Short Sales and Loan workouts for people who have assets or future to
protect from creditors
Some of our clients have assets to protect yet they still
wish to do a short sale, loan modification, deed in lieu or other loan
workout.(this page is a work in progress.)
We suggest balancing the risk related to the disclosure of the size and
location of assets vs. accepting a foreclosure and not engaging in a
communication with the lenders loss mitigation departments.
As your assets or salary gets more significant you need to understand the
entire loan
workout process becomes greater. If you have assets to protect, you may wish to
spend some
time thinking about how to frame your short sale package.
1.What
happens if your short sale does not close or your loan mod or deed and lieu is
rejected? (The national association of Realtors says that 90% of the short
sales listed do not close.)
2.You need to know if you lender is likely to ask
for a large cash contribution, a large promissory note, or approve your short
sale but reserve the right to collect a deficiency.Your short sale team needs unparalleled experience
and understanding of the law.
3.You need to understand the timing of when and if
you have to disclose the existence of those assets.It is our opinion some assets do not need to
be disclosed.
4.You need determine how the lender will react to those
assets.
5.You need to consider tax exposure to the IRS and
the California Franchise Tax board.
6.Sometimes banks do overstep their limits and you
need a negotiator who can decline the disclosure but perhaps still keep the
deal moving forward.
7.Create a backup plan in case your initial
workout plan does not go according to schedule.
Your lines of defense against the lenders
Loan Workouts and disclosure of assets
1. Your first line of defense in the protection of your assets is a
properly created workout plan.
If you your workout does not leave you exposed to a deficiency, then your
assets are going to
be safe from these particular creditors. Remember to consider the tax
consequences to the state of California.
