I recently sold a property on a shortsale and now the 2nd lender is coming after me for the balance of the loan. I had told my real estate agent

Asked by Helen, Lakewood, CO Wed Jun 16, 2010

during this process to make sure the lenders sign a waiver saying they will not come after me for the balance, but this was not in writing. The 2nd mortgage lender slipped the wording into one of the letters, which neither myself or the real estate agent noticed till after the sale closed and the lender started coming after me. The agent said she was also lied to/misled because the original lender was BoA, who promised they would not be selling the note and in the week before they sold it to Green Tree Servicing, which is now coming after me for the balance. The property is in Denver, Colorado, and I was an owner occupying it at the time I got the loans. I of course do not have the $34,000 that Green Tree is demanding I pay. (They already got paid $15,000 at the closing). I want to be responsible, but this sounds like a total scam. What can I do? Do I have a legal basis for fighting Green Tree? Did the agent breach her fiduciary duty? What can I do?

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13
Keith Manson-…, , Milwaukee, WI
Sat Jun 19, 2010
To close there must be a letter of agreement that would allow the title company to close the transaction with a short payoff for both lenders. The verbage in these letters are very important to understand! Words mean nothing but what is in writing means everything. A lawyer may help but it the document says you are liable you will be forced to negotiate with the bank for the deficency.

Keith Manson
First Weber Group
Certified Distressed Property Expert
Metro Milwaukee

http://www.milwaukeebailout.com
0 votes
Brian Burke, Agent, Highlands Ranch, CO
Wed Jun 16, 2010
Hi again Helen,
I think that you are right, Bob is giving the best answer for you at this time. These short sales are not good for anyone and I hope someday they will go away forever!
You seem like a great person with good intentions and got the short end of the stick. Like I said before , this happens a lot and will keep on happening. like "J" said only a few good Agents can do these short sales and many agents take them on.
Good luck,
Brian
0 votes
Kimberly Ryan, Agent, Highlands Ranch, CO
Wed Jun 16, 2010
Helen-
UNfortuantely common sense and reason don't seem to be part of any short sale or foreclosure. We use an attorney group and accountant to help our folks "navigate" through the process. I am sorry that this happened...especially with your honorable intentions. I wish that I had some great advice for you...
Kimberly Ryan
303-523-8333
0 votes
J, Agent, Greensboro, NC
Wed Jun 16, 2010
Helen,

Thanks for your feedback. In my neck of the woods, Greensboro, NC, there are only a few brokers who truly understand how to successfully work through short sale options and all related third parties within minimum time. In my opinion, I cannot conceive the thought of any agent taking a 3-4 week distressed property course and label themselves an expert or specialist. With all my contract and banking experience over many years I cannot refer to myself an expert or specialist of anything.

Many agents I know will not touch a short sale option due to liabilities. The successfull agents I know have lenghthy backgrounds and experience in finance, real estate law and contracts. I have been completing short sale options since 2007, and believe this --- they are complex and not appropriate for all distressed home owners.
0 votes
Sean Dougher…, Agent, Fort Collins, CO
Wed Jun 16, 2010
Helen,
I'm sorry that you're dismayed with folks in the Real Estate industry right now, and I'm sorry that you're in the position you're in right now. I have a couple of questions for you.

First, did the Agent sell your home? That's what you hired her to do, was sell your home. She is not a financial services professional (I'm assuming) and therefore should not be giving you advice regarding financial services. She was hired to sell the home, and she sold the home.

Second, did she work for you has a Transaction Broker or as a Seller's Agent? If she was a Transaction Broker, her recommendations to you should have been to meet with an attorney who specializes in short sales to read the fine print. Same as with the hail damage, the agent can't give you advice on your roof or other damages, that's for the insurance professionals.

I'm not trying to defend anyone, but please remember what real estate agents are hired for, to help the buyers and sellers buy and sell homes. It sounds like the agent did exactly as she was hired to do - she helped you sell your home. I can tell you from my experience, it's very difficult to keep up with all the new laws and rules that banks come up with. Literally, the rules can change every month. And banks are notorious for not giving promises in writing.

I wish you the best in the future, and I think that you're right, Bob Patrick has a great idea for you to try. Show the company that you don't have the funds to pay (or do an offer of significantly less, as this company probably bought the $34K note for less than $10K) and see where you end up. Best wishes.
0 votes
Helen, Home Seller, Lakewood, CO
Wed Jun 16, 2010
So far, Bob Patrick has had the most useful answer. Thank you!

