JP Morgan Chase Bank Has Made Some Changes
Posted on Jun 14, 2011 by Trent Chapman
JP Morgan Chase Bank, who also services loans that were previously owned by Washington Mutual (WAMU) and EMC Mortgage, has been testing some new programs since early 2011 by offering an incentive to some of their borrowers who are in default. These ‘incentives’ have come by way of a letter offering the borrower $20K-$40K to short sale their home. Granted, these offers are not made to all Chase Bank Mortgage holders, but specifically to those in areas where home prices are still >$300K.
Chase is my ist lender. We got an approval for Short Sale and they are giving us 35k as an incentive. Now comes our 2nd mortgage – Real TIme Solutions (Bank of America), asking us to pay them $38,500.00 otherwise they will not consider a short sale. Is this legal? The incentive money from Chase is our last card to be able to start a new life. Help please..
Thank You.
I am sorry to hear about your difficulties. To answer your question, yes it is legal for BofA to ask for that, however, if you have an agent who is worth their pay, they would fight to reduce that significantly. Let me know if your agent has given up and if you need help.
-Trent
I have a first lien heloc with Chase at $1.525mil. This loan originated with WAMU. I am preparing to short sale. What did Chase purchase my loan for when they purchased WAMU? Any advice?
I apologize for the delay in responding Darren, I just got back form a conference.
Although Chase purchased WAMU assets for a discount, they purchased a lot of debt that was backed by collateral that didn’t have sufficient value to cover the debt. For example, if I took 5 loans that were originated in 2007 for $400K each on 5 homes that were each purchased for $500K, Chase would not buy those notes for face value of $2M if there was a high risk that one of those loans would probably default and foreclose. They would expect a discount, knowing that the combined value of the collateral is likely less than $1.5M today.
So, the short answer is we don’t know what they purchased YOUR loan for. We can guess that it was 80% of note value, but there are other factors that would suggest they bought a large bulk of bad loans that would cost them much more.
Reply to my email and we can talk one on one so I can give you some more personal advice on what to prepare for.
-Trent
I just sent
Hi Trent,
Sorry got busy and didn’t get back to the conversation. How do I get a hold of you direct?
Trent thank you so much for your input. I like the idea of cc’ing other resources that may help our cause. We have been able to escalate to the negotiator’s supervisor and she of course is negotiating hard for Chase. I get the sense that the 2nd short sale submission (with us defaulting and me now unemployed as well as taking on the hardship of caring for an elderly mother) never got to Freddie Mac. The supervisor mentions she’s “talked” with them and tripped over the fact of how many times this has been submitted. She’s even upped the ante and is now asking for $50 cash telling us that this may not even fly with FM. I did a lot of research on the net and see that Short Sales are being pushed by the Federal Reserve (white paper in early Jan 2012), BOA is publicly saying they will up SS’s by 60 to 70% in 2012, and FM has a SVP who went on record that they are seeing SS’s as the way to get out of this mess and enouraging lenders to work through these. So I do wonder if we are hitting walls due to Chase, not FM. I have a couple email suggestions for FM I’ve found on blogs and a phone number. If you have anything that could help, it would be very much appreciated. I think we will try to contact them now to get direct feedback vs immediately responding to Chase. We too have a call into a real estate atty in ID. We aren’t trying to screw anybody, just come to an equitable resolution. Our hit for holding these 2 properties almost 6 years has cost us nearly $500K. And here we are within $30K of making Chase whole and they are being quite extreme in their negotiations. Due to my business partner’s new income, it LOOKS like we have no hardship, but due to relentless loss and then unemployment hardship these years, we now have to concentrate on WHAT debt we pay going forward. The equity lines, the credit cards, family, our own primary residences, etc. And of course the real estate investment without any equity, a loan that is unsustainable and no remod available, is the one that needs to go. And bottomline, it’s best for Chase and FM as well. How do you convince them of this when the math seems clear as day? Thank you for listening and your blog. It’s been very helpful as we trudge forward with this. It’s been a year of pure frustration.
