Posted by: Catherine | April 8, 2009

Short Sales – a last resort…

With so many real estate agents out there getting trained, certified and ‘designated’ as experts in short sales, its no wonder so many recommend that a short sale is the best way out of your situation.  Be very wary.  Do not go to a short sale as a first resort – in fact, other than foreclosure itself, it really should be your last resort.   Don’t get lulled into thinking you will not have any liability.  You may.  Your personal liability and your tax liablility are also, two very different things – separate from each other.   The “training” many agents receive is simply too broad to apply to every situation. I can tell you that learning to submit a package and how to work with the bank is the EASY part.  Understanding the client’s risk and potential of recourse and tax liability is much more important.  As Realtors, we can’t advise on most of these matters – and you MUST see an attorney and/or CPA before considering a short sale. If a Realtor you’re working with has not advised you of this, they are not doing their job and you may be at great risk of a huge surprise later. 

If you have other large consumer debt besides your house, don’t think you’ll just file bankruptcy later if the bank or tax man comes for you.  You need to talk to an attorney before you sell your house.  You may not have the bankruptcy advantages you think you will if you no longer have your mortgage debt.  Bankruptcy is not as easy or clean it used to be.  You may not even qualify at all.   Don’t make that mistake.

Do you think that just because the lender issued a 1099c that means they cancelled the debt and you are free of any liability? It  may not be true. 

Do you think that a short sale is always the best way? And always better than foreclosure.  Wrong.  Its is NOT always the best way, and in fact, in some cases a foreclosure may have protected you from very specific consequences.  You must see an attorney immediately when considering a short sale.

These are only a few of the reasons why.  You may leave some very important remedies available to you if you skip this vital step.  This is not the time to save $300.00.  Face it, many who have not paid their mortgages in months, probably have $300 to spend in order to save themselves from huge financial mistakes that may effect them for years to come.  Don’t let it be you.

If this is the last step, then you may be asking what is the first?  First, see if you can keep your home! Talk to your lender, and/or talk to one of the non profit HUD counseling agencies. No reputable agency will ever ask you for money!  No money up front – ever – to anyone.  Do not fall prey to traps.  There are no easy ways out of these situations, don’t expect a kick fix.  Here are two agencies you can start with:
Support and Guidance for Homeowners
888-995- HOPE (hope hotline)
Non-profit advocacy. HUD certified counseling agency.
(this is one agency that Countrywide will refer you to before they start on a short sale)

Side Note: if you call to start a short sale with Countrywide, they now say they are required to give you a HUD HELP number: 800-569-4287 .  This number is a HUD referral agency and can help you find a certified HUD housing counseling agency nearest you by entering your zip code.

Catherine Myers, REALTOR
Contra Costa , Alameda
Walnut Creek, Concord, Clayton, Pleasant Hill, Martinez

Short Sales as a last resort, avoid foreclosure, w/ homeowner help resource, loan modification contacts -we want you to keep your home!  DO you need to sell your home now?  Contact us for information.

Experience with all the major banks including Countrywide, Bank of America, Wells Fargo, GMAC, EMC, Chase, WaMu, Wachovia, Saxon, Indymac, CitiMortgage, CitiFinancial and more including local banks and credit unions.

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