AHMSI/IRS Short Sale Case Study:
Property Location: Seattle, WA - King County
1st Lender: AHMSI
2nd Lien: IRS (Internal Revenue Service)
Hardship:
“For the past few years, I have endured several obstacles that have made it difficult for me to financially keep up with my mortgage obligation on my family home. When I purchased my home, my intent was to live there for the rest of my life, with my children and my wife. I did several improvements on the family home to increase its value. Unfortunately, after I filed for divorce, I was unable to enjoy those improvements.
“While living in the family home, I had asked for an adjustment in my interest rate during the year 2008. That request was denied. In 2009, I filed for divorce and I was ordered out of the home and ordered to maintain the mortgage on the family home. I lived with a dear friend for two months in a room they provided for me, until I was able to rent a home in the same neighborhood of my former residence. I continued to pay the mortgage, but with my accumulating attorney fees and my IRS debt, I became delinquent on the mortgage. I attempted to pay and catch up with the late payments, but I was unable to do so.
“At that time, the divorce was extremely adversarial and it made it very difficult for me to concentrate on my work and my children. My employment suffered, and as a result my income dropped and I was unable to make the necessary mortgage payments.
“In September 2010 I was granted full custody of my children and was granted possession of the family residence. Upon gaining possession, the home was in disarray and extremely unkept. I moved back into the home, and was able to clean it and maintain it. But due to my decrease in income and my debt payments, I have been unable to pay the mortgage - so I have decided to place the home on the market for sale. Unfortunately, due to the economy and the housing market, the value on the home is less than my mortgage note.
“I would like to list the house as a short sale. I want to sell the house as soon as possible so that I can get my accounts settled and move on with my life.”
1st Loan Balance: $674,000
2nd Lien Balance: Tax liens totalling $219,200
Sales Price: $535,000
Approved Commissions: 5%
1st Loan Approved Net Proceeds: $481,112
2nd Lien Approved Net Proceeds: $1,050
Timeline:
On February 7, 2011, a signed offer to purchase the home for $535,000 was received. The seller’s agent contacted Seattle Short Sales, Inc., on March 1. Financial documents were assembled, and the completed short sale package was submitted to the lender on March 15. The Seattle Short Sales, Inc. case manager determined that, in addition to the mortgage lien, there were two tax liens and a judgment lien on the property - all of which would have to be removed in order to permit the short sale.
The Seattle Short Sales, Inc., case manager started to investigate what would be necessary to remove the IRS tax liens (see separate blog post for details on how to remove an IRS tax lien). New BPOs (Broker’s Price Opinion) were ordered, to satisfy requirements of both the lender and the IRS for considering approval. He was able to determine that the judgment lien had already been lifted, and on March 25 acquired Satisfaction of Judgment documentation confirming that.
On April 12, the Listing Agent contacted the Seattle Short Sales, Inc., case manager to say that the seller had been informed that the short sale had been denied. The case manager contacted the lender, and was able to confirm that this was not true, and that the short sale was still being considered.
On April 20, the lender’s negotiator indicated that she would submit the case for approval by their investor with a sales price of $550,000. The Seattle Short Sales, Inc., case manager replied that the price could not be changed without approval from the buyer. The lender submitted the case at the original purchase price.
On May 6, the lender issued their approval of the short sale. On May 17, the IRS issued their approval to lift the liens from the property so that the short sale could proceed.
Result:
The seller was able to pay off the mortgage, with $193,000 discounted from the balance owing, and was waived of having to ever pay back this deficiency balance. Additionally, he had the liens on the property for taxes owed to the IRS lifted, a step which was necessary in order to get the short sale approved. He was therefore able to achieve his goal of having his mortgage accounts settled and moving on with his life.
To download a copy of the short sale 1st approval letter, click here: http://seattleshortsales.com/LiteratureRetrieve.aspx?ID=86155
To download a copy of the IRS short sale approval letter, click here: http://seattleshortsales.com/LiteratureRetrieve.aspx?ID=87807
If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/
If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/
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