Even beautiful homes are sold short. In particular, the one in this information involved negotiating with a guarantor, which saved the day. At first, I tried to sell the house for enough to cover the loan and commissions. In spite of my best efforts, there were few showings. So we had to reduce the price.
Federal legislation in 2007 allows a homeowner to pay less than what is owed on their mortgage and not pay income tax on the “short” amount due the bank, under certain situations.
To get a short sale approved, you have to find every way to negotiate, and do not give up with the first “no.” Look at the seller’s monthly mortgage statement to see if there is a mortgage insurance premium. If so, there is a guarantor that will take some of the loss on this loan. Even if there no mortgage insurance premium on the monthly statement, the lender may have bought mortgage insurance and the premium is being paid by the lender, typically covered by a higher interest rate charged to the borrower in return for a “no pmi” loan.
The loan I was negotiating had a guarantor, i.e. the bank was not going to take the loss, the mortgage insurance company was, and the guarantor would be the company that was “short” so I contacted the guarantor and negotiated with the loss mitigation expert there. When the guarantor said they would approve the sale, the bank had to go along with it. If at first you do not succeed, try and try again. If the bank turns you down, see if there is a guarantor, or at least a supervisor to review the decision.
For a more detailed discussion on this topic, please go to http://shortsalesr.us/featured/short-sale-with-a-guarantor/