Northern Virginia Short Sale Sellers:  Are You Financially Insolvent?

What does it mean to be Financially Insolvent?

YOUR INCOME AND ASSETS ARE NOT ENOUGH TO MEET YOUR FINANCIAL OBLIGATIONS.

It does NOT mean:

That you have money in savings to tide you over, but don't WANT to use it.

That you have money in a 401K to tide you over, but don't WANT to use it.

That you have money in investments to tide you over, but don't WANT to use it.

That have income from investments, but don't WANT to use it.

That you are upset about the value of your home in the current market and want a "do-over."

That you are upset about value of your home in the current market, took a cash-out refi when the values were higher, and don't WANT to repay that borrowed money.

The examples above are often items that people use to show RESERVES to a lending institution when they are applying for a mortgage, or a refinance.  When you are in short sale situation, asking to be relieved of your mortgage, why wouldn't your mortgage holder(s) look into this RESERVE MONEY and ask for a percentage of the loan that will be unpaid, to be covered by you?

A person is truly insolvent when their income and assets are not enough to meet their financial obligations.  If you are not truly insolvent, but are seeking a short sale, you will find that your lien holders may ask for a promissory note, or cash contribution to offset their loss.

Chris Ann Cleland, Associate Broker- Licensed in Virginia, GRI, SFR, Northern Virginia Short Sale Specialist. Affiliated with Long & Foster, 7526 Limestone Drive, Gainesville, VA 20155.  To contact Chris Ann, call 703-402-0037 or email chrisann@LNF.com.  Or you can visit her website:  www.nvarealestate.net.

Header photos taken by Chris Ann Cleland.

The opinions expressed in this post are those of Chris Ann Cleland, not those of Long & Foster REALTORS®.

 
This post has been included in Virginia Real Estate News Prince William County, VA Real Estate News
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4 Comments on Northern Virginia Short Sale Sellers: Are You Financially Insolvent?

NOV
14
2009
985,144 Points 106 Featured Posts Localism Sponsor Outside Blog

In California, if a short sale seller is financially insolvent, it often means they won't pay taxes to the state on debt relief. I always have that talk with my sellers, that if they have disposable income, the lender is likely to ask for a contribution. If they aren't willing to contribute, then I don't list the short sale. Nothing is worse than getting to that short sale approval letter and having the seller unwilling to compromise. Well, except for maybe when the buyer vanishes.
9:17am • #1
1,518,977 Points 112 Featured Posts Localism Sponsor Outside Blog Called Shot Master

Elizabeth:  I will never forget the blog you did about short sale sellers who were working with Countrywide or BOA, and were insolvent, but had large, unused credit lines.  I couldn't believe that the bank asked them to take an advance on one of the credit lines to make the cash contribution they wanted. 
9:22am • #2
OCT
14
2010
117,447 Points Called Shot Master

I hear more and more people talking about strategic defaults. What do you think the banks will do if faced with a large number of strategic defaults?
9:51pm • #3
OCT
15
2010
1,518,977 Points 112 Featured Posts Localism Sponsor Outside Blog Called Shot Master

Anne:  I think strategic defaults are going to be hard to get approved.  If we start down that slope, the economy is going to be hit hard.
10:06am • #4


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Chris Ann Cleland, Associate Broker, Northern VA

Bristow, VA

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Long & Foster REALTORS®, Gainesville, VA

Address: 7526 Limestone Drive, Gainesville, VA, 20155

Office Phone: (703) 402-0037

Cell Phone: (703) 402-0037

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