Why You Need An Attorney When Negotiating a Short Sale
Perhaps you have recently read that 3 arrests were made in connection with fraud in short sale closings. Apparently the facilitators of the short sales had presented counterfeit pay-off letters from the lenders to the closing agents. After the closings took place and money was paid to them, the banks of course, refused to release the liens and most importantly, refused to release the original mortgagors from the liability. There are many scams out there today and each time consumers are faced with a hardship, someone finds yet another way to take advantage of them.
When you apply for a short sale it is to your benefit to be represented by licensed, legal counsel. An attorney can negotiate on your behalf; a facilitator cannot. An attorney can also represent you in foreclosure defense which can provide you the additional time necessary to close a short sale.
Frequently Asked Questions:
What is a short sale?
A short sale occurs when a borrower sells his/her property for less than the balance of the mortgage. This event requires the lender’s prior consent to close. Therefore, any and all requirements by the lender must be met prior to the sale.
Why is a short sale preferable to a foreclosure?
A foreclosure, when completed could become a judgment for the full amount of the mortgage plus any fees allowed by the court. It can appear on your credit report for up to 20 years in the state of Florida. A short sale is a “settlement” on your account and appears as such on your credit report. It will affect your credit and scores but the impact is not as severe as a judgment and its effect does not last as long (usually about 4 years).
Will my lender automatically approve my short sale?
Not necessarily. You must comply with their requirements which may include the property, the occupancy of the home, your financial situation and the actual investor (entity who owns the mortgage note).
Does a short sale relieve me of the mortgage debt/liability?
This depends on the approval of your lender. In some cases, they will not write-off the entire balance but may require payment of a portion of it. In the “negotiation” of your short sale, your attorney will attempt to have the entire balance removed. However, there is no guaranty as the final decision is up the lender/investor.
What is a facilitator?
A facilitator is someone who submits your request to the lender for a short sale, they will also keep the file updated through the approval/denial and hopefully, provide status to all parties. The facilitator cannot negotiate on your behalf; they merely act as a go-between relaying messages between the lender, borrowers and other interested parties (as legally allowed).
Does it cost more to use an attorney for a short sale?
It may cost an upfront retainer fee but most fees are obtained from the lender (within the payoff figures). At times, the buyers can be asked to pay a portion as well. There is truth to the adage: “You get what you pay for.” The retainer fee can represent “peace of mind” when you are in a state of distress.
How long does a short sale take?
While there are reports of lenders and agencies “fast tracking” the process, it is still taking from 90 to 120 days AFTER submission of a valid offer for the lenders to make a decision. You must also allow for the time to list your home and sell it.
So if you are asking yourself “why do I need an attorney to negotiate my short sale?, remember these basic facts:
· An attorney can legally represent you and negotiate on your behalf
· An attorney can also assist you in foreclosure defense
· An attorney can review your mortgage to check for the discrepancies or infractions of the law
· An attorney is licensed and is accountable to governing authorities such as the BAR Association