If the bank said they alow short sale, but they still n
Submitted by yanguqin from CA on Thu, 10/23/2008 - 11:07pm.
I am short selling my 4 unit non-owner occupy refinance property. the 2nd loan lender said they can approve the short sale, but they still need ask me to pay back the rest money I own them. The short sale is not settlment. In this case, should I agree to short sale and allow them to recouse the money in the future or just allow the 1st lender to foreclosure it. What is the diffenert between foreclosure and short sale without settlment in tax issue?
Comments:
This isn't really a "tax" issue. It is a repayment issue. Since the property is not owner occupied the 2nd lien holder does have the right to pursue their debt against you, even if they lose their secured interest in the property when the 1st forecloses.
I'd still recommend a short sale. You will likely get more for the property by actively marketing it for sale, and ultimately it is your money that is at risk.
Alternatively you could bring the first current, and hopefully force the 2nd to foreclose. By foreclosing the 2nd gives up their right to pursue a deficiency judgement against you (unless they choose judicial foreclosure which is very rare). It is quite possible that the 2nd will just sit tight, and accrue interest, late fees, etc. But if you can cover the first with rents, this may be worth consideration.
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