Has anyone successfully closed a short sale on an investment property?

Asked by Dawn Barrier, Las Vegas, NV Mon Apr 7, 2008

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Ute Ferdig, Agent, Auburn, CA
Mon Apr 7, 2008
Hi Dawn. While many short sales involving an investment property may fail because there's no qualifying hardship, it's not impossible. Sometimes, a purchase that was intended to become a primary residence may turn into an investment property due to an unexpected turn of the events (e.g., a couple splits up before they even move into the property). I think, these days, the lenders may consider approving a short sale even for an investment property if the offered price is right. The lender is looking at the short sales mainly from a loss mitigation standpoint and they won't benefit from going forward with a foreclosure instead of a short sale just because the seller does not fit the typical hardship case. The lenders may also make the short sale approval conditioned upon the seller signing a promissory note or liening another property they own. The downside of an investment property short sale is that the seller will not qualify for a tax exemption under the new Mortage Forgiveness Debt Relief Act if the bank were to forgive the deficiency debt. Most investors may try a deed in lieu of foreclosure instead of a short sale.
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