Regarding your side note about investors walking away from projectsâ€¦if you are referring to construction projects or multifamily projects that require commercial loansâ€¦ those are usually done with non-recourse loans. That means that the lender foreclosing on the property is the only recourse against the investor. There is a lot more to that which I will not discuss here, but that is the answer in short for some projects.
It is a tough situation because you cannot sell unless all three of those parties sign off on the deal. The problem is that if you are able to get the amount of your first mortgage for the house then they will be very reluctant to negotiate a short sale with you, because they would rather just foreclose since they would be in first position and they know they would likely recoup their entire investment at that point.
The HOA will also be very unlikely to try to work with you.
However your HELOC are the ones that are most likely to try to work with you because they know if your home gets foreclosed on then they are likely left with nothing. The other problem is that neither of the banks will probably give you much guidance in terms of what they are willing to do without an actual offer on the table.
Your best bet is to go ahead and try to get an offer as quickly as possible and then at least you have some real numbers to work with that you can present to the various parties and see what you can work out.
If you email me your property address I can try to give you a few more specific ideas.
Best of luck!
On a side note, my question is, how do all these investors let go of projects so easily and continue doing more investments??
Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower's financial situation.
A short sale typically is executed to prevent a home foreclosure. Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing. For the home owner, advantages include avoidance of a foreclosure on their credit history and partial control of the monetary deficiency. A short sale is typically faster and less expensive than a foreclosure. In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.
Short sales are common in standard business transactions in recognition that creditors are not doing debtors a favor but, rather, engaging in a business transaction when extending credit. When it makes no business sense or is economically not feasible to retain an asset, businesses default on their loans (called bonds). It is not uncommon for business bonds to trade on the after-market for a small fraction of their face value in realization of the likelihood of these future defaults
The website I provided, can answer those types of questions as well. Good Luck!!!
Please take a look at the website above, it has provided me assistance in the past with any foreclosure questions I have had!!
Best of luck, if you need any assistance, please do not hesitate to contact me.