My home was also WaMu and then bought by Chase and sold for 150k below the purchase price. 99k was a 2nd morgage which they reduced to 6k and 51k was the 1st. My ? is will they be sending me a 1099c for the intire 150k or just the 51k after they reduced the loan amount on the 1st and 2nd. What is the amount they will if any be sending me 1099c and if they do since it was my primary residence is that consider under the 2007 house bill the would keep me from having to pay that as phantom income?
The 1099C is usually for the amount of their loss, not the full balance. I am not clear on your numbers, because I don’t know how much you put as a down payment. So let me throw out what I think you are saying. You purchased the home for $220K and you had a $121K first and $99K second. The net proceeds to each was; $51K to the first and $6K to the second, which equates to a total loss of $163K ($70K first lien loss & $93K second lien loss). I would assume a 1099C would come from the first for $70K and the second for $93K.
If the amount of money owed against the property was equal to or less than the amount that was used to acquire or improve the property and it is your primary residence, then yes, you probably are exempt from paying taxes on the loss (based on the Mortgage Forgiveness Relief Act of 2007, set to expire in 11 months). I am not a CPA or Attorney, so talk to your CPA to understand how this Act applies to you.
-Trent
Hi Trent,
Thank you for what you are doing. I have a Wamu Chase 80/20 loan 2007, $200,900.00 almost 19% total interest, yes 19%…origination. I was in an auot accident and lost my jobThe bottom fell out of the housing market, and we are still trying to find it, and I am now on SS Disability. I tried 2 times for a refinance and 2 times for a loan modification, including the help of my government represantive. I was denied all.
I have exhausted all my retirement funds and wil have to move with my daughter in GA as I cannot no longer afford my $1600 doolar per month mortgage. I had a tennant but no longer, it is very difficut to find some one to trust while you sleep.
I would like to know if I hire an agent to do a Short Sale will Chase Pay the Agent. How much will it Impact my Credit Score> How long can I remain in my home, How long should I try to sellit. Do I still have to pay the mortgage????
I am presently Current on my payments,
Thank you for your time. God Bless You for what you do
Dee I am so sorry to hear about your situation. A lot of good people have been affected.
To answer your questions:
1) If I hire an agent to do a Short Sale will Chase Pay the Agent?
Yes.
2) How much will it impact my Credit Score?
The missed mortgage payments is the main impact and 6+ in a row can drop your score as much as 300 points or as little as 150 (there are a lot of ‘other’ factors).
3) How long can I remain in my home?
As long as the bank allows. In most States, the average time from missed payment to foreclosure is 16-20 months.
4) How long should I try to sell it?
I would try as long as it takes. Most of those who stay 1-3 years in their home have been trying to modify or sell and talking to the bank during this time.
5) Do I still have to pay the mortgage?
That’s up to you, but no, you don’t have to be current to do a short sale. Most of my clients are 6-12 months delinquent when they start working with me.
Dee, let me know if you would like me to refer you to one of my agents that I’ve trained and they will take care of all the conversations and negotiations with your bank.
-Trent
I have an investment (rental) property which I have never lived in, and it’s going to short sale.
I asked my CPA what would happen once the sale is completed, and I receive the 1099C, as far as my tax liability. He said that I would be able to write off as a loss the difference between what I paid for it originally, and what it sells for at short sale, and that loss would almost completely cancel out the “income” from mortgage forgiveness.
In your experience, does that sound correct?
Either way, I can’t believe the IRS would kick somebody while they’re down by charging them tax on a forgiven debt for a house they just lost.
Your loss and reduced income could definitely make it so that you would not experience any tax consequence to receiving a cash incentive.
I am not a CPA, so I would take your CPAs word over mine every day : )
-Trent
i have an interest only loan for $177,000 with citimortgage/freddie mac and my home is currently worth about $90,000. i live in arizona, a non-recourse state and wonder what the best steps are to either change my loan/amount vs. short sale/foreclosure.
