Short sale vs foreclosure

Starz26 · 08-04-2011, 07:42 PM

If you get the bank to agree on a short sale, you will not be responsible for the diff between the sale price and the loan value.

If you are foreclosed on, the bank can come after you for the difference.

As for tax ramifications, I have no clue....

Someone please correct me if I am wrong. Oh, and both will mess up your credit for a good while but that is the least of your worries in these situations.....

What about a loan modification?

Hope all gets better......

awsmith4 · 08-04-2011, 09:14 PM

Quote:

Originally Posted by Starz26

If you get the bank to agree on a short sale, you will not be responsible for the diff between the sale price and the loan value.

If you are foreclosed on, the bank can come after you for the difference.

As for tax ramifications, I have no clue....

Someone please correct me if I am wrong. Oh, and both will mess up your credit for a good while but that is the least of your worries in these situations.....

What about a loan modification?

Hope all gets better......

I would try for a loan modification first

What Eric said about the remaining balance after a short sale is true but make sure it is in writing from the bank that they are forgiving the difference. Even if they allow the sale to go through you are on the hook for the balance unless you have an agreement stating otherwise.

Another option is to try and sell, at least for the time before you officially default, you never know.

chippewastud79 · 08-04-2011, 10:01 PM

Short Sale > Foreclosure.

For the items outlined above, the bank is absolving you from any extra balance left after the sale with a short sale.

Banks are willing to wheel and deal these days, they don't want foreclosures anymore than the owners do. Definitely contact the bank, tell them of the situation and see what options are out there. With recent turns in the market, you could easily get a reduced rate and a lower payment. Don't underestimate renting, if you can come close to price of the mortgage payments (~$300 or less of the balance) it would definitely be something to consider.

Sorry to hear about the situation, but I hope it all works out.

cmitch · 08-04-2011, 10:26 PM

You can ask for what is called a 'Deed in Lieu of Foreclosure' which is basically giving up all rights to the property to the bank in exchange for title of property to the bank. This would absolve you of any liability should the house short sell. You do not mention if you have other assets such as other property, retirement accounts, IRA's or Roths. This could technically come into play if the bank balks at a Deed in Lieu of Foreclosure because the bank isn't interested in losing money, which they would in your case. It's unlikely the bank would agree to this if your house is worth less than you owe.

These are the kinds of jams folks find themselves into when they buy a house with very little money down and coupled with declining market values.

It's really hard to tell you what would be the best in your case since you don't mention how much you're going to be upside down IF the house does sell.

One other thing to ponder is what kind of cars do you both drive? Are they relatively late models with enough equity to sell them to help limp along or to make up any difference that you might owe? Short of waiting on a foreclosure where you lose the control over what your house sells for, I don't know what else you could do not knowing specific details.

I pray all works out and this sounds like a bad situation to be in. I hope you can get it together and get back together because it sounds like a split is going to do you both much harm, financially and emotionally.

08-04-2011, 07:42 PM	#1
Starz26 Adjusting to the Life Join Date: Aug 2009 First Name: Eric Location: Ohio Posts: 486 Trading: (22)	Re: Short sale vs foreclosure If you get the bank to agree on a short sale, you will not be responsible for the diff between the sale price and the loan value. If you are foreclosed on, the bank can come after you for the difference. As for tax ramifications, I have no clue.... Someone please correct me if I am wrong. Oh, and both will mess up your credit for a good while but that is the least of your worries in these situations..... What about a loan modification? Hope all gets better......

08-04-2011, 10:01 PM	#3
chippewastud79 Fatter than you! Join Date: Oct 2008 First Name: Larry Location: A little place called home. Posts: 5,397 Trading: (44)	Re: Short sale vs foreclosure Short Sale > Foreclosure. For the items outlined above, the bank is absolving you from any extra balance left after the sale with a short sale. Banks are willing to wheel and deal these days, they don't want foreclosures anymore than the owners do. Definitely contact the bank, tell them of the situation and see what options are out there. With recent turns in the market, you could easily get a reduced rate and a lower payment. Don't underestimate renting, if you can come close to price of the mortgage payments (~$300 or less of the balance) it would definitely be something to consider. Sorry to hear about the situation, but I hope it all works out. __________________ If we weren't supposed to eat animals, then how come they're made of meat? You can never have too many cigars, they are like an investment in good times.

08-04-2011, 10:26 PM	#4
cmitch Heads up get down Join Date: Oct 2010 First Name: Clayton Location: NW Alabama by the river Posts: 2,720 Trading: (25)	Re: Short sale vs foreclosure You can ask for what is called a 'Deed in Lieu of Foreclosure' which is basically giving up all rights to the property to the bank in exchange for title of property to the bank. This would absolve you of any liability should the house short sell. You do not mention if you have other assets such as other property, retirement accounts, IRA's or Roths. This could technically come into play if the bank balks at a Deed in Lieu of Foreclosure because the bank isn't interested in losing money, which they would in your case. It's unlikely the bank would agree to this if your house is worth less than you owe. These are the kinds of jams folks find themselves into when they buy a house with very little money down and coupled with declining market values. It's really hard to tell you what would be the best in your case since you don't mention how much you're going to be upside down IF the house does sell. One other thing to ponder is what kind of cars do you both drive? Are they relatively late models with enough equity to sell them to help limp along or to make up any difference that you might owe? Short of waiting on a foreclosure where you lose the control over what your house sells for, I don't know what else you could do not knowing specific details. I pray all works out and this sounds like a bad situation to be in. I hope you can get it together and get back together because it sounds like a split is going to do you both much harm, financially and emotionally. __________________ No matter what one's status is in society, cigars are the great equalizer where the affluent and common share a love for the leaf. - Me.