Why A Short Sale After Bankruptcy Just Isn’t Worth The Hassle

short sale after bankruptcyYou filed for bankruptcy and now are contemplating a short sale.

Maybe you got a phone call or a letter from some “workout consultant” who “specializes” in these sorts of things.

Perhaps a real estate broker called to let you know someone wanted to buy your house but it would need to go through a short sale in order to make the deal happen.

Before you agree to a short sale after bankruptcy, let’s take a step back and inject a little bit of reality into the situation.

After Bankruptcy, You’re Not Liable On The Mortgage

You went through bankruptcy and got your discharge. You’re no longer personally liable for the balance due on the mortgage. If the house goes into foreclosure after bankruptcy the bank can’t come after you for the deficiency.

There’s no further negative credit stigma because your debt has been discharged already.

If the bank takes back the house, it’s their problem – not yours. You can certainly sign off on a deed giving back the property after bankruptcy, but it’s up to the bank to come to you. This is a matter of convenience, not obligation.

Homeowner’s Association? That Changes The Game (Maybe)

Under Section 523(a)(16) of the bankruptcy law, homeowners association fees that arise after the bankruptcy case is filed are not discharged. That means that all HOA fees that arise from the date of the bankruptcy filing until the day the condo leaves your name, the meter is running.

If you’re giving up your condominium in bankruptcy, you’re theoretically looking at a very costly post-bankruptcy bill. The short sale specialists want you to believe that the pipe is going to come calling – but will he?

In most cases, the HOA fees that accrue between the bankruptcy filing and the foreclosure sale aren’t going to make a difference to you. In order to sell the property, the mortgage bank is going to need to pay off all debts on the property – include those pesky HOA fees. A failure to do so means that nobody’s buying the property.

When the lender pays off the HOA fees after bankruptcy, that gets added to the amount of money you owe the mortgage company. The debts to the lender were discharged in your bankruptcy.

Once again, this is the lender’s problem after bankruptcy – not yours.

Getting a short sale done after bankruptcy Is A Headache

You’re going to need to enter into a contract of sale for the property (I’m betting that real estate broker has one ready for you to sign, surprise surprise). Then you need to get it over to the right people at the bank (good luck with that). They’ve got to review it, get appraisals of the property, and make you jump through a bunch of hoops.

If you’re working with a workout consultant, you’re probably going to have to spend some money to get the deal done, too.

So you’re going out of pocket and out of time. And you get nothing out of it.

The only people who win when you do a short sale after bankruptcy are the real estate broker (who makes a commission on sale of the property), the workout consultant, and the buyer (who gets the property at a lower price than would be possible without a short sale).

Notice the person missing from this scenario?  Yup, it’s you.  No benefit whatsoever.  Of course, this presupposes that you don’t want your friend or relative to get a sweet deal on a house – but that’s another ball of wax and doesn’t involve these players.

So what happens if there’s a foreclosure after bankruptcy?

Eventually you’ll have to move out.  And until the bank takes title to the property you’ll want to keep current on the taxes and insurance.  But aside from that, pretty much nothing.

Why would you possibly consider a short sale after bankruptcy?  What’s the point?  For the most part, there is none.  Short sales after bankruptcy are a waste of your time and your energy except in limited situations.

Image credit:  certifiable.nl

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Comments

  1. Kenneth Embry says:

    Wow!

    The things that you don’t think about as a consumer…

    After reading this post, I called two people that had gone through a short sale after bankruptcy and they had never even thought about why they went through the hassle of helping everyone else make some money off of their efforts…

    They both said that they thought that they had to help so that they would not be exposed o any further liability…

    I guess they did not fully comprehend the “discharge” function of bankruptcy…

    For me personally, I may have helped out, but someone would have had to pay me some money or everybody would have been SOL…

    Wow! The things that y don’t think about and just blindly go along with…

    • Jay S. Fleischman, Esq. says:

      Nothing wrong with being nice and helping out a new potential buyer, Kenneth; it just kills me that outside professionals don’t realize how it works. Not saying that those who help the process along (brokers and the like) are trying to screw anyone, though; the new buyer wants the property and the existing owner is the primary point of contact. I just wish someone would consider compensating the owner for his or her time and efforts.