Hey Mary,
Unfortunately, most banks don’t offer ‘principal reduction’ as a part of their modification programs. The prefer to do what is known as a ‘principal forbearance’ which simlpy means that they may reduce your balance, but it is not permanent. So if you owe $177K and the reduce your principal temporarily to say $100K, you would not make payments or be charged interest on the $77K, but you would still owe the bank that balance and if you ever sold or refinanced or came to the end of yuor loan term, you would still owe the bank that $77K balance.
For this reason, many homeowners prefer to just do a short sale and prepare to buy again. The reason that banks will rarely do a true principal reduction, is because they are fearful that once they do that, the word will spread and millions of people will intentionally default on their loans, to try and get their loan balance ‘reduced’ to fair market value. Banks are afraid of opening those flood gates, so I don’t expect to see that ever happening.
If you would like a great agent to work with who is a personal acquantaince of mine, please let me know. I have a few good agents sprinkled across AZ from Lake Havasu to Tucson and any where in between that I can personally connect you with to get more information.
-Trent
thanks for the reply-yes, i would like to talk to an experienced agent in the tucson area-will wait for your reply.
Hi Trent. I live in California. I was able to short sold my house on Dec. 2010 for $238,000. It was my primary residence and lived there for more than 2 years ( date of purchased Dec. 2007 @$420,000)). It was a single loan ( my lender is Chase) and I did not do any refinancing during the time I had it. My question is why did I not receive 1099-C? they sent me a 1099-S though. I filed my tax almost the deadline last year waiting for that but until now Chase hasn’t send me one. Am I gonna get it still or not?
When I filed my tax return last year, H&R block just sent a copy of my 1099-S to IRS. Its tax time again, I dont know if I need to amend my returns for year 2010. Please help. Thanks.
They may not send it and it may be because they did not release you of all liability and plan on trying to collect on the balance. Your short sale agent may not have had a clue about how to negotiate a release of liability, so when you sold your home and they released the lien from the property, they may have left the balance as collectable debt so they could pursue you (again, if the approval letter did not release you of liability, then they have that option). What makes this so frustrating (if that is the case) is that it would have been simple to get a release of liability because if the home had foreclosed, per CA law they could not be able to pursue you for the balance because it was your primary residence and you had not refinanced the original loan (See CA CCP 580d). After 7/15/11 however any homeowner who works with an incompetent agent will be protected as the law was amended to state that if a lender does a short sale in CA, they cannot pursue the seller for any of the bank’s loss. The good news is that the statute of limitations for financial debt is 4 years, so if the bank does not obtain a judgment by 12/2014, they cannot obtain a judgment for their loss.
For now, I would just advise you to tell your CPA how much you paid and how much you owed at the time of sale and how much the bank actually received. You are more than likely covered by the Mortgage Forgiveness Debt Relief Act of 2007 and won’t have any tax consequence, but I can’t say for sure because I don’t know all of your specifics and am not a licensed CPA.
-Trent
-Trent
I WOULD LIKE TO BUY A HOUSE, I’M A SINGLE MOTHER AND I OWN MONEY FROM A WASHINGTON MUTUAL ACCOUNT.I WOULD LIKE TO KNOW IF THEY CAN LEND ME MONEY FOR A HOME LIKE AROUND 50,000 AND ALSO TO PAY MY DEBTS. I’M SO AFRAID TO MAKE BUSSINESS WITHANY REAL STATE I DONT TRUST SO FAR. DO YOU THINK IS POSSIBLE FOR ME BEING A SINGLE MOTHER TO BUY A PROPERTY ON SHORT SALE OR FORCLOSURE FROM MY BANK? IF YOU CAN ADVISE ME ON ANY OF THIS MATTERS I’LL APPRECIATE IT SO MUCH!
Being single won’t prohibit you from buying, but there are a few other factors to look into. I’ll email you and get some more information from you and connect you with someone in your local area to help you find out what you can afford and how to best structure that so you can qualify.
