Anyone have any luck with completing a short sale from a seller's perspective? Any luck especially with a short sale agreement which involves including the 2nd mortgage or a line of credit as part of the pay-off? My understanding is even if your State has an anti-deficiency law, the seller is still responsible for ANY 2nd mortgage or line of credit deficiency. In other words, if the short sale pay-off only pays for most of the 1st mortgage, you are not responsible to pay the 1st mortgage deficiency. However, unless the lender who owns the 2nd mortgage or line of credit signs and agrees not obligate you to pay, they will sue you for what you still owe on the 2nd mortgage or line of credit. Is this different for foreclosures? I think foreclosures are pretty straight forward in that you are always responsible for any deficiencies. Not positive though. I think a chapter 7 bankruptcy would be the only option for complete deficiency forgiveness. Also, I heard Uncle Sam no longer requires the seller to show the short sale deficiency forgiven by the lender as income on your taxes. Any comments, insights, experiences?
Combining a short sale on a first and second mortgage shouldn't be a problem....assuming that your two mortgages are both serviced by the same primary servicer. However, if you have different servicers for the first and second mortgage you're going to have a bit of an issue. Its very unlikely they'll look to work together as the first lien position will be disinterested in the (limited) rights of the second lien and similarly the second lien holder won't be particularly interested in relinquishing their rights without benefit. They key thing is that, assuming you're dealing with a reputable primary servicer for your second lien, they're going to turn the deficiency over to a recovery agency and bring you into a situation you likely don't want to visit. In general, my advice would be to reach out to your primary servicer and provide candid information about your situation and ask them if they have a relationship with the second lienholder where the negotiations would be combined. I would be very cautious about reaching any sort of agreement which doesn't completely satisfy your debt as, assuming the second lien is secured, working out a short sale on your first lien will do you very little in the long run.