Home Selling in 97009>Question Details

James Peters, Home Seller in Boring, OR

Is my IRA secure and a vehicle, as well, if I have to go to a short sale? Can my bank take them away from me?

Asked by James Peters, Boring, OR Mon Jun 27, 2011

The selling price of our house is now under the amount of equity left. Our only choice is to go to a short sale. Is our IRA safe or can the bank take it away from us? We have one newer vehicle. Can the bank take it from us? We have had the home and property up for sale off and on for two years.We have an excellent credit rating of 805. Will it go down drastically after the short sale? Will we be able to purchase a manufactured home, because that is all we will be able to afford? The down paymanet would come from our IRA. We are on social security and are on a fixed income. So far we have been able to make all our house payments, but that will end in a couple of months or more.

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Update to my previous answer: Just got an e-mail from Oregon Association of Realtors summarizing legislative action in the 2011 session, which just ended. A portion of the summary read:

"The Oregon Legislature unanimously supported House Bill 2916-Enrolled, which will protect sellers in the short sale process. This legislation precludes further collection on deficiencies in a short sale when a 1099-C is issued in connection with the sale, allowing sellers to make a more fully-informed decision when they sell. This legislation was signed in to law by Governor Kitzhaber and is effective as of June 23, 2011."
Web Reference: http://www.bybryson.com
0 votes Thank Flag Link Sat Jul 2, 2011
The banks don't "take" anything. You need to agree to everything on a short sale. If you don't agree, the short sale doesn't happen. Usually, the bank does not touch your IRA. Although, they do want to know how much, for possible future payments or contributions.

Your credit will be affected, but far less than a foreclosure would affect it. Feel free to call me anytime to discuss your specific situation.

Eli Givoni, Director
Short Sale Department, LLC
Serving all 50 states

MARS Disclosure for General Commercial Communications
Short Sale Department, LLC is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit.
0 votes Thank Flag Link Tue Jun 28, 2011
If all you have in the way of assets is a car and an IRA you won't have anything to worry about. Creditors may want you to dip into your savings if they think you are willing to contribute some cash to complete the sale of your property - but, that's only likely if you are sitting on loads of cash and you don't have a reason to be sellign your property short.
Overall, it's up to you to make sure that you negotiate for short sale terms that are satisfactory to you. This includes terms that are "without recourse" - mean
ing the creditor charges off any deficiency after getting the proceeds from selling the property and you wont owe any more. If you go through the federal HAFA program there is even get some money on the table available to you (the borrower) to help pay for moving expenses from the property, to pay off judgment liens, and pay secondary loans on the property. Some creditors will even allow these expenses to be paid for non-HAFA qualified properties.
Also; Stay in the property as long as you can - but you are going to have to move sooner or later and that can be problematic since you credit is toast from the short sale. Make arrangements in advance of doing damage to your credit.
0 votes Thank Flag Link Mon Jun 27, 2011
A short sale will adversely affect your credit. However, it's not likely that your lender(s) will have much, if any, recourse against you or your other property, if it approves a short sale. The Oregon Association of Realtors pushed new legislation this year to prevent mortgagees from going after home sellers in certain circumstances. I don't recall whether the legislation was signed by the governor, or when it takes effect, but you could find out more by calling OAR at 1-800-252-9115.

Most importantly, however, to get definitive answers to your questions, you need to talk to a lawyer. A few lawyers may be willing to answer a few questions for free over the phone. Otherwise, if you don't already have a lawyer, you should call the Oregon State Bar's Lawyer Referral Service. Lawyers referred through the service charge $35 for the first consultation, which should be enough to answer your questions. You can access the LRS online at http://www.osbar.org.

Best of Luck!
Web Reference: http://www.bybryson.com
0 votes Thank Flag Link Mon Jun 27, 2011
I recently was given a chart of the effect on FICO scores of short sales and similar events. It's from Fair, Isaacs (the company that owns the FICO scoring system). It's in my blog post at http://bit.ly/kCHhWo
0 votes Thank Flag Link Mon Jun 27, 2011
No, they agree to take what the home is worth and say that's it, and they have no way of taking anything else. It's to get you out of the debt of the underwater home loan.

Best to you.

0 votes Thank Flag Link Mon Jun 27, 2011
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