[quote=sdrealtor]I have read all over the Internet that Short Sales benefit no one other than the lisitng agents and that they are just as damaging to one’s credit as a foreclosure. [/quote]
Ok, I’m pretty well versed in this stuff and this is the first time I ever heard the theory that short sales only benefit the listing agent.
[quote=sdrealtor] Relocation forced borrowers to move cross country for family reasons. The short sale was completed with the sellers never missing a single payment. This dispells the myth that you always need to miss payments to get the bank to accept the short sale. The truth is you need to demostrate a hardship case. The bank wrote off about $100,000 of debt which the sellers will not be taxed on federally or statewise.
[/quote]
There is a million variables here. The borrowers either had just one lien or it was a purchase money loan. Also, from the sounds of it, I would bet this is a portfolio loan and not securitized.
The reason why 1 lien OR purchase money matters is because then the loans are effectively non-recourse. If it 1 lien refi then the borrowers are covered by the single action rule. If it is purchase money then it is non-recourse automatically.
Portfolio versus Securitized matters because servicers for securitized loans have a much tighter range of options available to them defined by their PSA’s (which can each be different depending on the pool). A portfolio loan the bank owns and just looking at if the borrower is recourse or not brings the situation to a logical conclusion pretty quickly if it isn’t recourse. There really is no option and its in the banks best interested to get it sold as quickly as possible.
