Short Sale - After the House was Sold (Dallas: foreclosure, mortgage) - Texas (TX) - City-Data Forum

techlead1 · 02-01-2011, 04:04 AM

Owned a house outside of Dallas and was laid off my job. Put my house on the market but was upside down. Relocated to Florida for employment and was falling behind in my payments (a couple of months) on the house in Texas. Had a buyer and my Realtor negotiated a Short Sale though still had to bring 4K to closing. Thought that would be the last of it. The bank contacted me and asked for repayment though there were several things that I found unusual. First offer was a lump sum payment of 13K though the SS was 25K which I didn't have. The second offer was for what I could afford payment plan at an interest rate of 0%. Reached an agreement off $100 / month though there was never any paperwork received or had to sign except an authorization to withdrawal from my bank. Bank just started deducting $100 / month. The bank was threatening a 1099 as taxable income and legal action if I refused to make repayment.
In my research I find that the bank would issue a 1099C and would not be taxable as described in:

Ten Facts about Mortgage Debt Forgiveness (http://www.irs.gov/newsroom/article/0,,id=205004,00.html - broken link)

Bottom line is I think my bank is screwing me and I ought to tell them to take a hike as the SS is already on my Credit Report.

Any input or direction would be appreciated.

Thanx

grumpy31700 · 02-01-2011, 04:25 AM

Quite a few people who file for short sale and the bank come after them file bankruptcy.

loves2read · 02-01-2011, 05:38 AM

think you started that house-selling process from the wrong end
the FIRST people you should have checked with WAS the bank and got the ok from them to do that

grumpy31700 · 02-01-2011, 08:10 AM

loves2read you cannot short sell a house without checking with the bank first, some banks will make you pay them back with a promissory note, some will take most of your cash. You will take a hit on your credit for each late payment and another for the short sale (about 50-75 points).

He should have seen an attorney before he completed the short sale. The attorney may have helped him get out of the note and would have given him advice on what to do.

Now that the short sale is over he will either have to pay or file bankruptcy and if he does the latter he will see an attorney.

techlead1 · 02-01-2011, 08:12 AM

My mistake was trusting my realtor who I gave permission to explore the short sale option as I didn't have enough funds to make up the difference with only 1 serious offer in 6 months and if I missed one more house payment forclosure proceedings would have started. So if it's $100/month for the rest of my life that's better than forclosure on my credit.

techlead1 · 02-01-2011, 08:17 AM

Quote:

Originally Posted by techlead1

My mistake was trusting my realtor who I gave permission to explore the short sale option as I didn't have enough funds to make up the difference with only 1 serious offer in 6 months and if I missed one more house payment forclosure proceedings would have started. So if it's $100/month for the rest of my life that's better than forclosure on my credit.

Last time I checked mt credit rating I was still in the 700's with only the SS as my only ding

BTW, Sale of home was 2 years ago

Haute Mom · 02-01-2011, 02:39 PM

Quote:

So if it's $100/month for the rest of my life that's better than forclosure on my credit.

from what i understand, a foreclosure and a short sale both effect your credit pretty bad. i would rather have a foreclosure than pay $100 for the rest of my life, as u can recover from a foreclosure in 4-5 years!

loves2read · 02-01-2011, 03:21 PM

OK--so this SS happened two years ago and your bank is just coming to you NOW for repayment

don't understand the time line

and don't understand how you could not know the final figures from you bank before you initiated the short sale--although the ultimate figure might depend on what price you negotiated for the house

gcrissman · 02-01-2011, 03:26 PM

Based on my research a Short Sale will hurt your credit but it depends alot on your bank, your credit score before, and the usage afterwards. There have been people who sold their house via short sale but never missed a payment and were able to turn around a buy a house a few months later. What I have found in my research (and have yet to put it to use as I am till in the short sale process) is wait 2 years after you short sale before using your credit for anything!! Then you will still have to explain the short sale to any future applications for credit. Probably not credit cards but car loans and home loans.

If you missed payments or were late multiple months or times then you have that on your credit report as well in addition to the short sale

gcrissman · 02-01-2011, 03:30 PM

Quote:

Originally Posted by loves2read

OK--so this SS happened two years ago and your bank is just coming to you NOW for repayment

don't understand the time line

and don't understand how you could not know the final figures from you bank before you initiated the short sale--although the ultimate figure might depend on what price you negotiated for the house

Common place for Banks to come after you months or years after the SS closed. The banks will not give you a release from the extra $$ and reserve the right to come after you or not. Some will say up front they want a signature no interest loan, some will forgive you, and some just wait till you get your life back together. The trick is if they ask for any $$ to get them to give you a release then.

Even better yet is to use the programs out there that "mandate" they release you from any future debt. The problem is they drag their feet, lose paperwork, and try to find ways to dis-qualify you.