-Trent
Hello Trent,
I am inquiring about a unique situation. I have a friend whos husband past away in a few months ago. Their home was mortgaged with Chase under the husbands name only. The house is about 100 to 125k over value. They owe 425, it’s worth 300 or so. The wife wants to purchase the home with cash. We know she can add her name to the loan but that would be just a little bit dumb. She wants the home because it has sentimental value to her and her children. Here is the situation. I have called on her behalf to Chase and only get so far with their hourly reps. I get the good ole statement that she can just pay the balance blah blah blah stuff. Who would she need to go through, what direction would be best, utilizing the best strategy, how would we go about handling this. I have one associate that says Chase would rather take a chance at foreclosure, which the house is in, and let it go then to take market value by means of cash from the woman who lives there. We want to do this legally and not do the short sale to the friend tactic a bunch of others are doing. Would appreciate any help or advice you could give.
If she can buy it for cash, why wouldn’t she just buy it at auction (assuming the minimum bid is $300K or less)? I doubt anyone would outbid her (unless they were dumb) and you’ll be hard pressed to find a solution which involves her buying it via short sale from her deceased husband. I am not saying it is impossible, but you need to start towards the top at BofA, not with the call center. Get an email or something in writing from the executive office or the escalation division that states they will do the short sale from the deceased spouse to her.
I’d first check with an asset protection attorney to see if they could come after her ‘cash’ if the home were to foreclose (it might be considered part of his ‘estate’, but I don’t know).
-Trent
Hi Trent,
I had a question. It does not pertain to short sales. However, it does pertain to Chase. My original loan was Bear Stearns in 2007 and serviced by EMC. My loan was bought by Fannie Mae, yet it was still serviced by EMC. After the decline of Bear Stearns, CHASE took over their mortgage portfolio. Since the interest rates have been so low compared to 2007, I applied for a loan using the HARP Refi Plus. CHASE denied my loan application due to the fact that EMC was my original loan and they don’t have enough details on the loan to be able to underwrite a new loan. This is a flaw in the HARP, yet CHASE is not doing anything about it. I have been straight as an arrow in payments (not a single late since inception). Obviously, HARP is my only option since the value of my house is clearly underwater…the amount owed is a combined 131% LTV. 93% LTV on 1st…then the rest from a HELOC. Nonetheless, I don’t think I’m the only one in this situation. The proposed refi that I applied under the HARP would have save me $500/mo. which is what the HARP was designed for. Yet, there is that “original loan servicer” EMC issue. So I don’t know what to do. Am I stuck with this “dud” of a loan?
I would contact Fannie Mae directly and explain that if they don’t have the original file to even apply for HARP, how can they say you owe them payments? They can’t play it both ways. Tell Fannie Mae to fix it and ask them who you need to talk to in order to straighten out the servicer (Chase).
-Trent
You are not alone! I too, am/was supposedly a “prime” candidate for HARP 2.0. Oh boy, they loved me – come on in, HARP 2.0 in full effect, this is your life saver! I also was quoted a wonderful rate with huge savings. I too have a former EMC mortgage that Chase claims they don’t know anything about and refuse to underwrite my HARP refinance. Then when I ask the tough questions, no one will put my answer in writing and will not return my voicemail. I don’t know what to do! I don’t know who to be upset with, Chase or Fannie Mae or both? Chase is blaming Fannie Mae and claims to be working for me, but who knows. Fannie Mae is absolutely clueless. In the meantime, I have no hope that even if I am able to push this through, that in the end it will be worth it because I’m sure Chase will use this as an opportunity to jack my rate up several percent. What incentive is there to significantly lower my monthly payment when I have been a great customer for 10 years and never ever been late on a single payment? There has got to be a misuse or fraud hotline that we can call to tell our story. I hate to be so blunt, but I don’t think these people care, I’m dead serious. I mean, they take government funding for a program and then put into place all of these pitfalls to set a good solid customer with good income/credit to fail. I’m seriously thinking about starting a website about this nonsense and naming names directly and publicly. This needs to be publicized on the net and the individuals that are promoting this scam need to be held accountable if not to the government or congress – then at least to the general consumer that may think about using a particular broker.
