Home Selling in Las Vegas>Question Details

nascimento_ph, Real Estate Pro in Las Vegas, NV

Planning on doing a short sale. I have 2 mortgages( 197K & 37K). The original cost of the house was 271K but is now worth around 140K

Asked by nascimento_ph, Las Vegas, NV Tue Jul 5, 2011

I am married and the only one on the loan but my wife is on the deed. Property was purchased after our marriage in Feb 07. Also looking to buy another home. Talked to a bank and showed our financial info and they said we would currently be approved to buy another home. So financial hardship may be a little hard to prove but looking at the option of a medical hardship. Would my wife still be approved to purchase a home if our current home in short sold?? Should we/she buy before the short sale or after? We are also willing to pay 20 to 50 percent down payment so a conventional loan should be possible. I am also a Veteran and haven't used my VA loan benefit. What would be advisable for our situation?

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0 votes Thank Flag Link Sun Aug 18, 2013
There are several loan programs that you can choose from. It is best to work with a professional so you can have your best choice. Check each loan requirements to know if you qualify for such.

Check if you qualify for a mortgage. Try http://www.whywaitbuytoday.com
0 votes Thank Flag Link Sun Aug 18, 2013
I would have your wife to quitclaim title to your name only asap. If she's not on the loan, her credit and ability to qualify for another home loan should not be affected by Short Sale, but it's safer just to take her off the property before even starting SS. You personally may have problems qualifying after Short Selling your house; it really depends on whether your credit score gets affected - if it falls below required 620 during the process of Short Selling plus some other issues - please discuss with your lender. If for some reason you denied of loan after Short Selling your house, your wife would be able to qualify credit wise.

Medical hardship is definitely recognized by banks.

If I were you, I would purchase a new house before doing Short Sale. It would most likely be easier to qualify for you and your wife now, considering tough mortgage environment these days and tight requirements to get a loan. You new purchase probably going to be considered by new lender as an investment property, as you already have a primary residence and you have a substantial downpayment to qualify for a conventional loan which won't require mortgage insurance (MI), so you can avoid a lot of hassle. I don't know about VA loan requirements for conventional loans, but this question could be answered by your lender. If you don't have a good lender, I will be happy to refer you to most reputable and experienced in VA loans direct lenders for free consultations. Please do not hesitate to call me anytime with any questions: 702-460-4702, Tatiana, Realty Executives. I hope I answered some of your questions and was able to help.
0 votes Thank Flag Link Wed Aug 17, 2011
To Anthony Tullous: Morality represents the way the people would like the world to work; Economics shows us how it really does work. There is no room for morality in the business world. Did morality come to the rescue of pensioners and bondholders for KMART when they filed for bankruptcy in 2002? Just over a year later they acquired SEARS!
I signed a contract, the contract stipulates exactly what happens if I pay, and if I stop paying (though I am still current). I went into this house with good intentions. Risk was taken on by both parties. I will loose around 60K that I have payed as down payment and in renovation costs, not to mention my perfect credit will be ruined. But everything would have to be weighed as business decision. No hard feelings. We are in a world where the irresponsible are rewarded and I'm not just gonna sit back and get screwed. Are you saying I should've bought a mansion back when the banks where practically giving away loans? Then maybe I would have a legitimate hardship, right?

Why would I throw money into a hole? I would be better off paying cash on another home and even get the possibility of capital appreciation. It's a loss- realized or not! This is the business world Anthony. Welcome to it!
0 votes Thank Flag Link Mon Aug 15, 2011
What you are suggesting is feasible if your wife applys alone. But if you have 50% down (assuming the homes are around 140k where you want to buy), why not just keep the home you have and catch up on your payments. Just because values are down doesnt mean its ok to run away from your responsibility. I hope im not sounding condescending, but you should do the right thing. Its not a loss until you sell.
0 votes Thank Flag Link Mon Aug 15, 2011
You should also discuss your situation with a lawyer. I am not a lawyer and I do not give legal advice, however, this strategy sounds like it could be considered bank fraud. I am relatively sure your wife will be held just as responsible as you are for the current mortgage. And I doubt she would be able to get a mortgage after the short sale except under the most narrow and strict of circumstances. And you say you can afford the current mortgage AND you have 20 - 50% to put down on a new home. I am not sure how you think you can convince the bank you need to short sell. They are giong to look at your finances, your bank statements, your pay stubs, your tax returns, and if they smell a rat they are not going to approve the sale.

