Possible Short Sale?

Question

I work with a guy who walked away from his home about three years ago and his bank foreclosed on him.  The bank (Wachovia) is constantly sending him letters wanting him to resume his mortgage with them but he is firmly opposed to going back to his old house.  He is still listed as the owner according to the tax office.  I was wondering if this home would be a possible short sale candidate and if not, what might be a creative solution for acquiring it a deep discount?  Any help is greatly appreciated.

Tom Mole · Answer

Disclaimer: I don't know anything about foreclosure law in NC. Do you homework.

That being out of the way, let me suggest. Have you talked to the lender? Would they be interested in selling the note at a discount? Buying the note at a discount would be similar to buying the property short from the bank's point of view. Your work pal could then sign the deed to you in lieu of foreclosure. Problem solved.

If there are any junior liens, a short sale could be a problem as the lien holders may deny the short sale. If you buy the house by the process above, you may still be liable for the junior liens. If that's the case, consider foreclosing to gain title. That will normally eliminate the junior liens.

Be creative. There is very often a way.

Happy New Year.

Laura Marshall · Answer

If they foreclosed, it is most likely a collection company sending letters. Wachovia merged with Wells Fargo a couple of years ago. They no longer use the Wachovia name. If the letters are from his old mortgage company, they should be coming from Wells Fargo.

Mark Gallagher · Answer

@Mike Chandler Either they foreclosed or they didn't..

Account Closed · Answer

email pam@theestates.com her company has been involved with over 300 short sales.

Elizabeth Colegrove · Answer

Kristine Marie Poe  she is the expert on these types of deals ;)

Account Closed · Answer

Way too many assumptions here.  Talking about a short sale when you don't have the numbers is a waste of time.  The lender might be owed less than the loan balance and other debts, which doesn't make it a short sale

Get the facts.  What's the value? (not assessed value)  What's the condition?  What's the status of the foreclosure? If it's not yet an REO: what is owed to the lender?  Get a title report and see what else needs to be dealt with and/or paid off.  Did the borrower file BK at any time?

It might well be an opportunity, but likely you will need the cooperation of the owner/seller.  But first come back here with all the info.  :)

Boyd McClean · Answer

Before you do anything more do a grantor/grantee search.  Verify unpaid property taxes. Verify all liens. The defaulted mortgage could have been sold to a hedge fund and not recorded because they are going to sell it. The bank still will send out letters for the balance as they have an agreement with the hedge fund to persue collection for a fee.

Whe you check on taxes ask how far in arears does the county allow taxes to go before the property becomes a canidate for tax sale? You indicated that 3 years has gone by. In your case maybe the bank kept taxes current.

Ask your friend to order a pay off letter. Then you will know where he stands and what is owed. When you have done the above then you can decide whether or not it is worth pursuing.

Don't guess.

Guy Gimenez · Answer

In addition to the mortgage, there will be penalties, late fees, attorney fees, etc. which very likely consumed much of the expected equity, so a short-sale may be a possibility unless and until it is foreclosed.

Short sales are seldom short and patience is a virtue. If you're new to investing, I would see if the owner will give both you and an agent of your choice the opportunity to try and negotiate a short-sale. Don't try to take this project on yourself...find a very good short-sale agent in your area and see if the seller will work with both you and the agent to get the process started. Of course, the agent must be willing to submit your offer immediately upon accepting the listing.

This is a complicated process but the owner needs to be involved initially, so that is the starting point for you.

Mike Chandler · Answer

Let me clarify...I assume the home is still in the foreclosure process since the bank has not taken possession of it yet or listed it with a realtor.  I think my friend owes about 70k and the tax value is about 66k, although he told me before he walked away from it, it was valued near 100k.  I thought it might be a rare opportunity since I seemed to be the only one he had told about it.  I've never done a SS before and I'm kinda in the dark about how to proceed from here, but if it's difficult to get a great deal doing a SS, it may be better just to leave it alone.

Wayne Brooks · Answer

Assuming there is no equity, yes it's a short sale.  But don't expect to get it much below it's value in it's current condition.

Possible Short Sale?

Most Popular Reply