Bankrupt Builder Short Sale

My husband and I built an investment house in Arizona.  We pulled a home equity loan on our primary residence to help with the difference that we needed to build this house.  The economy in Arizona has been hit and our builder filed bankruptcy–all the homes that are around us are now owned by the bank and are just about being given away!!

We have had our house for sale for almost a year with no success–even lowering the price several times.

We now have an offer for 100,000 less than what we built it for (they are willing to do a short sale) but it is what the houses are going for around us. We have been looking into all our options and think a short sale is what we need to do.  We cannot afford to pay two mortgages any longer and now we are 1 month behind.

Well that is the sum of the situation—my question is:

If the lender agrees to do a short sale–will they include the home equity loan in the short sale and how do we make sure that we get a Full Release?

Thanks for your time–

Tina

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Hi Tina,

If I read your question correctly, it sounds like the HELOC is on your primary residence and you will be short selling the investment property.  In that case, the HELOC will not be included.

How do you make sure you get a full release?  You make it a condition of the sale. 

Generally, a full release of liability is given to sellers who are experiencing a hardship and the seller’s financial statement and credit report should make that hardship abundantly clear to the shorting lender.

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.