You don't say why you want to buy another home. I would explore other options, like a HARP refinance or a HAMP modification and find a way to make the current home work. But I would definitely stay away from any strategy that is not 100% on the up and up.
0 votes Thank Flag Link Mon Aug 15, 2011
Hmm. In baseball terminology, I think we call this trying to steal second without taking your foot off first.

I wouldn't encourage you to pursue the strategy you have described.

You are responsible for the two notes, and a short sale does not necessarily forgive what you owe. In any event, once you start dashing for second base - applying for a new mortgage - the bank is going to see that you still have your foot planted on first (that you didn't pay to close out the other notes). The short sale disqualifies you for another mortgage for at least three years. Regardless of what you were told, you won't be approved for a third note in this scenario.

You don't do yourself any favors by declaring that you can't afford your mortgage when you make a request to short sale. The first two lenders may never get wind of your scheme - at least not until they pull up your credit again. This is why they pursue recovery of their loss after a short sale even though the homeowner declares financial hardship. If the borrower makes a sudden recovery, they will go after the short seller. I think they go after people even if they don't appear to recover.

If you buy a second home and then declare that you have a hardship and want to short sale, you're still going to be on the hook for those first two notes. In some states, the lender has recourse for seven years. That's plenty of time to figure out what happened and file a lawsuit.

If you're dead set on pursuing a second home, then use that extra cash to your advantage.

You might consider a plan involving an investment house, or two. Talk to a real estate agent there that is also a CPA. You may find that you are in a great position to create income from a second and possibly third property. If rents rise, you're in a sweet spot. You could position yourself to pay off that second mortgage after several years and put yourself on much more solid ground.

Las Vegas has experienced the worst depreciation of any city in the nation. That also means it is more affordable to purchase a second home. It's a bit like "averaging down" on a stock purchase. If you are cash rich, then you're also in a position to negotiate a better price. That scenario resembles an HR (home run) when homes begin appreciating again. If the appreciation never happens, you still have that passive income working for you.

You may want to get some advice on managing properties, or let a real estate office do that for you. Final note: If you do buy a second home, make sure you tell your lenders which home you will occupy. If you change your status (move from one home to the other), the lender will want to know this, too.

And, by the way, the averaging down strategy probably is what the lender was thinking you were up to when they said you would qualify for another mortgage. You should talk to them again after you have had a chance to interview several CPAs and decide what you will do.

PML of Longmont, CO
0 votes Thank Flag Link Mon Aug 15, 2011
The chances are slim to none you will get a short sale with a second TD. Better get a new loan using your wifes credit

David Cooper. Foreclosure Specialist with 35 Years Investing Experience. Receive a FREE List Daily of Low-Priced, Bargain Homes with Great Cash Flow for Investors. See website or Call +1-702-499-7037
0 votes Thank Flag Link Sun Aug 14, 2011
Micahel with her being on the deed and not the mortgage her credit should not be affected. If she can quailify on her own, then of course she can buy a house either before or after your short sale. When deciding to sell through a short sale, make sure you use an agent who is WELL expereinced with listing, negotiating and selling shotr sales. not all agents are.


Please see my blog with a full list of tips and advice on selling your home through a short sale.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Sun Aug 14, 2011
Financial Hardship is still the number 1 request by banks in consiering a short sale request. You might have a problem.

