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Home › Forums › Housing › Forced to NOD before Short selling. Is this normal?

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  • May 6, 2008 at 6:16 AM #199554
    Alex_angel
    Participant

    He wanted to talk the loss but after speaking to an RE agent the guy told him not to and do the short sale. The RE is now driving his decisions which IMO is crazy. He took the banks advice and stopped payment.

    He did try to find work here but after 4 months nothing happened. His old company in Phoenix ask him to go back with a raise so he did that after exhasting his options here.

    Most of you know that the job market in SD sucks donkey testicles right now.

    May 6, 2008 at 10:02 AM #199543
    seattle-relo
    Participant

    Your friend should speak with a real estate attorney and tax advisor to help him make the best decision for himself and his family. The real estate attorney could lay out the legal issues and also possibly try to negotiate with the bank for him; the tax person could explain the tax implications for a short sale vs foreclosure. I believe that the a bill was passed in 2007 that was related to foreclosures which erased the debt forgiveness tax to those who did a short sale if the property was their primary residence, but being that his CA home is now a rental, I would guess he would have to pay debt forgiveness tax. If his loan(s) were nonrecourse because he originally bought it as his primary residence and didn’t refi, he shouldn’t have any tax issues.

    I’m sorry your friend is going through this, it really sucks to be in his situation.

    May 6, 2008 at 10:02 AM #199584
    seattle-relo
    Participant

    Your friend should speak with a real estate attorney and tax advisor to help him make the best decision for himself and his family. The real estate attorney could lay out the legal issues and also possibly try to negotiate with the bank for him; the tax person could explain the tax implications for a short sale vs foreclosure. I believe that the a bill was passed in 2007 that was related to foreclosures which erased the debt forgiveness tax to those who did a short sale if the property was their primary residence, but being that his CA home is now a rental, I would guess he would have to pay debt forgiveness tax. If his loan(s) were nonrecourse because he originally bought it as his primary residence and didn’t refi, he shouldn’t have any tax issues.

    I’m sorry your friend is going through this, it really sucks to be in his situation.

    May 6, 2008 at 10:02 AM #199609
    seattle-relo
    Participant

    Your friend should speak with a real estate attorney and tax advisor to help him make the best decision for himself and his family. The real estate attorney could lay out the legal issues and also possibly try to negotiate with the bank for him; the tax person could explain the tax implications for a short sale vs foreclosure. I believe that the a bill was passed in 2007 that was related to foreclosures which erased the debt forgiveness tax to those who did a short sale if the property was their primary residence, but being that his CA home is now a rental, I would guess he would have to pay debt forgiveness tax. If his loan(s) were nonrecourse because he originally bought it as his primary residence and didn’t refi, he shouldn’t have any tax issues.

    I’m sorry your friend is going through this, it really sucks to be in his situation.

    May 6, 2008 at 10:02 AM #199635
    seattle-relo
    Participant

    Your friend should speak with a real estate attorney and tax advisor to help him make the best decision for himself and his family. The real estate attorney could lay out the legal issues and also possibly try to negotiate with the bank for him; the tax person could explain the tax implications for a short sale vs foreclosure. I believe that the a bill was passed in 2007 that was related to foreclosures which erased the debt forgiveness tax to those who did a short sale if the property was their primary residence, but being that his CA home is now a rental, I would guess he would have to pay debt forgiveness tax. If his loan(s) were nonrecourse because he originally bought it as his primary residence and didn’t refi, he shouldn’t have any tax issues.

    I’m sorry your friend is going through this, it really sucks to be in his situation.

    May 6, 2008 at 10:02 AM #199671
    seattle-relo
    Participant

    Your friend should speak with a real estate attorney and tax advisor to help him make the best decision for himself and his family. The real estate attorney could lay out the legal issues and also possibly try to negotiate with the bank for him; the tax person could explain the tax implications for a short sale vs foreclosure. I believe that the a bill was passed in 2007 that was related to foreclosures which erased the debt forgiveness tax to those who did a short sale if the property was their primary residence, but being that his CA home is now a rental, I would guess he would have to pay debt forgiveness tax. If his loan(s) were nonrecourse because he originally bought it as his primary residence and didn’t refi, he shouldn’t have any tax issues.