      • I certainly agree that short selling after bankruptcy is not a benefit to the seller. You forgot to mention potential liability to the buyer as in any real estate sale for whatever reason the buyer and agents involved want to sue you (no bk discharge available to you!). A couple of other points: 1. The HO fees lien is wiped out by the foreclosure in California so it does not need to be paid by the bank after Trustee’s Sale but it remains the seller’s liability for post bankruptcy HO fees and must be paid for lien to be released and short sale done. 2. Property taxes in CA are never a personal liability of the property owner so need not be paid by the seller post bankruptcy and insurance is included in HO fees (except liability which is optional, cheap and recommended). Finally, the incentive seems to be delay and some money from the bank because of a government program to reduce foreclosures (other than to avoid liability for the mortgage deficiency that people still believe they will owe because they can’t believe the agents would lie about that and not to have a foreclosure in their credit report because they were told that means never buying a house again).

        • Jay S. Fleischman, Esq. says:

          Thanks for the California perspective, Tony. This article was designed for the seller as opposed to the buyer, but clearly this shows the value of good representation for the buyer at closing.

          • Garth Sullivan says:

            In CA (and any other state in which an HOA lien gets in line behind everyone else) a short sale makes sense if the Debtor does not want to stay in the property and, therefore, does not want to continue paying the HOA. This is because, in the absence of a short sale, the bank will foreclose on the property and the HOA will NOT receive anything. Perhaps NY is different, but in CA, an HOA lien gets in line behind everyone else and typically will receive nothing in the event of a foreclosure. Moreover, at least in my experience, HOAs have become very aggressive about collection making this a real issue for many of my clients.

      • one tiny thing was left out…..What about all companys getting the lien assignment on post discharge (aged fees). Then filing suit in SCC . That one is not in the bankruptcy code! So, yes…People are getting screwed by having equitable title after BK

  2. The overlooked issue is what happens when you do not want to stay in the property. If you are staying there, then wait until they kick you out. Pay the insurance, taxes and dues and save the rest.

    However, if you have left or want to leave, then a short sale may seem like a good idea AS LONG AS YOU DO NOT PAY ANYTHING TO DO IT. Think about it, the post-petition taxes and dues liability goes away. The maintenance liability from the local government (those pesky ordinances) goes away. The liability from potential injury goes away. The house is no longer in your name and nothing more can happen based on that house.

    While it is a rare case, getting the house transferred to someone else fast can be a good thing. A short sale can do that.

    • Jay S. Fleischman, Esq. says:

      Sure, if it doesn’t cost you anything then do it. Problem is that such is rarely the case.

      • I have spoken to a person, a realtor, that assures me there is no cost whatsoever to me if I go through the short sale on my home. The documents indicate that the buyer agrees to pay all fees and she negotiates with the lender.

        I still have this feeling that I am missing something though. She said that she has done several of these already and has been very successful. Should I be worried that I will have to pay something in the end?

        I was planning on talking with my bankruptcy lawyer and I know that may cost me a bit of money but I am ok with paying that fee if I can do everything else without the cost.

  3. I have seen the debtors pay money to close a short sale because they think it will help their credit or lower their liability. The advantage to a short sale is mostly emotional. A lot of debtors feel bad because they are losing their home. They feel that a short sale somehow shows that they tried to do better than people who just walk away or lose their home in a foreclosure sale. This is a shame that these people think that way. Debtors still drive General Motor cars and eat Twinkies and Hostess Cupcakes even though those companies and many others filed bankruptcy and the companies are still around. If a business files a bankruptcy, it is called smart financial planning. The company has determined that it cannot survive if it continues to operate as it is presently operating. If a person files, they think that they are worthless or not as good as other people.

    Businesses use bankruptcy to get on with the business of making money. Too many people think filing bankruptcy is the end. I ask people who come in to file are they happy with the life they have now. The answer is always no. Most have no plan as to how move forward to where they want to go in life. For those without a plan, there is usually no “fresh start.”