David Cooper. Foreclosure Specialist with 35 Years Investing Experience. Receive a FREE List Daily of Low-Priced, Bargain Homes with cash flow and 10%+ roi. See website or Call +1-702-499-7037
0 votes Thank Flag Link Wed Aug 10, 2011
Call me and I can help. I listed a short sale 5 days ago on 6588 American Flower and i sold the house yesterday for the asking price with a cash offer and I already have this approved by the bank for the price. That's how fast I act. If you want to talk to me please call 702-523-4142,
Best Regards,
0 votes Thank Flag Link Tue Aug 9, 2011
If you qualify for a loan today while still owning your current home then buy first and short sale later. If you short sale first then you can take advantage of several different programs out there to purchase your next home. BEFORE you miss a payment find out the RISKS to prepare for. A free special report is available at http://LifeAfterMortgage.info

Dwight Aguinaldo
Realty ONE Group, Inc.
"Lease to own even after a short sale." Here's how it works:
1. Find the home you wish to buy.
2. Investor buys the home for you.
3. Lease to own from the investor.

Go to http://LVAffordableHomeSales.com
0 votes Thank Flag Link Tue Aug 9, 2011
The banks are doing a pre-approval credit report and also doing another credit report a couple weeks before closing. Your change of financial condition would be very evident when it comes to closing on a new purchase, and the bank would propbably ask for a higher interest rate and a bigger downpayment.

DAVID COOPER Foreclosure Specialist with 35 years experience in investing in Las Vegas, Free lisdt of bargain homes, see website or call +1-702-499-7037
0 votes Thank Flag Link Sun Jul 10, 2011
You sound like a guy who has his ---- together: You like to plan and do research and you want to do the best for your family. Well, here are some considerations:

1.) I would not trust the bank when they say that they will give you a loan (sometime in the future); they do not have the future information on your credit, etc. The normal waiting time to buy another house after SS or Foreclosure is 2-3 years.
2.) To be able to do a Shortsale, you will have to submit a Hardship letter to your current lender; explaining what your hardship is; why you need them to absorb $131,000.
3.) If you have 20-50% cash for a down payment, you are going to have a tough time proving hardship.
4.) Nevada is apparently NOT a non-recourse State: That means that you bank will look into suing you for the $130,000.
5.) If you still have your VA, you probably should use it; but go in there now and talk to them about your situation; I was in Viet Nam and I know that they want to help us and will go the extra mile.
6.) You might consider the combination of Renting out your house, using your cash for the negative monthly expense, and using your VA to buy another place. Try to visualize where you will be 3-5 years from now doing this.

You may want to read some of the BLOGS we have posted here on Trulia: Two in particular that I wrote are "DEFICIENCY JUDGEMENT" and "UPSIDE DOWN".

Good luck and may God bless
0 votes Thank Flag Link Sun Jul 10, 2011
Thanks everyone for taking the time in answering my questions. I know it can be complicated but to clarify what some of you have asked: Yes I am still current. Both loans are serviced by B of A and both are owned by Freddie Mac. I will contact a couple of you who's answers I like. Thanks.
0 votes Thank Flag Link Wed Jul 6, 2011
You may purchase a another home as long as income can support 2 payments and have a plan for the current home (rental, etc?) It may not be worth what you owe but as long as it is rentable it should be fine to be able to get another home!! Worst case you may try to short sale the home rather than letting it go to keep your credit in tact!
0 votes Thank Flag Link Wed Jul 6, 2011
Michael: These are all great questions and shows your've really thought through this decision. Every home buyer and seller's situation is different. Therefore, I would much prefer to answer these questions thru private consultation. I can also refer you to reputable accountants and attorneys to handle and tax or legal concerns you have prior to starting this process. Since you will soon be interviewing agents to handle your short sale and purchse of a new home, I can give you some pointer when interviewing agents for this job. (1) Be sure the agent you hire is full time in the real estate business. The decision to short sale is a complicated transaction and as much as you would like to do a Realtor friend a favor, you need a professional that works with lenders day in and day out closing these types of sales. (2) Be sure the agent you hire has systems in place to follow up with both your lenders regularly. (3) Be sure the agent you hire has CLOSED short sales. Ask how many, which which lenders they have worked with etc. Hope this helps. Please call me if you want to discuss your individual situation.

