A friend of mine told my mom her house was in short sale. I have never heard of this. Is this like a foreclosure? I think she is in serious trouble, and I am so worried for her. She said she they (mortgage co.?) has refused her last 3 payment attempts. (Can they refuse you like that?)

The really bad part is, I don't think she has told her husband. He's been working so hard. They've been struggling for months. I'm really scared for them.

I read that this short sale is like when the bank decides to sell the house for less than what is owed on the mortgage, at a loss. Say they owned $10,000; they bank would sell it for $8,000, at a $2,000 loss. I know that much. But I don't see what is the point, except for when the person can't make their mortgage payment. Maybe the bank does this to try to at least recoup as much as they can now, since they know no payments will be coming in, so they go ahead and sell the house right from under you, at a loss. But the loss would probably be a lot less now than it could be in the future. Do I understand this right?

How long does this short sale take? Is someone going to show up at her house from the bank with a notice or something? A sign to nail on the front door? Have they already lost their home? Will they only have like 30 days to get out? My God, they have SO MUCH property there, cars, trucks, trailers, little sheds they've built, LOTS of large dogs, cats, above ground pool, OMG, what a mess.

I am feeling really scared for my friend.

A shortsale is when the house is sold for less than is owed on it.

Here's an explanation:

Short Sale in Real Estate - How to Handle a Real Estate Short Sale

BE CAREFUL

This article is more specific to Tampa Bay but it's happening everywhere. I have read of people who were doing a short sell and were scammed right out of their homes for good.

New "short sale" scam taking root?

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From what I have heard the bank and the person owning the house must both agree in a short sale. Usually what happens is the owner tells the mortgage holder they can not catch up the behind amount on what is owed(due to loss of a job or just financial hardship)and so both agree it is better to sell the house at a loss and get some money rather than have it forclosed on which incurs fees, and if done correctly it could possibly save a owner from a bad credit rating.

Right now short sales are very popular because of the housing market. Houses that were bought for 200,000 just a few short years ago now are only worth 125,000 and the person owes 175,000 still on it. So in a short sale both parties acknowledge they will not get the amount owed on the house but more closely to what the house is worth now. It is a huge mess but in some cases is the only way a family can keep out of bankruptcy or financial ruin. Better to cut your losses then try and pay on a debt you will never get paid off.

((HUGS)) to your friend.

Thanks you guys, for the help. Thank you Shana, that makes a lot of sense! So she and the bank have to both agree to do this. Wow. She has not told her husband yet. I think she just got a letter this past Friday or yesterday. SHe's really freaked out, upset. SHe mentioned having to write a letter of hardship. Well, what to do though, if your credit is already ruined? And hers is, from what she tells me. So it looks like the house WILL be sold after all? Man, her DH is gonna KILL her. No wonder she's been losing weight like crazy lately. We knew something was wrong, but we didn't know it was this bad.

My daughter and son in law have put bids in on two different short sales. The one thing they were warned about is that short sales take a very long time (the *short* part is because the money paid is short of what is owed). One of the houses they wanted, they got sick of waiting on (over four months), the other house the owners ended up finding the money that would allow them to remain in their home. If your friends bank short sells her house and they do not get what is owed, it will impact her credit.

Her DH has to know if his name is on the deed. At least they can't sell it without his knowledge if his name is on the deed because he has to agree as well.

It WILL impact their credit but not as much as a bankruptcy or a foreclosure. I believe a bank can reject your payments if you have missed some payments and then decide to start paying again. They can't reject them if you have always been on time. Once you are behind, they do not have to accept your payments. At least that is what I have heard

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Man, her DH is ABOUT to find out, no doubt about that. It's just that she takes care of all of the financial business in the home, and he works hard. She has kept their troubles from him for months. Their credit was ruined years ago after they bought this house. It is actually 2 mobile homes stuck together, with 4 bathrooms (only one works at all!) and the value has greatly diminished. They got ripped off when they bought the place, IMHO. And they didn't get a fixed rate, they had an adjustable, and their payment was in the $1,000's, sometimes $1,200, sometimes near $1,500. And that was only the mortgage. Their A/C bill easily for the summer for one month was $500. No wonder they had such troubles. And she doesn't work. What a mess. They are gonna have one hell of a fight when he finds out.

