Mike’s Real Estate Show

Here’s a question from a Seller of a home who wants to buy another Home but thinks he can’t sell is current home? I asked the following questions and gave my commentary to his situation. Blunt as it might be!

Are the loans you have in place “refinances” or the loans you put on the property when you bought it? California is a “Trust Deed” state so the home is the final recourse IF you have the purchase money loans in place. If you have refinanced then you have what is known as a “recourse” loan which means the bank COULD come after other assets.

Some Sellers have purchased a new home while still owning the other then have “walked” from the first home and tried to sell it as a “short-sale”. The recent law which forgives “debt relief” only applied to owner occupied properties so this property now being NOT your primary residence might get sticky with the IRS!! I don’t think many attorneys even understand the process of foreclosure and short-sales as it is a big moving target.
  Why don’t you think you can sell your home? Bought it recently? Comps below what you paid? Why do you need to buy a new house?  What you want and what you get are sometimes just NOT compatible. It’s time some consumers started understanding there is a penalty associated with “walking” from a house! I think the current crop of foreclosures and short-sales are teaching the consumer they CAN walk away from big dept and have little damage. At our sales meeting today we have agents stating the lenders where asking for unsecured promissory notes at the close of escrow for money owed on a loan. One was a $10,000 note but the lender was letting the Seller WALK on $190,000 in loans!! interest only, 10 year call!! The Seller’s complained and squawked like crazy!!  Let me understand this, you owe me $190,000 but I’m going to trade that debt for an “UNSECURED $10,000 promissory note!! And they are mad they have to do it to make the deal! aarrrrrrrrrrrrrrrrgh!!