I have already contacted 4 lawyers and I can show my financial weakness -- I've had $30k in losses in 4 years because of negative cashflow. If I have to declare bankruptcy -- which I am reluctant to do, but that one lawyer advised -- that is what I will do.

The real estate agent made nearly $20,000 in this deal (which she deserves) but she certainly did not take care of me, her client.. If you are a real estate agent -- please -- you are just as culpable for not reading the fine print on behalf of your client as your client is. Otherwise, why are we hiring you??? I could have just gone into foreclosure or bankruptcy without all the hassles!

To suggest that I was "looking for an easy way out" through shortsale is an insult. My income dropped by 1/2 with the financial crisis and I simply could no longer afford the negative $500/mo cashflow on this property.

I spent 2 painful years on this short sale process -- with loan mod applications, loss mitigation officers, my real estate agent', insurance agents (due to hailstorms damaging the property) and more than a dozen shortsale offer contracts. By the time we got to the actual closing, I was too burnt out to read all the fine print!

Yes, I take responsibility for it. At the same time, I am very dismayed that the lenders switched their promises on us and put that clause in -- and that my real estate agent did not see it!

If I have to declare bankruptcy, I will do that. But it will certainly create a deep cynicism that I cannot trust anyone in the real estate industry. All these "professionals" are primarily looking out for themselves, not the client.
0 votes
Joanna Morris, Agent, Floral City, FL
Wed Jun 16, 2010
For what it is worth I do not agree with Brian's statement "You thought the short sale was an eazy way out and now you are in a bigger bind?" No offense Brian.........

I understand some seller's do need to take this course of action due to extreme financial hardship and it is better than having a foreclosure on your record. It is also better if you have to....to pay back a smaller deficiency than wreck your credit or keep struggling to pay the entire balance. Still hurts to have to pay it back though but you did sign and agree to original mortgage and to the short sale documents.

There would be no harm in contacting an attorney and Greentree to see what you can work out with them.
0 votes
Bob Movin-On, , Hartford, CT
Wed Jun 16, 2010
Wow, but you said it in your question "neither myself or the real estate agent noticed". Green Tree has a good case here, I think you better take an offensive approach and start negotiating with Green Tree, a personal financial statement and balance sheet, on a accountants letter head, showing they have nothing to go after works wonders.

Good Luck
Bob Patrick
Buy a home after foreclosure expert
0 votes
Brian Burke, Agent, Highlands Ranch, CO
Wed Jun 16, 2010
This is not a Scam and happens all the time. YOU need to make sure that they Forgive the balance in writing or you will pay. You need to get a Lawyer and I feel like you will pay this. I have seen wages garnished and many bad things with these short sales. It does not matter what was said to your agent. You and your agent should have made sure in writing you were forgiven. This is why you read ALL fine print.
You thought the short sale was an eazy way out and now you are in a bigger bind? ALL SHORT SALE SELLERS MUST BEWARE and CAREFUL!
Brian
0 votes
J, Agent, Greensboro, NC
Wed Jun 16, 2010
Wow! Thanks for sharing your situation. I am a Broker and the majority of my business is short sale options, foreclosures and undisclosed distressed property sales. The best advice ever given to me in this industry is ALWAYS get responses in writting ---- always. Any letters or correspondence received from lenders should be read carefully and understood by both agent, client and third parties before moving forward in any deal. Regardless of what the bank told you or promissed you or your agent on a verbal basis, the bank got what they wanted in writing and this is the bank's recourse. Real Estate 101, get everything in writing.

I had a career in the banking industry for many years before becoming a broker. I learned very quickly the importance of reading and understanding contracts and making sure clients fully understood what they were getting into before signing on the line. Another great piece of advice I received is if you or your representitive does not understand what is being signed, take a few minutes and call a real estate attorney to get clarity.

Anything dealing with contracts should never be taken lightly on any level.
0 votes
Sean Dougher…, Agent, Fort Collins, CO
Wed Jun 16, 2010
You definitely need to consult an attorney, but it sounds like Green Tree is fully within their rights to pursue the rest of the money that you owed on the loan. It doesn't seem like you signed the right form when you were negotiating the short sale, and therefore you didn't get the remainder of the funds owed "forgiven."

I'm not sure if the agent breached fiduciary duty, but you should have contacted an attorney at the onset of negotiations for the short sale.

Best of luck to you. You may have a long road ahead.
0 votes
Renato Lunnon, , Denver, CO
Wed Jun 16, 2010
Yes, this questions is best answered by an attorney.
0 votes
Joseph Jones, , Albuquerque, NM
Wed Jun 16, 2010
I would suggest you consult with an attorney.

Good luck with your situation!
0 votes
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