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Asked by Sam Abushaban, Manteca, CA Fri Feb 5, 2010

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Answers

14
Dianne Hicks, Agent, Rancho Bernardo, CA
Fri Feb 5, 2010
Freedom
Has you agent tried to get a stay on the trustee sale, it happens all the time. Try to get it posponed to complete short sale.

Good Luck
1 vote
Brad Gill, Agent, San Jose, CA
Mon Feb 8, 2010
Best bet to mitigate the possibility of being pursued at a later date for possible deficiencies or collections is to negotiate the sale of the property with your current lenders. Of course there is no guarantee that your lenders will allow the full release of liens without keeping the possibility of pursuing you later through collections (or for that matter for them to allow a short sale), especially with the trustee’s sales date scheduled only 3 weeks out, but most lenders would rather allow the sale if it makes sense then repossess your property through a costly foreclosure.

You are probably already aware of the risks associated with a foreclosure - the first lien holder may pursue you through collections for the difference between the outstanding loan balance plus all costs associated with the foreclosure and the final sales price of the property as an REO. And the junior lien holder, whom will be wiped out through the foreclosure, may come after you for a deficiency judgment. Also, both lenders will most likely send you a 1099C for cancellation and relief of debt which you may have to claim as income on your tax returns.

BUT, you could also be at risk for a “buy and bail” transaction. This occurs when a homeowner who is underwater purchases another home within his same neighborhood (open to opinion) and then allows his prior home to fall into foreclosure.

For these reasons I would definitely suggest that you seek legal counsel immediately, preferably a qualified attorney specializing in real estate and maybe even bankruptcy as well. But, at the same time it may be prudent to have a realtor start contacting your lenders in order to get your trustee’s sale date postponed if possible. Remember, realtors can get started quickly and at no cost (unlike attorneys, at least the good ones), and your realtor may also be able to refer you to a really good attorney at the same time they start assisting you with a short sale.

Good luck with your situation, there is a lot stacked against you at this point. Pick a realtor experienced in short sales and preferably one experienced with negotiating with your same lenders in particular. Get up to speed on your legal and tax liabilities right away for both a foreclosure and a short sale, as there will most likely be consequences associated with both. And if you build the right team of professionals (realtor, CPA, and attorney) working together, you may just avoid having to always “look over your shoulder for the rest of your life.”

Hope this helps!
0 votes
Terri Vellios, Agent, Campbell, CA
Sat Feb 6, 2010
Freedom, I concur with the advice to seek the advice of a Real Estate Attorney and CPA. Since both your loans are recourse loans the debt recovery language is built into your financing instruments. Those need to be read by someone who understands the law and language.

In the event a lien is filed against your Social Security number by either of these lenders it will be hanging in the shadows ready to attach either through a sale or a purchase. It is best to get the advice and from an Attorney who is experienced in this field of real estate.

Good luck to you.
Web Reference:  http://www.terrivellios.com
0 votes
Joanna Jensen, Other Pro, Livermore, CA
Sat Feb 6, 2010
You should be able to stop the sale. Are you working with a negotiator to do the short sale for you??
Your realtor should be on top of this. The should be willing to stop the sale since you have a short sale in place.

JoAnna Jensen
0 votes
Joanna Jensen, Other Pro, Livermore, CA
Sat Feb 6, 2010
Hi Freedom,
You have options but I would move quickly.
You wouldnt want them to attach your equity in your 2nd home which they may do.

I work for an attorney and have additional options as well. I am also certified as a Debt Negotiator.

I am happy to talk to you about your situation.
JoAnna Jensen
925 699 5041
jensenair@hotmail.com
Web Reference:  http://www.joannajensen.info
0 votes
Joanna Batem…, , San Jose, CA
Sat Feb 6, 2010
Freedom - I am working with a lawfirm that helps folks in your situation. You can also contact them via
http://www.2raisemycreditscore.com/contact.html. Tell Julie I gave you this information.
Other folks are correct, since we cannot give any legal advise.
Thanks again,
Joanna Bateman
0 votes
Jane Grant, Agent, Aguanga, CA
Sat Feb 6, 2010
Freedom: Harold gave you the best advice and I agree with him. You need an attorney well versed in Real Estate Law. http://www.curtislawgroup.com will give you a free consultation.

Also, the reason Harold said to contact an attorney and a CPA is because a CPA or Tax Professional can explain the tax ramifications to you. Short sales can leave borrowers responsible for the deficiency amount counted as taxable income......be very careful here. Get expert tax advice as soon as possible. And best wishes to you, many people are going through this and I am sorry you have to experience this.