All the best,
Nichole LaVigne
Prudential Americana Group Realtors
0 votes Thank Flag Link Wed Jul 6, 2011
The one piece that you left out-- Are you still current or behind? Banks are now agreeing to work with individuals with hardship pending that will end up making them be behind--
If you are not behind the ability to get qualified for something else quicker is possible with some new loan programs---
As far as the short sale- we are experienced with a team of short sale negotiators that stay on top of your sale to get it closed as fast as possible---
Contact us if you would like to consider utilitzing us to help you with your sale---
and visit the website to recieve a ton of information regarding the short sale process-------------
Paul May
0 votes Thank Flag Link Wed Jul 6, 2011
You're not looking to buy another home and going to get a Short Sale consideration, if you can afford to go and get another house then they will not approve you, talk to an attorney and learn what a Short Sale is and what it requires, you don't just elect to have one, you have to qualify and if you have any assets you have no chance!
0 votes Thank Flag Link Wed Jul 6, 2011
WOW Michael! You sure have generated answers all over the board. I agree with many of them and can add to many of them. The bottom line is, choose an expert and talk on the phone or in person.You need a planning session to get all the details covered.
What I do that sets me apart from the others is I meet with you and we talk about possibilities with government programs, legal alternatives and real estate solutions. We can stratagize a plan for YOU, not the bank. I am what's called a home retention counselor and short sale expert and would like to discuss your options, solutions and strategy. Setting the scene always makes a situation and outcome better. Maybe I should call myself a scene setter or situation advisor/director...
I would love to work with you.

Visit me at http://www.NVhousingsolutions.com or give me a call at 702.656-1818.
Kurt Grosse
Realty One Group
0 votes Thank Flag Link Wed Jul 6, 2011
My advise, proceed.
Let's look at the specifics about selling your home, speak with the mortgage holders to verify they will let you do a short sale without missing payments, and review liability to keep you out of any issues later on.
Verify with your lender that you are short selling and still wish to purchase.
I have been getting short sale approvals and closings with deficiency judgment waived and no missed payments.
You have lots of options. Let's discuss what is the best end game scenario for you.
Chris Dowlen
Keller Williams Realty
Web Reference: http://www.teamdowlen.com
0 votes Thank Flag Link Wed Jul 6, 2011
Hi Michael,
The answer is clear. Yes, you can short sale like everybody else who has done it already. There are different opinions and answers and you will get confused. That's why you have to choose a Realtor and start working with him/her. Following a professional steps will lead you to a successful outcome.
Good luck and if you need my assistance, please contact me.
Ivana Alexander
0 votes Thank Flag Link Wed Jul 6, 2011
Oh and Michael I also know of a company that settle's seconds if you are interested in talking to them. No upfront fee, they get paid if they are able to negotiate a settlement of the second for you. Call me if you want this information, it may be a better idea for you if you want to keep the house. Although I am talking myself out of a commission, I am here to do what is in the best interests for my clients.

Sandy Van
Attorney, Broker-Salesman, Realtor
Van Group at Realty Executives of Nevada
0 votes Thank Flag Link Tue Jul 5, 2011
One item that will also impact your ability to Short sell your curent home and to buy another one is who the lender on both current loans are. Some banks will allow a short sale to be approved without any missed payments and other lenders have other guidelines so knowing the lender and having experience with that lender will also be a key to get the correct information on how to proceed.
I have Team members that the ONLY thing they do is process Short sales and I would be happy to give you the names of the people who do short sales full time AND a lender who can answer any questions you have on how this will impact your future loan applications.
As in anything the more people you talk to the better you can understand your options and choose what is in your best interest.
0 votes Thank Flag Link Tue Jul 5, 2011
I'm not a lender but I believe you will have some issue getting a new loan: The problem is that when you showed your financial info to the bank for the new home it was based on both of your incomes and credit, I assume. However, you can't have it "both ways" when it comes to credit score and income after the short sale. After the short sale your credit report will show the short sale in some manner AND when you apply for a new loan the application will ask if you ever did a short sale. This means you, Michael, won't qualify due to credit issues. So, instead your wife will have to apply. However, she can't use your income because she is qualifying all on her own merits, her credit score and income (if they don't use your credit, than they can't use your income either). Now I made a big assumption here: If her income is enough to support the loan, then you may just be fine. This would be under a conventional loan. FHA and VA I believe require both credit scores to be good, so you can't go that route.

