San Diego Short Sales, Orange County Short Sales

Lenders seem to stepping up their collections efforts after short sales.

Question / Comments: I just completed a short sale on my house in Corona, CA and Citibank is the second on the house is coming after me even though the house is sold and I am insolvent. What should I do?
Info Request: Short Sale

Answer:

The first thing I would do is go over all the documents and communications involved in your transaction and recreate the terms of the deal.

There is a chance you were released from the remaining loan balance in writing.

Some lenders provide clear releases of liablity from the remaining loan balance.

Some lenders clearly state you will be liabile for the remaining loans.

Some lenders ignore the subject

Some lenders provide misleading releases

And some lenders provide a multitude of different types of releases and you have to read them all.

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Also based on the terms of the transaction and what actually happened, you might be able to argue the lender has no right to collect after releasing its lien. This is a complicated argument and I would review the case law and compare and contrast your facts with the cases.

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Finally you might want to talk to an attorney to discuss all your options. I have always wondered who advises people to close on short sales if they do not have a law license.

I have a whole section on California short sale law at UpsideDownRealEstate.com

here was a very interesting blog by Larry Bergstrom.

He gave a thoughtful answer to a very familiar question.

I really liked the fact he brought up the agency concerns.

http://activerain.com/blogsview/1315653/-did-you-set-the-price-or-did-the-seller-

Are our Real Estate Agency Rules outdated?

Why are we supposed to avoid telling agents and or the public price is negotiable. (unless our sellers specifically say price is not negotiable)

Whether we are trying to stimulate a new offer or trying to negotiate an improved offer, we are working on behalf of the seller. How could trying to bring in an offer or bring a current offer higher not be to our sellers advantage. We are not signing deals for our sellers.

My thought is that unless we are also working with a specific buyer and a specific buying opportunity we should be at liberty to say, sure the current listing price may be high for some buyers, but our price is negotiable.

Since we already know most Realtors are always negotiating price why don't we insist that agency rules conform to real estate reality.

(I exclude a situation in which the listing Realtor is also represents the buyer. )

Carlsbad Real Estate

Short Sale guidelines from Bank of America

This is a summary from and “internal memo” sent to me.

1. multiple appraisals may be conducted because investors or third party insurance may require current appraisals

2. B of A will pay sellers traditional closing costs like real estate commissions, appraisals taxes etc.

3. B of A will postpone foreclosure dates but the earlier you start the Short Sale process the better.

4. The closer the buyers offer is to the appraised value the more likely a short sale is to be approved.

5. B of A will not consider short sales from borrowers who are current unless imminent hardship is demonstrated.

6. Tax implications should be reviewed by an attorney or accountant.

7. Transaction must be arm's length

8. Promissory notes or cash contributions from seller may be required

9. BofA will usually require the borrower or agent to negotiate junior liens and the junior lien may delay the short sale.

Bank of America Short Sale Info

Non Recourse Loans (see CCP 580b)

Short Sales and Taxation by the State of California has become a little less risky.

In July of 2009 the California wrote this in one of their tax newsletters

"The most common situations when a foreclosure or a short sale does not result in cancellation of debt (COD) income involve a non-recourse loan. A non-recourse loan means the lender’s only remedy in case of default is to repossess the property the lender cannot pursue you personally in case of default. A purchase money loan (that is, a loan taken to “purchase” your home) is generally considered to be a non-recourse loan in California. Refinances, second mortgages, and “cash out” loans are generally recourse loans."

http://www.ftb.ca.gov/professionals/taxnews/2009/July/Article_9.shtml

This was a very important clarification of their position. There had been a debate regarding how the FTB would treat short sales of non recourse loans. In fact in the early part of 2009 the California Franchise Tax board was telling people on the phone they would have to pay taxes on the 1099 income.

I know this is a fact because one of sellers with an approved short sales opted to take a foreclosure rather than risk the tax burden to California. ( I suggested they call because they were asking very good questions about the applicablity of IRS tax law to California.)

for more info on

Taxation of Short Sales in California

We completed a short sale for a client here in North County San Diego.

Now they have another short sale to do in San Luis Obispo and they asked if I I would over see it.

I suppose this means that I would have to take a referall fee to oversee what is happening on the file.

The property is supposed to worth between 250 and 300 thousand.

Send me an email or give me a call if you are interested.

The more experience you have the better.

But if you have none, I could do the negotiating and do a co - listing or take a larger referral fee.

I am flexible.

short sale info