    Maybe a part of bankruptcy filing should be visiting and being tested by a vocational specialist so that the debtor can see how their skills can be used in the market place.

  4. Great insight and advice Jay. I find myself explaining this time and again. Now I have a link to direct people to so they know it’s not just me :-).
    I guess with the overwhelming communication from realtors our voices get overshadowed.

  5. I have modestly claimed “Faucher’s Law” among my southern California colleagues: “A short sale never helps a client about to go into bankruptcy anyway.” I now realize that it should be expanded to include clients who have gotten their discharge. Thanks for the post; it directs our attention to the real-world results of our labors, and how the benefits can be wasted if the client is not careful.

  6. Lew Siegel says:

    “In order to sell the property, the mortgage bank is going to need to pay off all debts on the property – include those pesky HOA fees. A failure to do so means that nobody’s buying the property.”

    I am not sure if the HOA (at least in NY unless the Condo has taken certain steps after the delinquency) are a lien on the property. If they are not a lien, is there any requirement that the Bank or any other forecloser pay off these debts – as I am not sure if they are “debts on the property”?

    • Jay S. Fleischman, Esq. says:

      Lew, if the bank doesn’t pay the HOA then the title company won’t let the sale go through. It’s a cloud on title, and no title company would except it.

  7. The worst phone call you can receive as a bankruptcy attorney is your client on the other line, telling you that their HOA just began garnishment for several thousand dollars. That’s right, their bank didn’t foreclose for months and they owe the HOA thousands of dollars and to make matters worse, the house still has not been foreclosed on and they need to continue to pay on the monthly amount until it does.
    Of course, I advise my clients to stay in their house but it doesn’t always work out that way. Ttey didn’t because the house was too far from work to begin with, they needed to move closer into town to cut down on gas and they wanted to move into a new school district and not have the kids get to attached to the neighborhood. They all have their reasons for moving and it is always to make their lives easier. Foreclosures don’t always come when you want them and sometimes they just never come. So, they moved and they didn’t pay, the HOA planted a tree, seeded their lawn and fined them $35.00 a day for leaving their garbage can out for a month and within 8 months of filing bankruptcy, they are facing a lawsuit for well over $5,000.00. This situation happens a lot here in Arizona. So, I do advise my clients to short sell their house which ensures that they are no longer titled to a house, responsible for the taxes, insurance and HOA and they know exactly when it will sell and are not hoping that the bank will be kind enough to sell it for them. And guess what, my short sale clients never call me and tell me that the HOA is garnishing them, ever.

    So, if your only logic in not selling your house is it is a hassle and someone is going to make money on you, then figure out what a hassle it will be for you maintain it, insure it and pay the taxes on it while you wait for the bank to foreclose on it.

    • Jay S. Fleischman, Esq. says:

      That’s a good point, and underscores the difference between where I practice and the rest of the nation. Here the banks will foreclose and the condo will wait in line, knowing that the bank is a better bet for payment than the owner.

      • I filed BK in Florida after my home had started down the foreclosure path. About a month ago, the bank sent me an insurance policy in the house. Apparently, the bank has to cover the home for liability reasons since I have declared bk. So before you run out and pay for an expensive insurance policy, give the bank the opportunity to cover it until it is time to leave.

  8. Majdel Musa says:

    What if they get $10-30K from the lender to complete the short sale? Debt free and money to start over? Might be worth the hassle. Oh, and yes, I’ve been at closings where Chase has done that.

    • Jay S. Fleischman, Esq. says:

      Majdel, that makes it well worth the effort on the part of the homeowner.

      • leigh will says:

        I was offered 7k to complete a short sale. I did bankruptcy in 2009 and thought it was over. The messages above help me clear my mind. I was offered 20k just the other day. Should I let the two offers compete and take the highest one. Is there any reason to bring a lawyer to a short sale when the buyer has everything set up already? I have limited time to get the answers because I was asked to sign the deal on Monday afternoon.

        • Jay S. Fleischman, Esq. says:

          Leigh, I’m not in a position to counsel you based on a comment on a blog. I think, however, that having a lawyer is the right way to go in this situation. Good luck!