You can go with any other lender for the HARP refinance. You do not have to go with your original lender like you would with a loan modification. I would suggest you do some research and find a local HARP refinance loan officer. As long as you are otherwise eligible (no missed payments in last 6 months, no more than 1 missed payment last 12 months and loan is owned by Freddie/Fannie) you should be able to be approved for a HARP refi. You do not need to prove your income in most cases either(unless you are going from a super low adjustable payment to a fixed rate payment that is increasing your current payment by more than 20%) so it is pretty simple.
-Trent
Trent
I have had my eye on a property in my home town for over a year. The home has been vacant now for over a year. According to tax records, the home was purchased for $40K in 2006. I know the owners son and he says his mother has not made a payment on the home in well over a year due to the fact that she could no longer afford to pay for it. She told him the home was foreclosed on by JP Morgan Chase. After I contacted JP Morgan about the home to get the details the system is showing that the home is still in the owners name and is not in foreclosure yet. I guess that shows how far behind companies are with all the foreclosures.these days.
My question to you is this. Should I contact the owner directly and tell her I am interested in purchasing the home and for her to contact chase about her hardship and she has a cash buyer interested in a short sale?
In the market we are in today what what kind of offer do you think they will accept? Thanks
Many homeowners don’t understand that the home doesn’t revert back to the bank after one missed payment.
I would suggest contacting the homeowner and getting her to work out a short sale.
The price is dependent on the fair market value and banks will still do what is best for them, so if the offer is too low, then you will find they would rather foreclose.
PS- A cash offer doesn’t excite the bank. If a financed buyer comes along and offers $2K more, the bank will take their offer over yours, because at the Close of Escrow, a wire is still what the bank receives from Title/Escrow, so the amount is what most matters to them.
-Trent
Hi, I am looking for an agent to assist me in my short sale, I have my 1st and 2nd loan with JP Morgan and i am in San Jose California. The questions that I have are as follow
1. Who pays the agent that assists me?
2. If the Home equity loan is with the same lender, in my case JP Morgan, is it a better chance tha they will forgive it?
Please advise, thanks!
1. The commission is paid out of the sales price, which essentially comes out of the net proceeds that the bank would be receiving.
2. Yes, because of CA precedent case law, Simon vs. Superior Court (1992), the second lien when held by the same bank as the first lien has less possibility of collecting on their loan balance if they elect to foreclose with a trustee sale.
-Trent
P.S. I have a couple great agents that we’ve trained in San Jose. Reply to my email and I’ll give you a couple options.
Hello…I bought a home in delaware May 2006…I recently found that my home is worth about $20k more than I owe…paid $179…owe $149…..appraised $129….My job has transferred me about 50 miles away…I have been commuting for almost 2 years but with the price of gas, student loans, and my sons tuition I am currently struggling to make ends meet…however I am current on all of my bills…my realtor has suggested a short sale…my credit score is 768..(worked really hard on it)….my questions are: 1. do i qualify for short sale through chase? 2. will this ruin my credit even if I am current on my payments? 3. will I be eligible to purchase another home in the future 4. will I be required to supplement any cost
1. Possibly, I don’t have enough info.
2. If you are current and complete the short sale, it will not ‘ruin’ your credit but may have a slight impact.
3. Yes, immediately via FHA if you do not miss any payments during the short sale.
4. Possibly, it depends if you have what appears to be a valid hardship. If you are trying to stay current and short sale, then it also increases the likelihood that you may have to contribute some money towards closing.
-Trent
Trent,
Any points of contact to work with Chase on doing a Short Refinance into an FHA or VA home loan? Currently owe about $295K and the Chase website estimates my property to valued at $240K. (Don’t think they’d ever see that if it were to going into short sale or foreclosure). We want to keep the house, but the payment is too much, and the property really isn’t worth what we owe.
