Just to add to what has already been said here, in order to do a short sale, not only do you need to be in a hardship position, but you can not have any assets. Putting your other home in your child's name make look like you are hiding assets. Check with an attorney to be certain.

What you need to talk to is a Bankruptcy attorney - one that has been doing it for years - not just since times got too lean in other fields of law. The courts will look hard at the last 3 months and may go further back if they choose. If you have quit claimed the house to your family but intend to live there, yes, it could be considered fraud. In Chapter 7, Your personal assets I think cannot be any more than $1000 and if you want to keep something you have a loan on, like a car, you will have to reaffirm that debt and prove to the loaner that you have the ability to make those payments. Bankruptcy laws changed a couple of years ago, and with a Chapter 7, you'll be left with virtually nothing. Chapter 13 is different, a reorganization of debt, but can't be filed unless you have an income of some kind. Again, the best solution is choose a very experienced Bankruptcy Attorney. A good place to start is linked below - although Bankruptcies are governed by Federal law, the different states and district implement different changes.

Andrea Packo
Keller Williams
702-279-7679 http://www.andreapacko.com

Ralitza,

I can't give you legal advise, and for any individual you really need to find out exactly what pertains to your situation. Banks are different, policies change, and financials and contracts can vary from person to person. I can give you some general questions for you to ask when seeking legal expertise.

Nevada is a deficiency state, meaning that lenders have the ability in short sale or foreclosure to file for a deficiency judgement for the balance owed. Earlier this year I attended a foreclosure seminar with local attorney and FOX legal analyst Bob Massi. At that time, he said he wasn't hearing of deficiency judgements being sought by the banks and that it is a complicated process, but they do have 6 years to exercise that right. He also mentioned that while he couldn't predict what they may do, the potential did exist for a lender to collect or sell judgements to collection agencies in the future.

We both had heard of some lenders approving short sales only if the homeowner agreed to sign a promissory note for the difference. Again, that varied from lender to lender, and individual to individual. In other cases it may have been possible for the agreement to include specifically eliminating the deficiency claim.

You may want to look at that post and see if there's any other information or link there that you may find helpful. (ex: Consumer Credit Counseling of NV and HUD)

http://activerain.com/blogsview/952138/las-vegas-foreclosure…

You also need to be aware that the lender will normally issue a 1099-C for the amount of the deficiency. That amount can be taxable. The Mortgage Forgiveness Debt Relief Act of 2007 allows for excluding this amount up to limits in the bill from taxable interest, but only if the home is a principal residence. Second homes, business, rental, commercial property is excluded.

http://www.irs.gov/individuals/article/0,,id=179414,00.html

As I think you can see it's a very complicated issue with many variables. That's why you need to continue to seek legal advise to find out what does or does not apply to you. I do hope this general information can give you some idea of the questions you'll want to discuss with your legal council specializing in NV real estate law.

Best,
Roberta

I realize that my next comments might come a little too late for you, and if so, then they'll hopefully be useful for someone else too.

If your mortgages aren't upside-down by too much (ie less than 20K), then it might be possible for your buyer simply to pay to catch you up, and to assume your current loan. This way you wouldn't even have to go through with the short-sale. However, if your mortgages are upside-down by more than 20K, then I (as an investor) would probably use another exit strategy: short the second (assuming it's large enough), and assume the first.

@ Dp2, yes I am only 1 month behind on the home I am short selling. There is already a buyer that has put $3,000 down.

@Ines, is this California or Nevada law? The mortgages have NOT been refinanced.

Thank you all for your help!

Are you only 1 month behind on the property that you intend to short-sale?

If you have refinanced this property since you purchased the home for a higher amount than the original, you may have a recourse loan in which case the lender may be entitled to a judgment against you. Many times, the lender will negotiate a promissory note at the end of the negotiations before a short sale approval is issued at which time you can negotiate the terms of that promissory in lieu of not having any future judgments against you from that lender. If you have not refinanced, it most likely will be a non-recourse loan, and a regular short sale will be negotiated. I work with a third party short sale negotiator specialist that I trust for my own clients and they have had success in getting my clients favorable short sale negotiations. I would be happy to provide you with that referral. There is no charge for an initial consultation. Best of Luck! http://www.ineseiras.com, ines.eiras@prurealty.com

Ralitza, I'm afraid I concur with my fellow agent. The banks have not been chasing homeowners to my knowledge, however if they decide they want to, they can.

Also, as part of your short sale package, they ask for a financial declaration. If they find out about the other house, and discover you transferred the deed to a relative (child, sibling, parent, etc.) in order to hide the asset, it could be considered fraud.

Depending on the value of the other property, they may choose to pursue you. You need to speak to an attorney who specializes in real estate law to see what your options are.

The banks can come after whatever they want. Beware of anybody telling you anything different. We are seeing policies changing often, and no matter what you hear today, it could be different tomorrow. If you have a hardship, you could very possibly qualify for a short sale. The terms will be stated in their approval letter and we suggest having an attorney review your approval letter. That will tell you the terms of their settlement, right to collect etc.