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CalAttorney2
CalAttorney2, Attorney
Category: CA Real Estate
Satisfied Customers: 10244
Experience:  I have experience representing HOAs, homeowners, businesses, and other individuals in real estate matters.
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We have sort of a complex situation. We need to sell our home

Customer Question

We have sort of a complex situation. We need to sell our home due to: A potential job relocation, the payments are extremely high. There is a lien on the home that is extraordinary, over 100% of the value. So, it will never be satisfied. We talked to the bank. We stand to make a couple $100K in gains that we are willing to give to the lien holder, but they want the whole thing. The way the house is appreciating, it will be another 10-15 years from now to get to that point. The lien holder plans to prevent the sale. We are stuck. Suggestions?
Submitted: 2 years ago.
Category: CA Real Estate
Expert:  CalAttorney2 replied 2 years ago.
Unfortunately, you are in the position of trying to negotiate a "short sale" of your home (you owe more than your home is worth (unfortunately, the speculative value of your home in 10-15 years is irrelevant due to your need to sell the home now).The best way to deal with this is to find a local real estate agent that specializes in representing homeowners in short sales - they can both help you negotiate with the bank and assist you in marketing the home to maximize the profit from the sale minimizing the shortfall (this will both increase the odds of the bank signing off on the short sale and reduce your "forgiveness of debt" income (which while the IRS generally will not tax you on, is something that you will still want to minimize for general accounting purposes as much as possible).You can check references, and ask prospective agents for their history in working in the market in general, and working with your lender specifically (there is considerable differences in how flexible each lender is in this process, so you want someone that knows your bank).
Customer: replied 2 years ago.

I'm sorry if I wasn't clear. The sale of the home will cover the bank loan. The extra $200K can be given to the lien holder #1 (a creditor), but they want the entire thing (over $1M).

Expert:  CalAttorney2 replied 2 years ago.
This is still going to be a short sale (the difference is that it is a lien created outside of a mortgage loan).You may need help from a mediator or even hiring an attorney to represent you to help you negotiate a settlement on this type of matter. Some general debt negotiation considerations (some of this may not apply to your situation, but the general principles may help you find areas where you can negotiate with your creditor): When trying to settle a debt, creditors generally prefer lump sums over payment plans. They are often willing to accept an amount less than the full debt (the trade off is that they get a quick payment and don't have to worry about ongoing collection costs or administration). If you do not have the ability to offer a lump sum for something the creditor will accept (some will accept a small portion, while others want close to the full amount), you can try a payment plan, these are less satisfactory to the creditor (especially if they have a lien on your property already), but if you are willing to offer something with a reasonable chance to get the creditor a large amount of their debt back, you are likely to get them to accept it.Whenever working with a creditor, make sure that you keep your communications in writing (if you speak to someone by phone, promptly send a confirmation letter to summarize your conversation), as this will help to ensure that there is no confusion later on, and you will be able to enforce your settlement against any future collection efforts.
Customer: replied 2 years ago.

Thank you. That is how I was picturing it. The bank getting paid first, then a lump sum would be ready for the lien hold (creditor). We would need an attorney to negotiate for them to take the lump sum. I think the risk is if they don't the house would potentially foreclose, which they could lose many of that extra lump sum as the bank would take over?

We want to avoid that, but this creditor is very unreasonable.

Expert:  CalAttorney2 replied 2 years ago.
Ultimately they shouldn't be able to prevent you from selling the property, but if they are being unreasonable, having an attorney negotiating the debt on your side can potentially get you a release from the debt - allowing you to settle out the debt and perhaps put this behind you for good.
Customer: replied 2 years ago.

Thank you William. The wild card how much headache does the creditor want to go through. If $200K is looking at them they might reconsider.

Take care

Expert:  CalAttorney2 replied 2 years ago.
You are welcome, and I do wish you the best with this matter.Thank you for using our forum, and please do not forget to rate my service so that I can receive credit for assisting you.Thank you again, and again I wish you the best.Bill