What is a Short Sale? A Short Sale is the sale of real estate where the price paid is insufficient to pay the loan or loans against the property, plus the costs to sell the property (title policy, title fees, legal fees, real estate sales commissions, etc.), and the seller cannot pay the difference. There are a multitude of issues in a Short Sale, including (but not limited to) legal and financial risks. This post is not intended to address all the issues. Neither does it purport to be comprehensive, or to provide financial or legal counsel. However, it is designed to provide information on some of the issues and risks involved in a Short Sale situation.
Before Proceeding with a Short Sale…
– Discern a Lender’s Options upon Loan Default
– Determine the various types of loans that secure real property:
The type of the loan and the property has a big influence on what the lender may do if the homeowner defaults on the loan (i.e., fails to make the agreed upon payments). The homeowner’s overall current and future financial strength, the cost the lender incurs when the loan is acquired, and the current value of the property are also factors in the lender’s decision to foreclose.
Beware of Predatory “rescue” Scams and Short Sale Fraud
If the homeowner is behind on payments and worried about foreclosure, they may be susceptible to people and companies that will try to take advantage of them. “Rescue” scams may cost the homeowner money with no results provided. These scams may result in the loss of the home through foreclosure or even put the homeowner in a potential legal issue of fraud. For additional information about fraudulent schemes, go to:
“Red Flags” to watch for to avoid a fraudulent scheme include:
To report suspected scams, contact:
Contact a FREE HUD-Approved Housing Counselor or Your Lender:
Legal and Tax Advice May be Needed
The Consequences of Committing “Waste”:
If you decide to damage the property, remove fixtures like sinks, toilets, cabinets, air conditioners, water heaters, light fixtures…. The lender may accuse you of “waste.” This liability to the lender may make it possible for the lender to sue you for damages. The suit would be for damages because you physically abused, damaged, or destroyed part of the property. Imagine having to deal with a lawsuit in addition to a foreclosure!
Stay tuned for the next 2 posts –
Century 21 Beal, Inc.