Dallas-Fort Worth Real Estate Investor Club

Homeowner with a shortsale

  • 03 Sep 2009 5:55 AM
    Message # 215499
    Deleted user

    I own a home in Southlake (4000 sf/1 acre/1984 construction with $90k of renovations in 2008) and owe $580k ($464 1st, $116 2nd).  Appraised value (late 2008) is $495k (appraiser told to value the house at the number he thought it would actually trade at).  I had a major loss of income in late 2008 and have made only 2 payments this year but both lenders are working with me.  The 1st approved a short sale for $460k but the buyer found another home (it took over 90 days for approval).  The 2nd would be wiped out but the 1st said they will pay a few thousand $$ to them. 

     

    Unless I find another buyer (the home is listed but we haven't had many offers lately - my realtor thinks buyers dont want to deal with the short sale situation) my options seem to be:  1)  rework my mortgage (1st will do 40 years at 2%, 2nd may do the same), stay in the home for a few months and then rent it out, or 2) let the lenders foreclose.

     

    WRT option 1, I have no liquidity and even after reworking the mortgage to reduce the total payment (P&I, Taxes, Insu from $5,100 down to $3,000) I won't be able to afford the 3 months of payments, I'll owe about $90k more than the home is worth & I'm afraid it could be 20 years before the values improve to where I can break even.  However with such favorable financing it seems like I should be able to do something?

     

     

    WRT option 2, I bought the home to live in but never fully occupied it due to the renovation and then loss of income.  I have virtually no liquidity and only a rental condo with about $30k of equity. Do lenders in Texas pursue homeowners for deficiency judgements in my situation? 

     

    Any suggestions or comments would be appreciated more than you can believe.

     

    Scott H

    texasnnn@hotmail.com

  • 03 Sep 2009 4:23 PM
    Reply # 215696 on 215499
    Deleted user
    Wow, that's a tough one.  I had a buddy of mine go through something similar back in 2002. I'm sure someone here will be able to offer some tips. 
    Last modified: 03 Sep 2009 4:23 PM | Deleted user
  • 06 Sep 2009 4:11 PM
    Reply # 216420 on 215499
    Deleted user

    Scott,

    If the bank will except a lot less then I may be able to work a short sale with them.  Needs to be $100K+  less than market value.  If for some reason you do not get an acceptable offer, just ride it out mortgage free for a couple of months.  The likely hood that they will come after you for deficiency is slim to none.  I have worked many short sales.  One in particular has dragged on for over 1 year and the homeowner has not made a payment for over a year.  I told her just like I am telling you just wait it out until the house goes to auction.  Make sure any money you do save up stays secure at your home and not in the bank.  If you accumulate to much cash in your bank the mortgage company may go after it.

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