Question: We are considering a short sale on the home we owned for many years. We contacted a short sale agent but we did not contact our bank. I lost my job last year. The agent advised us that we are $10,000 under water on the property not including an additional home equity line. We are current on our mortgage payments but we are wondering if we should continue to make the payments during the short sale process?
Response: You should have no problems doing a short sale, especially if you are only $10,000 under water. You need to contact the bank to initiate the short sale process. They will absolutely have to verify your financials to ensure that there is no way to repay the entire debt. In your case, where the amount of debt that needs to be forgiven is $10,000 but if you have other assets, it may be a problem. Since every bank has its own process in place, you need to contact the bank to determine if they will agree to a short sale in your case. It doesn't seem that there should be a problem with such a small amount being forgiven. As far as stopping payments goes, you need to know that when you stop making payments, you are always at risk of facing foreclosure. At the same time, if you stop making mortgage payments, by the time the short sale takes place, you will owe more money to the bank, and thus, a greater amount might or might not be forgiven. The amount that banks will generally accept at the short sale is roughly equivalent to the fair market value of your home.
In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.
The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
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