Any thoughts on how to work with Chase (they are the servicer)?
Thanks!
I would look for a local loan officer who has experience with the HARP refinance. It’s very rare that a lender will agree to any other type of ‘short-refi’. I’ve not personally known anyone to successfully close a short-refi, although I am sure it’s possible, I would not bank on it working out. HARP refi is the closing thing you’ll get to a short-refi.
-Trent
Only problem with my situation is that Freddie or Fannie don’t own my mortgage!!
Well… good luck with the short refi. Banks don’t like them and there isn’t really much by way of ‘risk’ that they will lose money because 1) you have to remain current to get your new loan, so they know you won’t be missing payments which leads to 2) they feel you can afford the current payments if you aren’t delinquent. It’s a tough transaction, but if you have the perfect income (not too high and not too low) you may be able to pull it off.
-Trent
I have been approved for HAFA short sale on my Chase mortgage. I worked a contract and sent it to CHase for approval. It has a 5/15/12 closing date. They approved this contract on 3/15/12. I got “word”-nothing directly addresses to me, as the OWNER of the home, that Chase set a 4/2 closing date. The buyer has until 3/23/12 to firm up the contract. Everything I read says a short sale has 45 days after the RASS is approved –I believe this is the 3/15 date. The sale is for $375K, the loan (orig. WAMU) is at $530K. I would rather it go to foreclosure than be forced to move in 10 days. I spent hours on the phone today trying to get an answer to the official timing of the short sale closing. Can you help? From what i have read here, they might offer me more $ to close early–I am just getting the $3K HAFA funds.
I have not read of any guideline in HAFA that would require a minimum 45 days close of escrow from the date of approval. If you don’t close escrow by April 2, they will give you more time. The fact that they gave the written approval on the 15th would be reason enough to push back and request more time to close. They probably got approval internally weeks ago, but by the time you got the approval letter, several days had passed and they did not update the close of escrow date.
Is there a foreclosure sale date set?
-Trent
Hi,
We bought our home for $364,000 end of 2006.
We have not been late at all on any payments. We have 2 mortgages, 1). $259,000 & 2) $67,000 (approximately). It was an 80/20.
We would like to be able to get out and move but because of the market our house is worth approximately $210,000. – that is chase’s value as of June 2011.
How can we go about selling? Nobody will by it at what we owe of course. Can we short sell even though we are not late? If yes, how does that effect the 2nd mortgage? If yes, does this way still hurt our credit? We are currently 753 & 805.
If no, is the only way we can short sell is by stop making payments?
Ay suggestions of how we can sell/ get out, other than renting?
Thanks.
Nicole
Nicole, it really depends on how your financials look and if we can prove an upcoming hardship. I am working on one right now where the owner is receiving $1,800 a month in child support. That goes away in May when her daughter turns 18. This is something that we have been able to document and show the bank that the hardship is real and that within the near future, the owner will start missing payments. Other examples of hardship are divorce, job transfer, reduction in income and saving are almost depleted (savings will be gone in the next few months and then mortgage payments will be missed).
The key to preserving your credit is working with the RIGHT AGENT (if you need to find a good one in your area, email me: trent @theshortsalegenius. com and I’ll connect you with an agent who I have trained and coach).
-Trent
Hi Trent,
I have a joint mortgage with my ex, we were never married though. I haven’t been living in the house since January 1, 2010, and I haven’t paid on the mortgage since then, my ex has been living there and paying it. I haven’t had a job since last July, my boyfriend and father have been paying my bills. My ex informed me that he is moving in a few weeks back to his home state, into his Mom’s house, across the country and we will have to do a short sale on the house. I believe he has been unemployed for a while. We bought it for $124k, we owe $117800, and Chase is our lender, it is worth ~70k. My credit score is 785 and I am worried about the impact of not keeping the mortgage current, as we have been advised to let the payments slip for the short sale. Additionally, I am not sure what to put in the hardship letter, so if you have any advice there It would be greatly appreciated. I don’t know how much detail to go into when writing it. Thank you for everything!
