The Government is all over short sales. The HAMP and HAFA programs are designed to incentivize a lender to accept a short sale (if you think $3,000 for a loss that can sometime be more than $100,000 is an incentive…).
Many real estate agents are standing by to assist in a short sale, even though the process can take nine months or more.
Borrower/owners believe a short sale is “better” than a foreclosure. We’re not convinced, but it can be for some. A “strategic default” is better for others. It’s as much a tax question as a real estate one.
Some lenders have entire short sale departments set up to do nothing but process these applications.
They wonder why it doesn’t work? After all, it is not working.
Effective January 1, 2011, in California, new legislation compels a lender to release the underlying obligation on the first position deed of trust, if a lender accepts a short sale. Later that year, the Legislature did the same thing for junior deeds of trust too. So far, so good.
The rules change daily, weekly, monthly. Every Borrower/Owner’s situation is different. The liabilities to Brokers and Agents also seem to change when the wind shifts. (As recently as October 2010, a court case imposed new liability on a real estate agent if certain, undefined, disclosures are not made.)
In this ever-changing landscape, it’s absolutely critical to get competent legal advice. That’s what the Hanson Law Firm team brings to the party.
But even we don’t do everything. If a short sale seller is confronted with the need to file bankruptcy, we refer them to Price Law Group—who have been serving consumers in need of bankruptcy assistance for over 20 years.
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