  9. Eric Earley LL.M. (Real Property) says:

    There are other factors to consider, such as how long you want to wait before you buy a home again: 2 years after a CH7 BK but 3 years after foreclosure. The way lenders are treating this after a BK and Foreclosure is that they use the latest date after a BK—so if you let it go to foreclosure after bk, it tacks on another 3 years from the auction date. But the short sale is only two years. See website below for FHA guidelines.

    Also Note that my extensive experience is that short sales rarely cost the client because the Realtor fees and attorney fees are paid out of the proceeds of the sale—this is especially true after bankruptcy because of the extra leverage the owner has (I have never seen a cash contribution in this case and the lender has always paid the HOA, taxes, etc.).

    And here in Nevada, where the entire process is typically non-judicial, foreclosure can occur in 3 months and 20 days after the recordation of the Notice of Default—but doing the short sale actually buys you more time in the property as the Lender typically postpones the auction so that they can fully consider the buyer’s offer.

    So I see no problem here in Nevada with doing the short sale after Bankruptcy—and I encourage it. See below for FHA guidelines after BK and Foreclosure.

    The following is quoted from: http://www.fha-home-loans.com/
    Q. How long after a bankruptcy can I use FHA loans for buying a home or mortgage refinance?
    A. You may buy a home or do a refinance mortgage using FHA loans two years after the date of discharge for a bankruptcy, assuming that you have maintained perfect credit since the discharge of the bankruptcy with a FHA streamline refinance loan.

    Q. How long after a Foreclosure can I use a FHA mortgage loan for buying a home or a refinance mortgage?
    A. FHA loans may be used for buying a home or FHA mortgage refinance three years after the final date of foreclosure assuming that your credit since the foreclosure has been perfect.

  10. Laura Ybarra says:

    Jay,
    My understanding is that a foreclosure after a BK discharge can, and will, be reported on your credit bureau. Even though you are no longer personally responsible for the debt, you are still responsible for the lien. A foreclosure, BK or not, will stay on your credit for seven years whereas a short sale will have less impact and only be on your credit for two to three years, making it easier to qualify for a new mortgage. Can you please advise?

    • Jay S. Fleischman, Esq. says:

      Laura, I don’t know that to be the case. Adverse credit information uniformly regardless of WHAT that information is.

      • Alexis Saller says:

        Jay,
        I live in Virginia and went through a chapter 7 BK 18 months a go. We DIDNOT reafirm the mortgage. In the beginning (first year post BK) we were making the mortgage payments on time. Then we hit another financial hurtle and began falling a little behind. We would pay them as much as we could, but of course that didn’t work. as of April the mortgage company began to send the threatening letters and we just received one from a forecloser attorney. We were thinking maybe a short sale, because we have been told a forecloser will hurt our credit even more than the BK already has. We feel very confused as it seems many of your blogers do. What will a forecloser on top of a BK do to our credit report?
        Please advise, remember we are in Virginia. Thank-you so much
        .

        • Jay S. Fleischman, Esq. says:

          Alexis, I’m not a Virginia lawyer so I can’t speak to anything there. If you’re looking for help in Virginia, I recommend that you get in touch with Jason Krumbein. He’s in Richmond, and his number is 804-303-0204. Another option is Mitchell Goldstein at 804-592-1674. Both good lawyers.

  11. I have had several clients who made the mistake of moving out before a foreclosure sale. The lender loses the incentive to complete the sale or at least to not record the deed. I tell my clients in CA that they should stay in the home after foreclosure until the lender becomes the “owner of record”. The new owner (typically the bank) will give a 3 day notice to vacate. I told my clients to check online with the county recorder to see if the trustee’s sale deed has been recorded. If not, print out the County recorders list of filed documents and call the “owner” and fax a copy of the recorders printout. Then I have the debtor tell the “owner’ that they have checked with the county recorder and confirmed that the debtor is still the “owner of record.” I recommend that the debtor tell the new “owner” that when the buyer becomes the real “owner of record” and the record owner then gives a new 3 day notice, then they will discuss moving. That puts an end to the HOA problem. I believe that the new buyer cannot enforce rights to possession of the property without accepting the responsibility that comes with being the owner of record. So far, it has worked to get my clients out of this issue.

