The mortgage guys can conveniently forget to tell California homeowners that a refinance changes their type of loan. When you buy a home in California and take out a mortgage, that loan is considered purchase money. When you refinance and / or take out a home equity line of credit, a HELOC, your mortgage is now hard money. A hard-money loan carries recourse whereas purchase-money does not.
So, think about this when you are being bedazzled by sparkly low interest rates. Because if your loan was not used to purchase your home, the lender might be able to pursue you after foreclosure. Moreover, you might pay taxes on that "free money" you received from the refinance and / or second if the funds were not used to enhance the home after a foreclosure or a short sale. This is one reason why it's always important to get legal and tax advice before doing a short sale.
The twist in all of this is even if you have a purchase money loan secured to your home, it is no guarantee the lender will make your short sale easy and quick. You might hear about slam-dunk short sales but those are few and far between. Each is different. Especially when you are dealing with PNC.
A PNC short sale is sometimes a total nightmare. The things that could make a PNC short sale worse would be if the investor was Fannie Mae and the loan was hard money. But a PNC short sale with two purchase money loans is not necessarily an easy short sale to do. Neither is a Green Tree purchase-money with a PNC purchase-money second. In fact, those two form a combination that alone are bad enough but together can be explosive.
We just closed a short sale on Friday that involved a Green Tree Fannie Mae first mortgage and a PNC second purchase-money loan. Both lenders were a PITA, but PNC was worse. PNC squeezed the sellers for more money. It didn't care about SB 458. We brought in the lawyers. After much fighting, we went to closing. The seller was at the hospital, 9 months and counting. Labor was about to be induced. I don't know what made the sellers the happiest last Friday. The fact their short sale closed or the fact they were now proud parents. It's pathetic to say but I sense they were more relieved that the short sale had closed.
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Certified HAFA Specialist
Sacramento Real Estate Listings
Elizabeth Weintraub is an author, home buying columnist for About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.
The Short Sale Savior, by Elizabeth Weintraub, available with free shipping.
Lyon Real Estate is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate. Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice. It could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.
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5 Comments on Purchase Money Loans Do Not Guarantee Smooth Sailing for CA Short Sale
My stomach always turns when I read about your bad experiences with PNC Mortgage. I haven't dealt with them yet, but they hold my mortgage. I have no intention of doing a Short Sale, but it makes me uneasy to know that if I HAD to, it would be a nightmare.
Good morning Elizabeth there are always options the question is which one will you choose?
I did one with PNC last season..they are a disaster. So unaccomadating..you'd think they want ALL the properties to go to Foreclosure! Good job!
I must need my head examined to continue working on PNC short sales. But at least I warn my sellers that it's gonna be bumpy ride.
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