Have you looked into the new HARP program? With the new guidelines, if your loan is owned by Fannie Mae or Freddie Mac, you can refinance and possibly remove him from the mortgage without proving income or having to worry about the loan to value… but that still leaves you liable for the loan.
If you are going to short sale and you can show a hardship, it is possible to remain current and close the short sale (I’ve done about a dozen and actually closed one 3/29/12 that was current on both mortgages at the time of closing). These are not easy and require cooperation from all those on the mortgage, but if you can show a future hardship (which it sounds like you can) and work with the RIGHT AGENT (that is really the key, most agents will just tell you to miss payments) then you may be able to preserve your credit.
My clients that closed escrow last week are actually in escrow already to buy another home (lower price obviously) at the end of this month with the FHA program.
-Trent
Hi, I’m current on my first, my 2nd (HELOC) is with Chase, balance 114K, has been charged off last month, I called chase Recovery, within a few seconds he offers me 12% to settle the balance, is that the norm? the max I can come up with is 8K, can I offer that? what happens if I don’t take their offer?
That is not the norm, but that is a pretty good deal. If you can afford to keep the house, see if they will take 10% with $8K now and the rest over a couple months. Because it is a HELOC, they may have other recourse options, so that is why they will usually want at least 10% of their principal balance.
-Trent
I also just found out he makes 3k a month and will be retaining that job when he moves.
We currently put an offer in to a home that has a FMV of 240K. We offered 220K, the owners owe 325K. The owners accepted the offer. This is in the state of Wisconsin; the lender (JP Morgan Chase), has started the foreclosure process on the home….we offered on the home at the same time they put the court case on the docket.
My question is this: do you think Chase would prefer the short sale or go through the foreclosure process? Does having the short sale offer in now change the foreclosure process on the home?
Generally speaking, is the 30 day rule followed by lenders to provide an answer on the the short sale offer?
Any other thoughts/advice at this time? Thank you in advance.
1- Chase prefers the short sale.
2- The foreclosure process may continue as they are reviewing the short sale to make sure it is a better deal for them than a foreclosure.
3- No, there is no general rule. There are ‘programs’ that state a specific time, but none of them is consistently less than 60 days.
As a buyer in a short sale transaction, you put a lot of trust in the seller’s agent to keep the bank informed that they will make more money by working with you than by foreclosing. If the agent is not well versed in short sales, a good short sale offer may not be approved and the bank will foreclose and will lose more money. The banks and their processes are not well organized and many bad decisions are made if the agent working with the bank allows it to happen.
-Trent
Hello Trent
I’m a new real investor I would like to know if you offer training to investors on how to negotiate a short sale with the bank quickly as a real estate investor. there are alot of over leverage sellers in my region that would like sell but I’m not sure how to work with. Thanks
Hello James. We don’t have a training specifically for investors, we focus on teaching the skills of negotiating short sales and how to get them approved.
-Trent
Hi Trent,
I bought a home in CA for $489k back in 2007. I had two loans with EMC mortgage. The first was for $396k and the second $93k. I short sold the home in September of 2011 for $250,000. I received a 1099C in the amount of $93k for the second but nothing regarding the first. I don’t know what happened to the $157k lost on the first loan. I’m trying to file my tax return and have to put in a total of debt owed to the lender. My problem is that the full amount of the 1099C is not excluded if I only owed the bank $332k. Now if I put in $489k as the debt owed then the full $93k qualifies for the insolvency. In your opinion was my debt to the lender the purchase price of the home regardless of what they took as a loss? Should they have sent me another 1099C or possibly a 1099A?
Thanks
Hello Stephanie. First, I am not a CPA, so I can’t give you tax advice, at best I can point you in the right direction.