  12. My wife and I are in a situation that is probably becoming more common. Our Chp 7 BK was discharged March 16, 2010. First mortgage and second (HELOC) were discharged. Haven’t made payment on either since, but, we’re still in the house nearly 2 years later (though, we did move out for a year and rented, practically begged the bank to foreclose, stayed current on HOAs, and, since the bank wasn’t taking action, we recently moved back in). Now, we received a NOD dated Jan 9, 2012 so the clock is now ticking. Here is our dilemma; in March/April, we should be able to qualify for FHA loan (2 years post-BK, plus we have re-established with credit scores of 682 and 708, respectively). We’re thinking about buying because prices are pretty good right now (we are in Orange County, CA). But, will we be denied because our name is still on the title of a property that is in default and will be foreclosed (meaning that we have to wait another 3 years to qualify for FHA)? And, If the answer is yes, will a short sale change this? On the other hand, and maybe more importantly, if we were to enter into a short sale agreement, will we be required to re-obligate ourselves to the first and second?

    • Jay S. Fleischman, Esq. says:

      Tim, I can’t tell you what underwriting standards will bear out with a new loan application. This would be a good time to speak with your lawyer as well as your mortgage lender or broker.

      • I was in a similar situation to this one. I was pre-approved for a new FHA mortgage and was in escrow on the purchase of a new property when the mortgage broker contacted me and said he would need a “sherrif’s certificate” to show the disposition of my old house that had been discharged in my Ch7 BK. Of course I didn’t have one, and so they rescinded their mortgage approval. The broker told me that there had been several instances of people in this situation who were basically stuck thanks to being upside down on a property. I resigned myself to that reality and am staying where I am with the hope that the market eventually picks up sufficiently to allow me to sell without having to do a short sale.

  13. Mary Chandra says:

    It is my understanding that in California a Chapt 7 does not discharge any mortgages against a homeowner’s property,i.e., the homeowner/borrower is still liable for the loan(s). Therefore a short sale makes perfect sense along with the fact that many homeowners can get paid by the bank to do a short sale.

    • Jay S. Fleischman, Esq. says:

      A Chapter 7 bankruptcy discharges personal liability on those debts that can be discharged; unless the mortgage was reaffirmed or otherwise excepted from the discharge by the court, the personal liability of the filing debtor is extinguished at the time of discharge.

  14. I was just called by a Realtor with a similar proposition. My property was included in my bankruptcy discharge. The bank is offering me $2500 to short sell rather than having them foreclose. If I go through with this, will I owe the bankruptcy trustee the $2500?

    Thanks

    • Jay S. Fleischman, Esq. says:

      If the bankruptcy has been discharged, the property abandoned and the case closed, any new income is outside the reach of the court. You should speak with your lawyer to ensure that the property has been abandoned and the case closed prior to making any move on the property, though.

  15. Are there tax implications for completing a shortsale on an income property even if the property was discharged through bankruptcy? The bank mailed me a 1099 recently.

  16. I filed bankruptcy and was discharged 2 years ago. I kept the house and continued payments. It is my primary residence and wanted to stay in it. What would happen if I go on foreclosure or short sale if the bankruptcy was discharged over 2 years ago?

    • Jay S. Fleischman, Esq. says:

      Assuming there was no reaffirmation of the mortgage in bankruptcy, the lender cannot try to collect a deficiency against you after bankruptcy.

      • In this case, will they take control of the property right away or will they offer me options for loan modifications? Had medical problems and can’t go back to work. The bankruptcy was 2 years ago.
        I was wondering if I still go through foreclosure proceedings like everyone else or will they just evict me from the property. I just missed my first mortgage payment and wondering how much time I have.
        Considering getting a mediation lawyer.

