THE SHORT SALE LAWYER CAN BE YOUR BEST FRIEND!

John, your answer was great and spot on...

That being said, I think realtors are not zealously recommending their clients to seek legal counsel on their short sales.

I see time after time approval letters that do not speak to the deficiency and unfortunately the newer agent, who may not be aware of their clients liability, just want to get the deal closed.

I negotiate short sales in New York as well as do the closings for all of my clients. At the very least, have your client speak to an Attorney, so by some off chance litigation ensues, you at least did your best to inform your client that you are not their Attorney and are instead their super star realtor that will Short Sale their home.

KB Collins
New York Attorney

Feel free to call me when your in doubt.

If your property is in California and you hire a Realtor to help you sell you short sale, your Realtor will ask you to sign a form which instructs you to speak with an attorney.

Why?

1. Because many lenders like Bank of America (and countrywide) will not release you from the loan deficiency in writing.

2. Because if you have purchase money loans protected by CCP 580 b and you take a foreclosure you will not have tax liability to the California Franchise Tax board. But, if you do a short sale you may be responsible to pay taxes on the entire amount of the loan forgiveness.

3. Since you may be left being responsible for a large and sometimes 6 figure deficiency to your senior lender, it might be much smarter to accept a foreclosure.

4. If you have two loans it might much smarter to stay current with the first while you negotiate a short payoff with the second. Then you can commence a short sale.

5. When and if you lender issues short sale approval letters, who is going to tell you the difference between a release of mortgage, a release of lien and a release of the outstanding loan balance.
(I would ask for an opinion letter backed by Mal practice insurance.)

6. Some attorneys may be able to gain leverage over the lenders during the negotiating process.

7. Some lenders may cave if your attorney can point out when they are not negotiating in good faith.

If you have assets or a future salary you wish to protect you really should consider working with someone who is actually licensed to give you an opinion about your future exposure to collection attorneys or taxation authorities.

My suggestion is that your Short Sale Realtor should have attorney consult with you. Epecially if you property is worth substantial fees to the Realtor.

There are several free sources in Tulare County that will help you navigate through a short sale. You should also ask your Realtor about the process. It can be a stressfull situation, but if you are well informed, you can successfully complete a short sale.

Try to talk to a attorney who can give you a free consultation. I think if there is any loop holes in your mortgage note that the attorney might be able to fight on your behalf to push for the short sale approval. Otherwise, if you are in true hardship and can prove it then lenders usually try to work out a short sale. It can take about 3-4 months to complete but when you choose a realtor to help you with the short sale make sure they are diligent in follow through. It is a lot of work but I have had success selling them. Good Luck.

In order to have a short sale you must prove hardship or it will not fly. Be sure to get a competant realtor who is familiar with short sales.

A Realtor experienced with short sales should be able to help and advise you through the process. Another thought is to have an open, honest conversation about your circumstances with your lender if you haven't already.

There are several issues that a seller should know about that a foreclosure attorney could help them with. Specifically there could be tax ramifications of receiving a credit from the bank to allow the short sale and sellers could also be subject a a deficiency judgement. However all these issues are explained if the seller uses The Short Sale Company. This company is very well organized and experienced at working the seller through the system in conjunction with a real estate agent in the neighborhood. I thoroughly recommend it. The agents have to give up some of the commission but they also don't have to deal with the loan mitigation people at the lenders, who are sometimes difficult to work with!
As real estate agents in the Cincinnati area, in the county with the most foreclosures in the country, we are getting very good at helping sellers to sell their homes before they are sold on the court house steps. It is better on the credit score to try and sell with a short sale than to let it go into foreclosure. There are a few things you can do to maximise the opportunity to sell before foreclosure but it is important to act with speed since once you are behind in payments, there is only a limited time period before the lender will sell the property. It is sometimes very hard to stop the process once it is initiated by the lender.

HI Pam, You can not consider a short sale without your lenders approval. Some lenders will not okay a short sale, but you may be able to renegotiate terms with your lender. It never hurts to consult with a Real Estate attorney, but you can also find an experienced short sale Realtor to negotiate with your lender.