Short Sales

This is not going to be easy. The essence is easy, but there are many facets, many ramifications, that complicate matters. At base, a short sale takes place when the mortgagor, the lender, agrees to let the mortgagee, the borrower, transfer title to someone for an amount less than the balance owing on the mortgage. The only certainty in the transaction is that the buyer is guaranteed clear title as to the mortgage in question. Nothing else is certain. The short sale agreement, from the lender perspective, is granted because it presents the least loss scenario, or the best of a bad situation. Faced with the certainty of foreclosing and unable to identify any means of collecting on the note, the lender offers some agreement to the borrower. No one other than legal counsel is in a position to advise the borrower that the proffered agreement is in their best interest. There are significant tax and legal consequences and financial considerations that can only be identified by a professional in real estate law as they relate to an individual borrower. All agreements are not the same. All borrower circumstances are not the same.
Because real estate agents live to secure listings to sell property, and because the market has tightened up considerably, a cottage industry has sprung up, holding seminars for real estate agents for a fee of course, teaching them how to cash in on the booming foreclosure market. One of the ways is to advertise as short sale experts, promising some extra knowledge that will make their service more valuable. Keep in mind that a short sale listing is just another listing. A little more work once an offer to purchase comes in, but still just another listing, and it is deceptive to suggest that there is some special training or skill that will serve your interests. Only you can negotiate with your lender for the terms of your agreement, or your lawyer if you will only hire one as I suggest. Get legal help. If a short sale agreement is determined to be what you need, negotiate it, then shop for a real estate agent you think will work hardest for the least cost. Compare services and fees, just as with a regular listing for sale. From a buyer perspective, there is no necessary advantage in looking at short sale listings in search of a bargain. All lenders are different and will have differing flexibility in their view of fair market value. Keep in mind that your negotiation to purchase will require satisfying the underlying agreement for the short sale, and the lender is in firm control of that. For practical purposes you should simply find the home you like, decide how much it's worth to you, and negotiate within that limit, regardless of the type of offering.
One other thought. As mortgage brokers, as well as real estate brokers, we're held to some pretty high standards for our conduct. Since we know that a great number of the impending foreclosures, or defaults, are related to contracts that were entered into by deceptive means; misrepresenting income, occupancy, bank balances, employment, source of down payment, etc., if we are asked to represent a client in a short sale we will ask questions to determine if these events took place. If we determine that fraud was involved we will refuse to participate. Lenders are entitled to protect themselves and as licensed professionals we are obliged to protect them. If the contract involved fraudulent representations the lender is not obliged to enter into any agreement, and can in fact move rather swiftly in both civil and criminal proceedings to find relief.
For a final bunch of thoughts. If default is imminent, call your lender. All lenders have loss mitigation departments. Keep in mind that the loss they want to mitigate is theirs, but if it can be worked to your advantage, listen to them. Seek professional help immediately. This could be a mortgage broker you trust since there are some programs that might help you. Do not seek the advice of sales people until you have determined from legal counsel that your best interests are served by that decision. The web is filled with foreclosure sites. All promise for a fee to avoid foreclosure. Not likely. You or your attorney need to talk to your lender. Get information about the timeline for default/foreclosure actions. From our site you can access title companies that will provide you the information. Lacking that, call us. We'll get something to you. Here are some FHA sites with info about about a temporary program for helping people in some special circumstances. If you think you qualify, you must have your application in by Dec. 31. We can do that for you if it works for you. http://www.fha.gov/about/fhascusqa.cfm http://www.fha.gov/about/fhasfact.cfm
We're trying to locate a foreclosure consumer advocate with free legal help in our market area. So far no luck. If you know of one please call and let us know and we'll publish for all to share.

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