  17. Diana Boyesen says:

    Wow, so many different opinions (and valid, cordial and professional ones at that) are great to see. I am a real estate agent in Central Florida and do many short sales. So, I am going to respectfully stick up for my attitude and my profession! The article makes it seem as if realtors are just greedy little buggers who want your short sale so badly they will do or say anything to get you to go along with it. And, while I think there are always bad eggs in a profession that make everyone look bad, there are realtors (of which I am one) that really care about the well being of our clients, strive to give good, solid advice and know that it isn’t about the money that is made on each transaction, but rather the branding of our business overall that is important. That being said, I would be grateful if I never had to deal with another short sale in my life. Between the internet, media, banks, and consumers there is so much misinformation and so much of what is going on in the real estate market that does not make sense that it is enough to drive anyone batty.
    Last week, my opinion was pretty much the same as the author of this article. If a client’s situation permitted and seemed best to just do bankruptcy then that was the advice that I dolled out and had them seeking an attorney and legal advice.
    However, after attending an office meeting where our broker brought in an attorney to speak to this issue, I am now calling all my clients that have filed bankruptcy and advising them to reconsider doing a short sale and asking them to talk with their attorneys. The information that we received indicated that (1) the foreclosure is worse for the client than the short sale and can affect their credit (2) clients go through bankruptcy and then go on about their lives thinking that their “do-over” start date is now, when in reality it can take months and years for the bank to take property back and the actual “do-over doesn’t start until then (3) as mentioned, the hoa fees, taxes and insurance are an issue (4) the property is still in their name and they are still liable for it and how bad would it be if they were sued over a liability issue just when they were getting back on track (and the attorney had horrific examples on this one!).
    So, I now have 2 new short sale listings coming up- and just so you know one is for $40k and the other for $80k. Yes, the homeowner will have a headache to work through, and I will make money. My huge incentive?!! Commission totals for both=$3,600 of which my broker gets a healthy cut and then I pay expenses, and I spend lots and lots of hours on working out the short sale details and get a payday about 90 days from now. Of course I would love (and make more money on bigger deals) and I will take them and ignore those that say it is just greedy real estate agents. Because, hopefully a bigger commission short sale comes along to balance the small deals, karma pays off and everybody wins.

  18. I am a title insurance AVP from Fidelity National Title of Los Angeles, CA.

    This article is informative but does not show the full picture. Each property and each owner should be dealt in a case by case scenario. Whether you go through a Realtor to do a Short Sale or a Lawyer to file for a bankruptcy or loan modification, every factor must be considered. Every person has a different credit score, different type of hardship reason(s), some have already filed for bankruptcy or tried a loan modification, and some are just wanting to live in the home as long as they can without paying their mortgage.

    A short sale can be an excellent alternative for a homeowner. A short sale, foreclosure, or bankruptcy filing will all negatively affect the homeowners credit. It all depends on what the homeowner wants to do after a short sale, bankruptcy, or foreclosure.

    For the majority of the agents I work with, they service their friends, family, personal referrals, church members, and the community. They are working hard to help each homeowner to decide on the best option. There are a lot of good agents out there and homeowners need to do their interviews and research to choose the best one.

    Please do not knock the hard working realtors and especially the escrow officers that work so hard to close each deal. REMEMBER, each home and homeowner should be dealt in a case by case situation. Every persons situation is different and delicate but there are solutions to each person and home.

  19. I have to say that after reading these posts I understand why it is so important to hire a Broker that knows what they are doing, not a one of you here have a clue about doing a shortsale, before or after bankruptcy or during, the benefits for the sellers of some short sales are in most cases excellent to unbelievable, I am talking Monetary here, cash monies at closing, 40-50 thousand dollars and more, HAFA money at the very least, besides being able to stay in the property for an extended length of time rent free, please whoever is swayed by the blogs on this site BEWARE, they do not know what they are talking about. I just cannot believe my eyes here–what planet are you folks living on ???

  20. I am so glad that I read this article. Our bk was discharged in August and we are two months behind. I am glad to know that I don’t have to feel bad about letting our home go. Our lender won’t work with us because they say they we make to much money. Amazing since we can’t make it every month. I feel so much better. Thank you for such great information. This is just a moment in time and we will get through this.

