newbie needs help with short sale
Wholesaler · Los Angeles, CA · Member since 2009 · 48 posts · 28 votes
A relative is interested in doing a short sale. The house is in Sunland, CA. They have a first mortgage with Bank of America for about $240,000 and a HELOC with National City Bank for around $90,000. According to Zillow, the estimated worth of the house is around $340,000, but there is deferred maintenance and once Realtor's commissions are factored in, there is not enough equity to sell the house.
Any ideas on how I can help them. Anyone have experience working with National City Bank?
Thanks.
National City Bank is one of the best to work with. The only problem you may have here is that you said its your relative. This might be what is known as a Arms Length Transaction. You might want to look into that. As far as zillow goes while it really is a cool site I sometimes question there prices sometimes. I would call a Realtor and ask them to pull some sold comps in the area. Just to warn you National City will try to get the Home Owner to take the HELOC as a LOC and want them to pay the difference on what they get from the Short Sale and what they owed. As far as BOA goes everyone else says there a pain to deal with. I personally have had great luck with them. I will let you in on a little trick with them just don't tell anyone. When you call the Loss Mitigation Department ask to be transfered to the Short Sale Department right away. Yes they are two totally different departments. Once you get to the Short Sale Department play stupid and ask if they have gotten your file. When they say no ask if you can email it or Fax it while you are on the phone. They allow me to do this 100% of the time. Now when they get it they will tell you it takes up to 5 days to get it into the system. Tell them that is perfect and ask if they can schedual a BPO for you. Generally they will do that on the first call. Don't tell anyone about this though! (Like I am not on a public forum) If you need the Short Sale Packet for either lender let me know I have all of them.
One other thing Rob. Is there a way to do a short sale so that the owner walks away with no lawsuits / LOC debts / 1099-C forms?
My relative is very responsible, but he wants to move into a new house. He is always on time with his payments. If the real estate market wasn't so crashed (compared to 2004-2006) he would sell conventionally, but he just doesn't have that option.
Adam,
All I can say there is that you don't get what you deserve you get what you Negotiate! Yes there are ways around this. They key here is going to be getting a highest price offer you can. The lower the deficiency amount. The better the chance that you will get around that. The 1099C is for Tax loss generally National City will not waive 100% of that.
I agree with Rob... your problem is with the 2nd mortgage. Since it is an HELOC, National City will want to pursue a deficiency judgment for the loss amount unless it such point it becomes cost-prohibitive to do so.
As an investor, I usually decline leads with HELOCs becuase they rarely work out for the seller due to the deficiency rights. My recomendation is to NOT involve yourself (as an investor) since your profiting will be a detriment to the successful outcome.
Instead, you should advise your relative to find a good broker that has experience with negotiating deficiency waivers. As Rob has said, the key is getting the second as close to whole as possible, but there are several things your relative can say and do which will strengthen their odds of receiving a waiver. It is all about negotiation.