We have been waiting for an answer from Bank of America and finally after 2 months they said;
-Short sale is approved but the seller is still responsible for the rest of the balance!(they are not fogiving it,if I buy the house for $207 sellers will owe around $140K still)
What kind of an acceptance is this?I asked if they want a counter offfer they said no. The owner refinanced 1 year ago for $350K-line of credit, no second mortgage,and lost his job, could not pay for 11 months.The value of the house came down and it has been on MLS for a long time for $322K,no buyers.It is worth for 290-280K and I offered $207K.Do you think I offered too little is this why or is this Bank of America`s policy?Any ideas?Thanks.
No you did not offer to much. The difference is the deficincy judgement which would be considered taxable income to the sellers. However there is a new debt relief act and this may or may not help the sellers. Depending on their situation they may not have to claim this as income. I would recommend asking a CPA about the new tax law that is good thru 2010 for short sales.
Some states do not allow for deficiency judgements such as mine but I’m assuming you are in a state that does allow them since they are not forgiving the debt. Be sure to check with your state laws on this issue otherwise, yrush2000 is correct and may not be an issue.
In the future you may put in your offer a contingency that indicates they will not go after the seller with a promissory note or judgement for the difference. Sometimes it works sometimes it doesn’t. B of A I imagine is less likely to work in the sellers favor especially those with seconds (first and second being with B of A) not a good.
What is your state, I can send you more info if you need?
Hi, I am in NJ.Since the owners have more depts than their assets,they most likely are not going to pay much taxes on it…But they own the house they live in right now,but it does ot have much equity in it,either.
Would this cause any problems for me?Thanx
The deficiency judgements and promissory note possibilities for Sellers can certainly be deal killers in states that allow this. A good thing to check is whether the P Note is a recourse or non-recourse note. If it’s a non recorse not you may be in luck with Seller’s being able to avoid a deficiency judgement or P note for the deficiency amount. If not, just demand that the bank(s) not pursue any further legal or collectin action against the Seller and include this language in the lien release letter. They are more likely not not pursue the Seller for the deficient amount because it will cost them even more money to pursue them and they would just be throwing good money at bad and will loose more overall. Good luck! :beer
Shortsaleruby,
What is the recourse and nonrecourse promisary note? I’ve never heard of that. I actually just completed a short sale in which the PMI company issued a promisary note of $25K payable over 15 years no interest to the borrower.
any thoughts on how to avoid that?
The seller took all their equity out a year ago and partied it up. It’s not all that unfair for the bank to want the money paid back.
It’s got nothing to do with you or how much you offered.
If the sellers don’t let the property go on a short sale, the bank will foreclose and the sellers are still be on the hook for the unpaid balance. Foreclosure and short sale are not the same as bankruptcy. They don’t cancel out debt.