    I’m sorry your friend is going through this, it really sucks to be in his situation.

    May 6, 2008 at 4:10 PM #199862
    seattle-relo
    Participant

    Actually I should take that back about the non recourse issue. I am not certain how the non recourse loan works if the property is turned from owner occupied to rental. I believe if you buy an investment property the purchase loan is recourse, but I don’t know how the bank sees it if it was owner occupied and then turned into a rental – does it keep it’s non recourse status? Does anyone know?

    May 6, 2008 at 4:10 PM #199904
    seattle-relo
    Participant

    Actually I should take that back about the non recourse issue. I am not certain how the non recourse loan works if the property is turned from owner occupied to rental. I believe if you buy an investment property the purchase loan is recourse, but I don’t know how the bank sees it if it was owner occupied and then turned into a rental – does it keep it’s non recourse status? Does anyone know?

    May 6, 2008 at 4:10 PM #199930
    seattle-relo
    Participant

    Actually I should take that back about the non recourse issue. I am not certain how the non recourse loan works if the property is turned from owner occupied to rental. I believe if you buy an investment property the purchase loan is recourse, but I don’t know how the bank sees it if it was owner occupied and then turned into a rental – does it keep it’s non recourse status? Does anyone know?

    May 6, 2008 at 4:10 PM #199955
    seattle-relo
    Participant

    Actually I should take that back about the non recourse issue. I am not certain how the non recourse loan works if the property is turned from owner occupied to rental. I believe if you buy an investment property the purchase loan is recourse, but I don’t know how the bank sees it if it was owner occupied and then turned into a rental – does it keep it’s non recourse status? Does anyone know?

    May 6, 2008 at 4:10 PM #199988
    seattle-relo
    Participant

    Actually I should take that back about the non recourse issue. I am not certain how the non recourse loan works if the property is turned from owner occupied to rental. I believe if you buy an investment property the purchase loan is recourse, but I don’t know how the bank sees it if it was owner occupied and then turned into a rental – does it keep it’s non recourse status? Does anyone know?

    May 8, 2008 at 6:13 PM #201489
    cyphire
    Participant

    What is credit anyway??? The whole credit worthiness scam is a joke – unfortunately it’s a joke which at it’s end point adversely affects everyones lives.

    I am not one of those folks who think your friend is completely at fault… Based on your explanation, I wouldn’t assess his fault at more than 20%. Americans have credit thrown at them, from the time they graduate high school till they die. The credit companies including banks, credit card companies, retailers will give anyone credit then get huffy when some people can’t pay anymore. It’s a scam, because they make up the lost money on the people who are still paying their bills….

    If credit is so easy to get, it should be easy to get away from, if credit is hard to get, it should be hard to walk away from.

    Imagine if it was an absolute requirement to put down 20% and you couldn’t get a second mortgage???? Or if you did get a second it would have to correspond in a direct investment in your home which improved it’s value by that amount or more. Imagine if you did only have 20% equity in a home that you would be constrained from other debts???

    This is the way it should be. Credit is ok as an economic lubricant but when it is abused by the creditor granters, they deserve to be left with nothing…

    If you give anyone credit and don’t require even the smallest amount of due diligence on their ability to pay, you deserve to lose your business.

    The banks deserve contempt for their easy lending and the government deserves even more for bailing the banks out. I feel bad for the homeowners and the level of credit advertising they are subject to – i think the whole credit situation in our country is beyond disgusting!!!

    REMEMBER::: This crisis was created by easy lending. Easy lending and artifically low interest rates created the house price increases… If the government interferes it will only make things worse or destroy us in the long run as it will increase our debt and reduce the value of our currency…

    May 8, 2008 at 6:13 PM #201533
    cyphire
    Participant

    What is credit anyway??? The whole credit worthiness scam is a joke – unfortunately it’s a joke which at it’s end point adversely affects everyones lives.

    I am not one of those folks who think your friend is completely at fault… Based on your explanation, I wouldn’t assess his fault at more than 20%. Americans have credit thrown at them, from the time they graduate high school till they die. The credit companies including banks, credit card companies, retailers will give anyone credit then get huffy when some people can’t pay anymore. It’s a scam, because they make up the lost money on the people who are still paying their bills….

