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Need advice on "short selling" a house.
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Posted by Tricia
on November 16, 2001 at 15:21:59:
I have had a rental house in another state up for sale for months and absolutely no one has shown any interest in buying it and I have had no offers so far. Today, I got an offer but it is a little short for paying off both the first and second mortgage. I will be no more than $5000 short and could be less, depending on how much of the allotted money for repairs is used for the FHA loan. Anyway, I contacted the second mortgage this morning to see if I could make arrangements on the remaining monies, to pay them off at a smaller amount or extend the loan for that amount or however they wanted to handle it. I didn't mention that I could borrow some money from my sister if we could work out an agreement and they just acted like it was no big deal to what they called "short sell" the house as long as the amount was not more than $5000. Needless to say, I was floored. They want all kinds of documentation as far as debt ratio, tax statements, bank statements, pay stubs, contract, appraisal, etc. but say it should be no problem to sell the house even though I'll be short. At this moment, I feel like my prayers have been answered, as I'll finally be able to pay some other things down, but I wonder what a short sale will do to my credit report. The second mortgage company only reports to one reporting agency, but wondering what to expect in the way of what it will say on there and also if they will sell my unpaid amount to some collection agency or something. Any information anyone has would be appreciated.
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