If you are exempt from paying federal taxes, per the Mortgage Forgiveness Debt Relief Act of 2007, then you are not required to pay any taxes on the loss of the principal residence indebtedness. In other words, if you owed less on the home that what it cost you to buy and improve the home, and if it was your primary residences, then you would most likely be considered exempt from the tax liability.
Again, this is just general info, you REALLY need to use a CPA, even if for just this year, so you can get good competent advice.
-Trent
Hi,
I just recently signed contracts for a short sale and am currently waiting on bank approval from Chase. My question is if you know the usual reason why The bank will not offer a waive of deficiency? I am very concerned that could happen to me. My house is only in my name but my husband contributes to our household expenses although his contribution has declined over the last year. I also had to go part time due to child care issues. I was told by lawyer that it is a possibility they could make me pay the deficiency. That is a big risk although I’m willing to take. I am somewhat current and not over 6 months late. Do you know if the banks see that you being current a issue even though you have a hardship?
Thanks
I understand your concern Michele about the deficiency. The first advice I would give anyone in your position is to find a qualified agent. You’ve already picked your agent and I don’t know how qualified they are. The number one factor in whether or not the deficiency balance is forgiven is how well trained your agent is at getting the bank to agree to those terms. Agents will make excuses all day long about how, “in my state the bank won’t forgive the balance” while in the exact same city there are a couple other agents who are getting the deficiency waived on every single short sale.
If you are working with one of the agents who says, “it can’t be done”, advise them to get more education on how to negotiate for YOUR benefit, not just so they can get paid. If they still refuse, my company has trained thousands of agents and I can help you locate one that is competent and knows how to get the best terms for you.
In some cases, you may have to contribute a small amount in order to get the bank to write-off the rest of the balance. This depends on how severe your hardship really is.
-Trent
hi i live in my childhood home my mother passed away in jan my father 10 yrs ago. my father was the borrower on the home there is 90k left on mortgage i just found out my mom never put her name on mortgage and because of senility she was going into defaultat the time of her death what do i need to do to try to keep the house? there is no way i can qualify for a mortgage the house is in detroit mi and i keep hearing the banks are walking away from area homes
Sorry to hear that Kathy. This sounds like a question that is more appropriate for a probate attorney. You may not have any claim to the property, but you may be able to buy it from the bank for much less if they decide to foreclose. I would start with a probate attorney and answer all their questions so they can help you understand if you can even control the property. Again, sorry and good luck.
-Trent
I completed a short sale with Chase a 16 months ago because I didn’t qualify for a loan modification. At the end of short sale completion Chase only gave me $1,000. After being a loyal customer for years and only missing two payments in order to start the short sale process, I feel I have been swindled by them.
Steve, I understand your frustration, but you also have to look at what else they did for you. Did they forgive you the balance of the debt when they agree to the short sale? Was it $20K, $50k+? I am not taking the bank’s side, however, too often we feel entitled to something simlpy because it was offered to someone else. I don’t understand all the reasons why some banks offer tens of thousands of dollars to get a seller to cooperate with a short sale, but If I were the bank, I don’t see how it is ‘fair’ that I am forgiving a borrower of tens of thousands of dollars AND paying them a few thousand dollars at the end… yet banks still do it.
-Trent
Yes Trent, the Bank did forgive the balance at the end of the loan which was about $38,000 and issued me a 1099c form after the sale. But having them for over 10 years they certainly didn’t lose any money on this deal. I was annoyed with them about the fact they did not try hard enough to keep me in my house. I submitted two applications because they lost the first one, and and all the Info needed for the loan modification but they alway claied something went missing or they were just so overwelmed by everyone doing loan modifications they didn’t want to be bothered with the process and turned me down.. But when it came to the Short sale which I didn’t want to do in the first place, my house was sold and the short sale was completed in 23 days. Go figure. My realtor coudn’t beleive it. So now i’m forced to rent and not sure if I can ever get a home loan again despite having credit scores over 700. Banks don’t want to talk to you until two years after a short slae and even then I’ve been hearing that there are no guarantees, so what are the options?