Replies to This Discussion

Permalink Reply by Joe Beauchamp on November 22, 2010 at 2:38pm

Well, a short sale looks better on credit than a foreclosure. Banks give credit, foreclosures are the deaths of the biggest loans that banks give to people. Worse than a BK to them, because it is directly against them, is a foreclosure on that credit report. So, yes, there is a value. I can't say how much, I don't remember that sort of info. A BK has less impact than a foreclosure on a credit report. You can probably look up stats on the diff. (things like your car insurance for the next 7 years will be $200/mo more or whatever - so there will be even a minimal real cost to either.)

Also, your owner can look at a deed in lieu of foreclosure. I suspect it is not as good as a short sale but it is close. In practicality, they may even be close enough to be treated as the same - I don't know..

Permalink Reply by Angela Alfe on March 22, 2011 at 3:06pm

A DIL is not necessarily better than a short sale.  It is simply a foreclosure without the legal fees and court costs to the lender and a quick way for the owner to be completely done with the property (remember, until the bank owns the property, the owner is STILL responsible for the property insurance, taxes, etc.  Also, if someone were to get hurt on the property, the owner would still be liable for any damages/lawsuits/etc. even if the home is abandoned).

 

If you client is considering a short sale, I would strongly advise you to advise them to speak with a qualified real estate attorney, along with his bankruptcy attorney.

Permalink Reply by Nancy Hodgson, GRI, SFR on March 22, 2011 at 3:21pm

Thanks for your reply, Angela. The situation resolved itself with the property going to foreclosure sale earlier this month. It sat vacant the entire time and at one point was the home to several of the area homeless who got in through a back window. The bankruptcy attorney insisted the owner leave the property abandoned. I agree with you on the liability issue as well. I had to bow out as the bankruptcy attorney started accusing me of looking to "make a buck" rather than acting in what should have been the client's best interests.

Permalink Reply by Ralph R. Robles on November 22, 2010 at 8:15pm

Joe is correct... a short sale looks better than a BK on credit report and the Bank will lose less money short selling than foreclosing...they rather short sell than foreclose any day and of course it gives someone an opportunity to buy and you and opportunity to do business and build contacts.

Permalink Reply by Barbara Pedersen on February 4, 2011 at 12:16pm

Exactly. I had a client who did a short sale, after his bankruptcy had been discharged, for this very reason.

Although his property was included in the bankruptcy he said he did not need both: foreclosure and bankruptcy on his credit report.  Bankruptcy alone was bad enough. He was also aware of the fact that the foreclosure would have more negative inpact on his future ability to obtain a mortgage loan than bankruptcy.

Permalink Reply by Nancy Hodgson, GRI, SFR on February 4, 2011 at 1:27pm

My thanks for all the ideas and thoughts. I'm now working with an owner who is getting ready to file to discharge credit cards, etc. but hoping to do a loan modification and not lose the home he has owned since 1976.