How can I get my second mortgage holder to forgive my loan? my home was sold in short sale? not a major bank?
by Mortgage Rates on Friday, October 8th, 2010 | 9 Comments
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uh….you have no leverage. YOu should not have sold their secured interest in a short sale without getting their approval first.
Either pay it off, go bankrupt, or default and let the chips fall where they may.
Options, don’t pay anymore and they could file a 1099 form to the IRS grossing up your income for the balance. That isn’t good because it could create a situation where you couldn’t pay the taxes owned. You could hire an attorney to negotiate on your behalf. Or you may want to talk with a bankruptcy attorney at this point.
well you can stop making payments and see what happens.
why not temporarily sweat it and get a 2nd job for 2 yrs to get it paid off.
then, your credit will stay excellent or at least good
You should have gotten approval from both of your mortgage companies before short selling. I think that the realtor or title company would have prevented the sale had this been known. I think that the second mortgage company still has rights to the house. The new owners are for a rude awakening when their home gets reposessed and find out the transaction was not legal or binding because of the lean.
I think what you did was sign a paper to the second lien company that “if you will release the lien on this house so I can sell it with a clear title then I will take the balance as a personal note”. You apparently signed that and have been paying.
Since it is a personal note then if you stop paying they won’t go repossess the house- but they might do all kinds of things to you and your financial situation. I would strongly suggest you hire someone to negotiate on your behalf and probably get the amount lowered (probably in exchange for faster payment or something).
the title exam would have listed the second mortgage as a valid lien against the property. I can’t imagine a buyer taking the property with a lien still against it. This second mortgage holder can foreclose on the house.
I find it hard to believe that a properly filed second mortgage lien on your home didn’t prevent the short sale from happening without the second mortgage holders approval. You are either going to have to pay it our they are likely to issue you a 1099 and you’ll have to declare that $$ as income (and pay the resulting taxes on it) as well as taking an additional hit to your credit score.
The 2nd lender obviously approved the sale, but they only released the lien, not there ability to collect, as this happens ALL the time. Depending on if you signed a new note with new terms and recourse or your just paying your payment as always, it will determine what can be done. You should speak with an attorney, but if you stop paying, they can either sue you and seek a deficiency judgment or they can write it off and issue you a 1099C. You may be protected from the tax implications if you qualify for the Mortgage Debt Relief Act of 2007, so speak with a QUALIFIED Tax Adviser, who may also present you with the IRS form 982 for Insolvency if the MDRA 0f 07 doesn’t apply.
That just covers your tax implication, not your legal. You didn’t mention what state you are in, as you may be in a Non Recourse state (Like CA), which means the lender probably can’t do anything if this was your primary, as they did their one move, the short sale. If your in a Recourse state (Like FL) then they can persue you BUT remember, they must sue you for the deficiency judgment, its not automatic, which means they need to spend money to get money, and banks don’t like spending good money to chase bad money, nor do the stockholders. Again, speak with an attorney.
Good Luck