Yesterday I spoke with a rep from Chase on a Short sale I was closing today to inform me that their new policy as of last week was to go after every owner for a deficiency judgement on all Chase owned loans that are short sales or foreclosures.
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This one finally closed this week after 10 months. At the closing the new approved net was different than the hud we had sent. Couldn't reach Chase rep to find out why. So of course yours truly took it in the shorts for the difference. At 6 o'clock rep calls and says she can fix it if we want to close it again in a few days. Yeah after 10 months I am going to resubmit. The fun never ends.
In California it is going to be impossible to go aftter any owner for a deficiency judgement. Chase needs to get better in working short sales specially the ones inherited from WAMU.
I have the buy side of a Chase attempted short sale signed yesterday. Chase has refused to short sale, and has told the seller in no uncertain terms that they WILL bring money to the table or not sell. period.
In California, generally speaking (of course seek the advice of an attorney), a non-judicial foreclosure precludes any deficiency judgments. If Chase wants a deficiency, it MUST judicially foreclose (in California).
What is interesting is the short sale - if this is Chase's position, then they pretty much have just forced every single potential short sale seller into choosing to be foreclosed upon. Pretty idiotic on the part of Chase if true (assuming it applies to CA)
It depends if the state is recourse or non-recourse as well regarding deficiency judgements. The bank must put in writing that they will take the offer as Full payment on the loan and record a "satisfaction".
I have had seller/investors that short sold and as long as they are insolvent when they short sell their accountant can file an insolvancy form. Each individual has there own set of circumstances but many of my sellers who have been isolvant at the time of sale have been o.k. regarding tax implications per there accountants.
I had a short sale where the builder was the lender and they required a deficiency judgement or the sale would not go through. The seller refused to sign it. They didn't have the 50k that was to be paid in 18months. After this happened I went to a bankruptcy lawer and picked their brains. They said had the seller done that, and had the builder/lender taken them to court they could file bankruptcy, and since it is an unsecured loan, it more then likely disappear. BUT, I am not a lawyer, don't play one on tv or at home, and all cases are on a case by case issue.
A deal is a deal and an Contract (including loan note) is a Contract.... I wonder if they would take a deed in lieu and then sell it to the buyer? Cheaper than forclosure and no carry time if your deal is strong. Maybe there is a way to manufacture a winner here.
Goerge, very smart. Will it work? How can we find out. This is an idea worth checking in to. In fact, it is an idea worth checking into in several different scenerios.
I had heard talk of this, that it was a real possibility.
Something about short sales most people do not know until it's way too late is that the IRS will file Capital Gains for the unearned income in the amount of the difference of the sale versus the amount owed. I tell all of the agents in my office if they have a client wanting to do a short sale to talk to a CPA first before talking to the bank.
Robin S. Reed > Steve AdkinsJuly 29, 2009 at 11:30am
Capital Gains are created from capital investments. Unless it is a rental / investment property, the IRS would recognize it as ordinary income which is taxed differently than capital gains. Also under IRS Code 1231, the owner of an investment property that is short sold, can write off the loss between the adjusted basis and the sales price as a way to offset the forgiven debt that is represented by the 1099C
Replies
What is interesting is the short sale - if this is Chase's position, then they pretty much have just forced every single potential short sale seller into choosing to be foreclosed upon. Pretty idiotic on the part of Chase if true (assuming it applies to CA)
I have had seller/investors that short sold and as long as they are insolvent when they short sell their accountant can file an insolvancy form. Each individual has there own set of circumstances but many of my sellers who have been isolvant at the time of sale have been o.k. regarding tax implications per there accountants.
Just my .01
Something about short sales most people do not know until it's way too late is that the IRS will file Capital Gains for the unearned income in the amount of the difference of the sale versus the amount owed. I tell all of the agents in my office if they have a client wanting to do a short sale to talk to a CPA first before talking to the bank.
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