for a California homeowner to take a foreclosure and sometimes it is better to do a short sale. However, when you have an attorney on you team, you can stack the odds in your favor.
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| Last Updated ( Sunday, 25 November 2007 ) |
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