    If credit is so easy to get, it should be easy to get away from, if credit is hard to get, it should be hard to walk away from.

    Imagine if it was an absolute requirement to put down 20% and you couldn’t get a second mortgage???? Or if you did get a second it would have to correspond in a direct investment in your home which improved it’s value by that amount or more. Imagine if you did only have 20% equity in a home that you would be constrained from other debts???

    This is the way it should be. Credit is ok as an economic lubricant but when it is abused by the creditor granters, they deserve to be left with nothing…

    If you give anyone credit and don’t require even the smallest amount of due diligence on their ability to pay, you deserve to lose your business.

    The banks deserve contempt for their easy lending and the government deserves even more for bailing the banks out. I feel bad for the homeowners and the level of credit advertising they are subject to – i think the whole credit situation in our country is beyond disgusting!!!

    REMEMBER::: This crisis was created by easy lending. Easy lending and artifically low interest rates created the house price increases… If the government interferes it will only make things worse or destroy us in the long run as it will increase our debt and reduce the value of our currency…

    May 8, 2008 at 6:13 PM #201561
    cyphire
    Participant

    What is credit anyway??? The whole credit worthiness scam is a joke – unfortunately it’s a joke which at it’s end point adversely affects everyones lives.

    I am not one of those folks who think your friend is completely at fault… Based on your explanation, I wouldn’t assess his fault at more than 20%. Americans have credit thrown at them, from the time they graduate high school till they die. The credit companies including banks, credit card companies, retailers will give anyone credit then get huffy when some people can’t pay anymore. It’s a scam, because they make up the lost money on the people who are still paying their bills….

    If credit is so easy to get, it should be easy to get away from, if credit is hard to get, it should be hard to walk away from.

    Imagine if it was an absolute requirement to put down 20% and you couldn’t get a second mortgage???? Or if you did get a second it would have to correspond in a direct investment in your home which improved it’s value by that amount or more. Imagine if you did only have 20% equity in a home that you would be constrained from other debts???

    This is the way it should be. Credit is ok as an economic lubricant but when it is abused by the creditor granters, they deserve to be left with nothing…

    If you give anyone credit and don’t require even the smallest amount of due diligence on their ability to pay, you deserve to lose your business.

    The banks deserve contempt for their easy lending and the government deserves even more for bailing the banks out. I feel bad for the homeowners and the level of credit advertising they are subject to – i think the whole credit situation in our country is beyond disgusting!!!

    REMEMBER::: This crisis was created by easy lending. Easy lending and artifically low interest rates created the house price increases… If the government interferes it will only make things worse or destroy us in the long run as it will increase our debt and reduce the value of our currency…

    May 8, 2008 at 6:13 PM #201587
    cyphire
    Participant

    What is credit anyway??? The whole credit worthiness scam is a joke – unfortunately it’s a joke which at it’s end point adversely affects everyones lives.

    I am not one of those folks who think your friend is completely at fault… Based on your explanation, I wouldn’t assess his fault at more than 20%. Americans have credit thrown at them, from the time they graduate high school till they die. The credit companies including banks, credit card companies, retailers will give anyone credit then get huffy when some people can’t pay anymore. It’s a scam, because they make up the lost money on the people who are still paying their bills….

    If credit is so easy to get, it should be easy to get away from, if credit is hard to get, it should be hard to walk away from.

    Imagine if it was an absolute requirement to put down 20% and you couldn’t get a second mortgage???? Or if you did get a second it would have to correspond in a direct investment in your home which improved it’s value by that amount or more. Imagine if you did only have 20% equity in a home that you would be constrained from other debts???

    This is the way it should be. Credit is ok as an economic lubricant but when it is abused by the creditor granters, they deserve to be left with nothing…

    If you give anyone credit and don’t require even the smallest amount of due diligence on their ability to pay, you deserve to lose your business.

    The banks deserve contempt for their easy lending and the government deserves even more for bailing the banks out. I feel bad for the homeowners and the level of credit advertising they are subject to – i think the whole credit situation in our country is beyond disgusting!!!

    REMEMBER::: This crisis was created by easy lending. Easy lending and artifically low interest rates created the house price increases… If the government interferes it will only make things worse or destroy us in the long run as it will increase our debt and reduce the value of our currency…

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