My daughter has a second loan I a house that was an equity loan made at the time of purchase as part of some creative financing. She closed a short sale 1 1/2 years ago but the second shows as a foreclosure. I want to sell her a 525,000 dollar home for 211,000 and she can't get the loan because of the second. Other than this she has never made a late payment in her life. Chase refuses to remove this and sIde they will settle for 32,000 of the 160,000. If I reD the anti deficiency laws right they will never be able to collect. Should I just offer 6,000 tho clear the foreclosure.
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Sounds as though the loan in question would fall under Code of Civil Procedure section 580b(a)(3) if the home were bought to be owner-occupied. This law prevents a deficiency judgment. I would need to see all the documents in order to comfortably give any further opinion.
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Your post is confusing and some of the language contains typos. If there was a short sale, then there was no foreclosure, and the issue is whether or not Code of Civil Procedure section 580e applies. I would have to have more facts before I could render an opinion on that offer.
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The two previous answers are confusing credit reporting and legal collectability of the debt. It shows as a foreclosure because credit reporting does not distinguish between short sales, defaults on uncollectable debt, and actual foreclosures. I had to sell a rental property after the tenants trashed the place, and I could not keep up the payments and fix it at the same time. I was able to sell the house well ahead of the foreclosure, and paid the debt in full plus a major profit, but that is still considered a default on the debt, which counts the same as a foreclosure on my credit. If you can and want to negotiate a removal of that in exchange for a payment, you are free to do so at whatever price you can reach agreement on. Just make sure you get any agreements with the bank in clear writing.
One other thing, though, that you don't ask about but your question raises a red flag about, is the $525k house being sold for $211k. That kind of a deal with your children has ALL KINDS of tax implications, both now and in the future whenever she sells it. The amount you pay to clear the second may well be pocket change compared to the nasty tax consequences of the deal you are putting together. You may be screwing yourself or both of you tax wise now, and her in the future on capital gains tax, doing what you propose. You need to get some in-person professional advice and evaluation of your deal before you make a very costly mistake.
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As I have thought about your situation more, it occurs to me that there are probably a lot of ways to achieve what appear to be your goals - providing affordable housing to your daughter and seeing to it that she has the home without probate when you pass (others?) - without creating the tax and estate mess your proposed transaction would create. For example, putting the house in a trust with her as the beneficiary and then the trust renting it to her for the amount that the loan, taxes, insurance, etc. would add up to under the $211,000 sale idea, might solve your problem. There are probably others. If you have different or additional goals, there are other structures that could be set up to avoid the problems you have and are about to create. Talk to a lawyer in person.
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