Short Sell home to Self?

[Beavus]

So, I purchased a home at 450k. The bank calls me to see if I would like to short sell my home. I say no, I would like a principal reduction of 100-200k. Bank says no?

Why won't the bank reduce the principal? It would appear that the bank would rather take the home from under my feet, sell it to some one else for less, and have the loss go against me as the short seller (don't know what the negative repercussions are, no mention from bank). So the 450k house is sold for 250k-350k to some other guy, loss of 100-200k to bank/short seller.

Why would a bank short sell and take a loss vs. allowing a principal reduction so owners can stay in the home?

Is this the twisted backdoor process of transfering ownership of property to the state.

Maybe state is a strong word, I mean bank?

Why can't I short sell a home to myself, wouldn't that be the same thing as a principal reduction?

[c1ue]

Re: Short Sell home to Self?

Beavus,

You're assuming the bank wants to take your house.

What if they just want to not acknowledge the loss on the loan?

After all, since the banks don't need to capital being tied up in the house loan (thank you Mr. Bernanke!), and the bank has some slight chance that you'll get a great job and/or win the lottery and starting paying again, why not dangle you?

In the meantime you're screwed more than the bank.

a) You can't borrow from the Fed.

b) Its hard to get another loan when you're on the hook for 6 digits of underwater home loan.

c) Paying rent means more cash out of your pocket than just living in your foreclosure process home.

Credit rating would be spanked either way.

[ax]

Re: Short Sell home to Self?

Beavus,

You're assuming the bank wants to take your house.

What if they just want to not acknowledge the loss on the loan?

After all, since the banks don't need to capital being tied up in the house loan (thank you Mr. Bernanke!), and the bank has some slight chance that you'll get a great job and/or win the lottery and starting paying again, why not dangle you?

In the meantime you're screwed more than the bank.

a) You can't borrow from the Fed.

b) Its hard to get another loan when you're on the hook for 6 digits of underwater home loan.

c) Paying rent means more cash out of your pocket than just living in your foreclosure process home.

Credit rating would be spanked either way.

Have they passed legislation yet allowing the short-sale taxes to be forgiven or is that still in the works?

[swgprop]

Re: Short Sell home to Self?

Have they passed legislation yet allowing the short-sale taxes to be forgiven or is that still in the works?

Yes, see this for an overview.

Why would a bank short sell and take a loss vs. allowing a principal reduction so owners can stay in the home?

Beavus, in a short sale you would be selling the property to a new buyer at a price insufficient to pay the mortgage in full. The bank would have to approve the transaction since they are accepting less than full payoff.

Why would the bank not allow a principal reduction? There can be many reasons for that but most prevalent is the situation where your bank/servicer no longer owns the mortgage. The mortgage is likely securitized and your bank is simply passing your payments through to a trust. Your bank would have to adhere to the terms of a seller/servicer agreement which may not allow them to do a principal reduction even if it is the most logical course of action.

[rob2060]

Re: Short Sell home to Self?

I'm astonished the bank called you and offered the short sell option. Mine has been uncooperative from day one.

[aaron]

Re: Short Sell home to Self?

I have been told "no" to virtually everything. I realized talking to them (their evasiveness, really) and through a bit of research, that it will take forever to foreclose so long as we
A) Put the house on the market
B) It is occupied (we have paying tenants)


It seems the banks can't sell everything right now, have no real incentive to sell right now, and have every incentive to keep "their" houses in good shape for the future when they DO sell them.

Have tv stories of families being pulled out of their homes gone down? Are people being foreclosed on but not kicked out?

[ggirod]

Re: Short Sell home to Self?

In a short sale they get the mortgage off their books, even losing some. If they reduce your principal they still hold your mortgage. In principle you might be able to get a smaller mortgage somewhere to buy off your higher one in a short sale, but my guess is that the second mortgage would be hard to get, since it would be clear you were about to become a short seller.

[photoncounter]

Re: Short Sell home to Self?

Obama administration to expand housing plan


WASHINGTON – The Obama administration is expected to expand its mortgage aid program on Thursday, announcing new measures that would help homeowners avoid a blemished credit record even if they don't qualify for other assistance.
The new initiatives are expected to include ways to allow borrowers to avoid foreclosure by selling their properties or giving them back to lenders, according to people briefed on the plan who declined to be identified because it has yet to be announced.
One way would be to encourage a "short sale," in which the home is sold for less than the amount owed on the mortgage but the lender considers the debt paid off. Another option is a deed-in-lieu of foreclosure — in which the borrower gives the property to the lender to satisfy a delinquent loan and to avoid foreclosure proceedings.


....


http://news.yahoo.com/s/ap/20090514/..._obama_housing

[cjppjc]

Re: Prevent Foreclosure Weston

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Fred is this what happens when more people hear about iTulip?

[FRED]

Re: Prevent Foreclosure Weston

Fred is this what happens when more people hear about iTulip?

Every single day, 100s of people try to join iTulip. Every once in a while a spammer slips through our processes. Thanks for letting me know!