About Me
“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”
Written by Craig D. Robins, Esq. Many Long Island homeowners have homes that are underwater, meaning that the homeowner owes more on the mortgage than what the home is worth.
What are your options if your home is underwater and you can’t afford to make the mortgage payments any more? One frequently-discussed option is the short sale.
What is a Short Sale?
A short sale, also known as a compromise sale, is when the homeowner sells the property to a bonafide purchaser for less than what is owed on the mortgage. The only way to do this is to persuade the mortgagee that it is in their best interest to do so, and then get their consent.
Short Sales are Very Difficult to Obtain
With the advent of the sub-prime mortgage market and the increasing popularity of securitized mortgages, negotiating with mortgagees has become an exercise in frustration.
No longer is it possible to make a simple call to a lender to discuss a short sale or mortgage modification. It is now necessary to go through many layers of committees that are often ill-equipped to make quick decisions, let alone any decision at all.
During most of the past decade, my firm and I have refused to negotiate short sales and mortgage modifications because of the low likelihood of success.
Even If a Short Sale is Possible, It is Often Not the Best Option
If you have relatively few assets, it is often most advisable to simply file for Chapter 7 bankruptcy and walk away from the house, assuming that you’re eligible for a Chapter 7 filing.
A special benefit arises from the way a Chapter 7 bankruptcy interacts with foreclosure law – You will often be able to stay in your home without making any mortgage payments for well over a year.
If you have assets or high income, you might think that trying to negotiate a short sale is the way to go. Perhaps not. A lender is not about to let someone walk away from many tens of thousands of dollars or more – if they have the financial ability to pay off the difference later on.
One thing is certain: meeting with an experienced Long Island foreclosure defense attorney who is also familiar with bankruptcy is a necessity to get good advice.
