Can you do a sub2 with a shortsale?

Question

Can you do a sub2 with a short sale?

Bill B. · Answer

By definition a short sale nullifies the mortgage so no sub2 there.

You could pay all past due amounts and try to do a sub2 at the current balance, but then also by definition, you’re paying more than the short sale price.

It is a sad state fo affairs if we still have short sales in 2019. 10 years of modifications, adjustments and I assume in at least some cases, not making any payments.

Account Closed · Answer

The short answer is "no". "Subject To" and "Short Sale" are not compatible. A short sale requires an all cash transaction (from your bank account or from a loan) to the lender, while Subject To means the loan is not getting paid off. A lender has no incentive to lower the payoff amount if it isn't getting paid off.Also, a short sale can trigger a "forgiveness of debt" tax problem for the seller to the IRS.

Short sales are used when there is an over abundance of foreclosures in the market. We are not in that scenario.

Lydia R. · Answer

@Fili Aguirre Its very rare that a bank will approve a short sale when the owner is not in distress. This distress is typically demonstrated by missed mortgage payments. Banks dont just approve a short sale because the property is upside down. The homeowner has to be able to show they are in financial distress.

Wayne Brooks · Answer

Why would you want to?  By definition in a short sale.....the mortgage balance is more than the house is worth....not a formula for success.

Account Closed · Answer

@Wayne Brooks there is a new trick, didnt you know it?

Account Closed · Answer

@Bill Brandt the property has no due payments its just worth less than what the mortgage is, its for sale as a short sale

Bill B. · Answer

Then as long as you’re willing to pay the full owed amount, not the short sale amount (since the short sale will cancel the mortgage) And you can get the seller to agree to cancel the short sale and sell to you for The full amount due. You’d probably also have to pay the realtor’s commissions out of pocket as the seller won’t want to pay them. (They would have been eaten by the bank in the short sale.)

Can you do a sub2 with a shortsale?

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