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Q: Can you buy a house after a short sale transaction?
You mentioned her buying again? Have you talked to a lender. Almost all lenders I’m aware of have a 2 year seasoning requirement. This may change, or maybe it has changed for certain banks, but it is not a given she will be able to buy again soon. Plus, a short sale will still substantially hurt her credit. My perfect example is clients who just closed 6 weeks ago on a short sale. Never late , impeccable credit. But the notation of settled as agreed for less than full balance dropped their score 150 points. If your client isn’t into the 800’s now, dropping 100-150 points could be significant.
Q: Will the bank go after me for the reaming balance unpaid?
Most of the time on a short sale, we request the bank to waive the deficiency. Meaning, the bank will have to forgive the remaining balance of the unpaid debt. However, bank will issue a 1099 C which you will have to file as income, but your CPA will have to declare a lost in order to wash the gain. Speak with your CPA about how to file for your 1099C’s. In some cases lenders will insist to go after the homeowners for deficiency judgement and you have to be prepared to be bothered longer than expected.
Q: How to deal with the emotional effects of a short sale towards your clients?
As evidenced by some here , doing short sales also means learning how to manage your clients in distress.... It is heartbreaking for many to lose their homes. Others have resolved themselves to the fact and can move on. How do you respond and approach a homeowner you know is very emotionally fragile...and near the edge.... they have no money for counseling or insurance or their insurance does not pay or pays very little.
Again, I clearly help clients deal with this situation by making them realize that they are in this situation because they can’t afford the home any longer. I don’t pressure moving immediately, but they have to realize the sooner to move the easier it will be waking up every morning not knowing who is to knock on their doors, or what scary letters are coming from the lenders. Homeowners have to realize too that they have at least stop paying the mortgage 6 months to a year already. Therefore, cannot expect a free ride forever?
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For my honest opinion, call me direct be prepared to listen to my truthful and very direct advice. Call Ken Go at 1st Innovative Finance (888) 822- 5363 or write to: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Please be understanding to yourself, mistake can be made to better yourself in the future.
( Published on July 1, 2009 in Asian Journal Los Angeles p. B3 )
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