  21. Some friends of mine recieved a discharge in bankrkuptcy 3 years ago. They then abandoned their property, mailed the keys and letter of abandoment to the lender via certified mail immediately following, however the lender has not taken any steps toward foreclosure. Would it be so difficult to prepare and record a deed transfering title back to the lender? Mailed certified to the bank would be acceptace absent some action refusing the recording, correct?

  22. We currently have to file Ch. 7 due to many debts. We are unable to File Ch. 13 because our income won’t let us qualify. We are in the middle of a modification with BofA and we are behind on our mortgage. To make sure things go smoothly with the modificaiton, is it in our best interest to reaffirm the loan? I’ve read several conflicting stories about Ch 7 hurting/helping modifications. I understand Ch. 13 is the preferred filing for keeping our home, but there is no way we could pay the current payment plus the arrears, not to mentions the other debts. I would like to know if for some reason we do not get approved for the modification after filing Ch. 7, will we still be able to do a short sale? Is it dependent on if we did or did not reaffirm?

    Thank you to anyone who can help me with these questions. I want to make sure I am making the right decisions.

  23. Janina Czarniecka says:

    I agree completely with the author of the article. Short sale after bankruptcy is a mistake.

    My “closing” will probably take place soon but if I knew 6 months ago what I know now, I would have never involved myself with that MESS. I had FHA mortgage that was discharged in chapter 7 over a year ago but hoping to settle the account with the Condominium Association, to spare my neighbors seeing foreclosure notice on the next door unit and to receive enough money from the PNC bank to cover my relocation expenses, I got involved with so called “short sale”.
    I bought the one-bedroom unit for $116,000 in 2003, in 2010 when I stopped making mortgage payments the value of the same unit was around $60,000, now the unit is selling at $44,500.
    In 2010 my outstanding loan balance was about $98,000 and I called PNC requesting the reduction of the home loan principal to match the actual value of my place. I was told that they do not offer that type of the “loan modification option”. They have not received a monthly payment on my home loan since.
    I will just give you the “almost final HUD statement” so you can judge for yourself if going through all that hustle is worth your time.
    Sale price: $44,500
    The PNC Bank net proceeds: $36,250
    Realtor Commission: $2,670
    Title Insurance Fee: $1,450
    Legal Fee: $750 (I heard that this is 50% of what they usually charge)
    Unpaid assessments (I stopped payment the association assessment 10 weeks ago) $818
    Seller Incentive $925
    This means that all I am receiving is $925. Since the mortgage loan has been already discharged I am not even interested in any favors from the bank. They cannot collect any money from me even if their sale net proceeds were zero. I am angry, disappointed and actually upset with myself. I was simply stupid. I should have just stay here until the very end, let that “greedy PNC Bank” go through the foreclosure proceedings and maybe sell my unit at the auction for half what they are getting now.
    So stay in your house or condominium as long as you can, save your money and let the sheriff kiss you goodbye. You credit is already very bad and it cannot really get any worse no matter how nice as a human being you are. Do not let others make money on your misery, specially that bank that was never good to you anyway. After all, the bank is not losing anything, do not fall into any “short sale” promises, and represent only your own interest. Good Luck and be smarter than me! Janina

  24. I just got through with Chapter 7 Bankruptcy Discharge. I do not want to keep my home. I am getting too old (65 yrs.old now) to continue working and paying on it and want to just retire soon. Things were going better before my wife’s business was empacted by the changes in employment, rising of gasoline and housing prices. She was able to help pay bills with me but she also is getting older and is physically unable to work these days. We have a new home with a large Mortgage, 2d Mortgage and HOA dues to pay. We live in SF East Bay area. We tried to remodify three times before but were turned down either because they thought we could afford it or some other crazzy reasons. Later (after 2-3yrs) we filed for Chapter 13 but eventually we had to switch to Ch.7 and was discharged of our depts. I reallize now ( according to the info above) that I do not have to worry about a short sale but I’m also understanding that the HOA fees will always be there until it (the ownership) is taken over by the bank. I want to know how long that will take and what I can do to rush it a long because it is really killing us. We have already moved out because we did not want to be locked out by a sherif. But, I still continue paying the HOA dues and taking care of the property the best I can.