Hello all,

 

forgive me for asking such a rudimentary question but here it goes:

 

I have a client who is the executor of his recently deceased mother's estate. He wants to get rid of the property contained in that estate but must do so via short sale. About $100K is owed on the property and its worth about $35K. The client told me has is the beneficiary of his mother's insurance policy which may be enough to cover the balanced owed on the mortgage. However, he is unwilling to use that money to pay off the property. He simply wants to get rid of it without using any of the resources he may have inherited.

I was told by a more experienced agent that if the bank learns of the insurance policy, and they must certainly will, they will NOT OK the short sale, expecting the client to use that money to pay the balance. Thus, I was advised to let that client go and move on.

However, I'm told the exact opposite by another experienced agent; the client as a child of the deceased has no obligation to pay the balance and so the bank would be left with no choice but to either foreclose on the property or take the short sale. Who is correct in this case? Thanks in advance for any input.

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LOL! Harry!
Putting this in the newsletter today

Short sale are based on a hardship ,if your dead you have a hardship.  The policy is made out to the son not the mother,has nothing to do with the estate. 

The nice thing to do for the bank is to short sale it,but if he doesn't want to mess with it, let them foreclosre.  The only one that wins here is the agent they get a commission

I am doing one with same circumstances. You can short sale without a problem. Death is a hardship even with the worst lenders. They rather you short sale. Saves them legal fees, upkeep, etc.
If the Estate is not the beneficiary of the insurance policy then the son should not have to worry about it.  It would be different if there was money left in the estate, like 100K in a savings account.  It does not help or hurt the estate to short sale or foreclose so if it is in the bank's best interest to short sale they probably will.

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