Oh.My.Hail she is going to have a heck of a time explaining to her dh how he wasn't clued into this before now. Adjustable rates suck lemons too ya at the beginning the rates weren't too bad but as the economy/housing tanked payments went up. I hear that is one reason why a lot of people are loosing or trying to sell their homes they just can't make the payments.

The place imho sounds like a rip off too I feel so bad for them what they are going through can become a huge financial and relationship breaker. I hope the best for them.

You said she didn't work.. Why in the world didn't she get a job to help out??

op - almost everyone works hard, sometimes it just isn't enough. Can she look for a job? Can they cut back? Can they sell some of the sheds, cars, etc? It sounds like they didn't inform themsevles when buying. A house (even if a double wide) is basically the largest purchase people will make. I will never understand how people sign and obligate themselves and then can't handle it.

I also don't understand why people don't know "adjustable" means just that. That it won't always be low, it will be high, low, etc, all over. Even if the mortgate broker failed to explain, they should have learned from other sources. People all over are making bad decisions and then doing little to pull themselves out of it.

I hope it works out, but she should have also advised her dh of the downfall in the beginning so they could have both strived to pull through. A fight? I am thinking maybe a divorce, you don't do that to someone you love.

dl

It's sad that she felt she could not be honest with her husband and kept it from him. He may very well have been able to do something to help prevent it.

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The political system is broke and it's a joke.

You know, I'm pretty empathetic and sympathetic when people fall on hard times---I've been there!
However there are times that I can't muster up a lot of sympathy for some people! This woman has allowed this to happen to herself and her husband....
1) adjustable rate mortgage is pretty damned self explanatory! Ours was, H and I knew it when we signed on the dotted line. Thus, when the payment was to balloon, we re-fi'd.
2) unless she is completely and totally disabled, then her butt should have gotten a job. This is not something that you wake up to one morning! It takes several months to get as far behind as the OPs friend is. Good grief! I got a second job....so I can hopefully keep my home when the divorce is final!
3) LYING BY OMISSION, IS STILL LYING! "forgetting" to tell the husband, or thinking it would be better if he didn't know--is such a friggin' cop-out! Don't get me started on this aspect of it.
4) who in their right mind buys a "house" where 3 of 4 bathrooms are inoperable? Or at the very least doesn't fix the problems upon moving in.
5) Seriously, way too much drama (I'm working hard on weeding the drama out of my life!). OP, you didn't ask, but if I were you I'd stay the hell out of the situation.
And the really cynical side of me wonders if the friend doesn't have some sort of addiction (gambling, shopping, drugs, etc.) where it's her fault entirely that she's going to lose it all.

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Mental that one, I'm telling you. ---Ron Weasley, "Harry Potter and the Chamber of Secrets"

What about a 401K account the husband could draw from to save their house?
DH works with a man whose wife does the same thing, never tells the husband when they are behind on their bills. The husband found out when the bank came knocking on the door. The husband had a 401K that they drew from and caught the house payment up. However, how long will it be before it happens again?? The mortgage is a high interest rate with a high payment.

I am sorry to hear your friends are having so much difficulty. Foreclosures & short sales are happening all over these days.

For what it's worth, she can still save her property. Obviously her first job is to speak to her husband. They need to work on a bare-bones budget, and how to increase their income. If she is able to work, she needs to hit the ground running and find any job she can.

They should contact their lender immediately. In order to have reached the point of short sale, they must have received many previous notices from the lender to which they did not respond. They can research online or through the lender's customer service department to find the Home Retention Department. This is the department set up to help homeowners re-structure their mortgages and catch up on arrears. If the value of their home is less than what they owe, they should provide some information on comparable sales and/or listings in their area. They will need to provide a list of expenses and income, and a plan for covering their monthly payments going forward, as well as additional monies each month to correct the arrearages. It is certainly possible to negotiate new terms (interest, length of mortgage, etc.), but they will need to act quickly.
They need to document every conversation, and send every letter, document, etc., via regular and certified mail, return receipt requested.
These companies are swamped, so persistence is necessary.

I wish them luck, and hope they land on their feet one way or another.

Let us know how this turns out. My thoughts are with this family. I hope it works out eventually.

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