Thursday, March 24, 2011

On going for a short sale when living in a condo.

People ask me what to do to get their lender to accept a short sale. Almost every time, the answer is "stop making mortgage payments". We won't go into detail on that here, but we will address some of the other fees that condo owners pay in addition to their mortgage. When going for a short sale, my advise is usually to not make payments to anyone related to the property, the mortgage(s), property taxes, HOA or association fees or anything else. Instead, save that cash for when you'll move out because you'll probably need it for a deposit on a rental after the credit hit you can't avoid because of the missed mortgage payments.

I think paying HOA and property tax is a waste of money, because when the place sells the bank will pay the delinquent property tax out of their sales proceeds. Typically they also pay delinquent HOA fees but now I'm seeing lenders refuse to pay the HOA fees (probably because HOA's are known to try and make some foreclosing or short saleing lender pay inflated fees at closing). There is absolutely no credit/tax recourse that you'll face from not paying your property taxes and I highly doubt there would be any recourse from the HOA either-I have not heard of any. If you want to be sure exactly what the HOA will do to you if you don't pay I would actually recommend calling them and asking, you don't have to identify yourself necessarily. You could also find their legal recourse in your CC+R's which you probably got when you moved it. There's no reason to pay either, stash the cash instead.

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