So what do you do? Here are some possibilities if your wife can't qualify for a loan;

1. Short sale the home and rent for several years.

2. Short sale the home and look for a home with owner financing. With a large down payment and slightly above market interest rates, it would be attractive to some sellers.

3. Short sale the home and with a large enough down payment you can get a "hard money loan" regardless of credit score, often. But there are high fees and high interest.

4. Depending on who owns the 2nd mortgage, it can sometimes be reduced significantly or made to "go away" for a settled amount. I have seen this during a short sale--that helped convince the 2nd to settle BEFORE the short sale even consumated. With the 2nd gone/reduced, your mortgage may be low enough that you may want to keep the house. Your credit will still be damaged to some extent however.

5. Buy a new home now and rent the old house out for awhile. You can decide the disposition of that house later (including possible loan mod(s). Do note that "buy then bail" could be considered loan fraud. So, if you buy a new home, please have the intent to keep the old house.

The summary is that with a large enough down payment, there are some options for you. If your wife's income/credit score qualify you for a conventional loan, then you have even more options.

Good luck.
Web Reference: http://www.HouseOfVegas.com
0 votes Thank Flag Link Tue Jul 5, 2011
Good day Michael,
You ask many questions. I suggest to interview a few Short Sale Specialists to get a feel what they recommend. You may also want to look for a SSP that works with an attorney. These arrangements make a powerful team to assist you in getting to your future goals.

Be sure that everything that the SSP tells you is provided to you written down so you may refer to the information later. You will also want the SSP to be able to answer questions from the other professionals that you are questioning.

It sounds like you may be considering the Buy and Bail option to dispose of your nonperforming asset (ie: your house). The Lenders are looking for this action when looking to approve a short sale and approve an additional loan for the 2nd property. This action is not only unethical, but may also be considered mortgage fraud. You and an agent knowingly participating in this action may also be guilty of mortgage fraud. If the intent is to defraud the Bank/Investor of your existing property, it is MORTGAGE FRAUD.
The real question is: Do you want to do business with a licensee that will knowingly participate in MORTGAGE FRAUD?

There are many Mortgagee Letters from Brian Montgomery (Assistant Secretary for Housing-
Federal Housing Commissioner) about Buy and Bail issues. I suggest you locate them on the web or locate a Realtor that is familiar with the issues.

I will be glad to chat about the issues and have attorneys available to back up our actions if needed).

Please contact me immediately if you know a person that cannot make their mortgage payments. I will work with them to avoid foreclosure or bankruptcy at no charge or fees to them.

Steven Goldman, CRS
Broker Salesman
Certified Short Sale Professional (CSP)
REO-BPO Certified
Realty One Group
Las Vegas, NV 89135
Direct 702-242-1372
E-Mail: crssteven@teamgoldman.info
Web Site: http://www.teamgoldman.info
0 votes Thank Flag Link Tue Jul 5, 2011
Hi Michael,
I am so sorry to hear what you are going through right now.Unfortenatully many people are in your situation.If you already decided to go to short sale is great,but you should actually discover all of your options before hand so you can make an educated decision which one is best for you.You should consult with attorney and tax advisors.
Also consider interviwing Realtors to see which one is a good fit for you.
Call or email me should you have any additional questions.I would be happy to help.

Tina Encheva,Realtor
Realty One Group,Inc
0 votes Thank Flag Link Tue Jul 5, 2011
Hi Michael,

No problem. Yes, you can short sale this house. You should buy your next home first, and move. Your wife's credit will not be affected by the short sale, because you said she is not on the loan. Feel free to call me anytime and I can walk you through the process.

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 Jul 5, 2011
Don't forget that some of the questions you have -- and some of the ones you haven't thought of yet -- are best answered by a lawyer. I know a number of attorneys that do short sale negotiation, and that will improve your chances of getting everything to work out. You might try Tiffany Ballinger at Black and LoBello.
0 votes Thank Flag Link Tue Jul 5, 2011
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