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Web Reference:  http://www.soreal.biz
0 votes
Hannah Flieg…, Agent, Larkspur, CA
Sat Feb 6, 2010
Hi Freedom,

You have two Recourse loans. The first appears to be foreclosing on you. 1st Lender MAY have the legal right to come after you even after your foreclosure. You may have signed something during the refinance process that put you on the hook. Lender in second position if a $300k Heloc as you state for sure will come after you and have the legal right to do so.
Therefore, I would suggest a Bankruptcy Attorney for you. If the lender has the legal right to go after you they certainly will, either by doing so themselves or selling that debt to a collection agency. Then you have the statute of limitations which is 10 years and guess who will be there waiting for you when you recover financially?
If you pursue a short sale and are able to get the trustee sale extended and then push a short sale through great! I would make sure that both lender in first and second position relieve you fully of the debt however! The lender in second may say that they accept the short sale but have the legal right to pursue you further. You have to decide if you can live with this risk.
Therefore BK seems to be an option as well. You can use this to shake the debt through 7 or 13 most likely.
Just for fun, Fannie Mae and Freddie Mac set the guidelines for residential lending here are their rules:

24 months after a short sale a borrower can get an FHA mortgage
24 months after a bk a borrower can get an FHA mortgage
36 months after a foreclosure a borrower can get an FHA mortgage

You can visit the fannie mae or freddie mac websites to confirm for yourself.

I wrote a book and would be happy to send you a E-Book Free of course just to help you and get you forward thinking again. I wish you good luck!
0 votes
Lea1982, , San Jose, CA
Fri Feb 5, 2010
Freedom,
I am in a similar situation and I wanted to let you know that Michael Roberts who just replied to your question is fabulous! He answered my question a few weeks ago, and I swear I have never been so amazed that there are still nice, knowledgeable people in this cruel world. We are still trying to work things out, but either way he is there. He has been the one voice I like to hear with all of this craziness. I have had some sleeze ball realtors/brokers contact me. Trust me, most of them are! One in particular (I wont name) was a total vulture. Be very careful and go with your gut on who you choose to hold your hand in this. My gut told me Michael was it. I couldn't be happier. He is smart and knows his stuff. Not only that, he knows everyone in the business, and they are the best. This is a tough time, and you need the best. Take it from someone who knows! I am right there with ya! I am so glad that I stumbled upon Trulia, otherwise I would not have my right hand man ;) Hope this helps! Good Luck!

Lea O.
0 votes
Harold Sharpe, Agent, LAKE HAVASU CITY, AZ
Fri Feb 5, 2010
Freedom,
First thing Monday, contact a real estate attorney and a CPA.
think about your options with professional help.
helocs are not a good debt to have hanging over your shoulder.

Ask your agent in your short sale to see what is going on.


Harold Sharpe
So Cal Homes Realty
(951) 821-8211

http://www.southern-california-home.com
0 votes
Michael Vale…, Agent, Pleasanton, CA
Fri Feb 5, 2010
Hi Freedom,

First off, I am not an attorney and I would definitely advise you to speak to one regarding this situation. However, If I understand you correctly, these are not purchase money loans because you refinanced them. If so, then the 2nd lien may have the right to go after the deficiency if they get wiped out during a short sale or foreclosure. Depending on the lender, sometimes in the short sale approval letter it will actually say they reserve the right to pursue the deficiency. In this situation it is my opinion that it's best to complete the short sale because it at least puts you in a position to negotiate with the 2nd to either forgive the deficiency or to settle with them for a fraction of the loan balance so they will not pursue you later. If the lender has recourse, it is my understanding they have 5 years to come after you. In their mind, you may be back on your feet in that time so they will have something to pursue. These are complex issues so again, it's best to speak to an attorney and/or a tax professional regarding these matters.
Web Reference:  http://www.rwacclaim.com
0 votes
John Juarez, Agent, Fremont, CA
Fri Feb 5, 2010
I, too, wonder what banks will do in a few years with all of the recourse debt that they have charged off. Will they pursue debtors? Will the sell the debt to collectors for pennies on the dollar let them go after the debtors? Who knows what the future will hold for those who owe many millions of dollars of possible collectible debt to the banks because of short sales or foreclosures.

You need to see an attorney for advice on ways to protect what assets you have now and may have in the future. I know a very experienced real estate attorney in Livermore. If you want his contact information, email me by hovering your curser over my picture and clicking on the “contact me” link.

Best of luck to you.
0 votes
William Klopp, Agent, Morgan Hill, CA
Fri Feb 5, 2010
Freedom. You are not alone, there are literally thousands in the same situation. I would recommend consulting a real estate attorney. Additionally, you need to make sure during the short sale process that the lenders don't reserve the right to come after you on a "deficiency judgement". A lot of the more prominent lending institutions are starting a Home Affordable Foreclosure Alternative (HAFA) program. This program is typically initiated if a borrower does not qualify or merit a loan modification under the Home Affordable Modification Program (HAMP). Some of the yet to be finalized program guidelines include one that is geared toward making short sales seller not to have any further financial burden with respect to the property sold during the short sale process. Stay tuned on that. In any case you will want to make sure any action leaves your current lienholders with No Recourse after the sale. Good luck.
0 votes
Michael Robe…, Agent, San Ramon, CA
Fri Feb 5, 2010
Hi Freedom. There are few options at this late time. I would be glad to share (offline) your best options after getting a complete picture. My main concern is the fact you have equity ,as stated, and that needs to be protected. You may be surprised!

Michael Roberts
http://www.MichaelRobertsHomes.com
mroberts@rwnetwork.com
408-505-5614
twitter: http://twitter.com/ShortSaleRx
Trulia Vip
Zillow Contributor
ActiveRain Agent


My FOX Business News Interview http://bit.ly/8YFcpb
0 votes
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