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Thursday, April 8, 2010

Short Sales?

Vicky L. Campbell by GRI Instructor Vicky L. Campbell, GRI, CRS, LTG, PMN, SRES

Teaches GRI Courses 100, 101, 102, 104, 106

View future classes taught by Vicky L. Campbell
What's a person to do? Be very careful what you tell or advise your clients to do! As agents, we are constantly asked what they should do. You are not an attorney or a tax consultant and should not be answering these questions.

Maybe you should say: "It depends." "You really need to talk to an attorney or a tax consultant or CPA that knows your situation in order to find out what the best plan of action is for you!" Well, is it a Recourse or Non-Recourse loan? You should not answer that question either! Even if they live in the home, they may have refinanced it or own other property, which will change the outcome! I think we who advise our clients will be liable if they do get hit with a tax bill or a creditor/collector calling them after we close that short sale. They are going to blame us for giving them the wrong advice!

Please be careful what you say or acknowledge! Use the Legal Q & As provided by CAR and NAR.

I recently received a copy of an email sent to one of my past clients who used a Short Sale Specialist for the sale of a home that was upside down. It started with "Congratulations, we got Short Sale approval!" Then attached was the letter from the Bank that had language in it that they reserve the right to collect any and all deficiencies and that a 1099 would be issued for that deficiency. So, guess what, that is not good for the client. The agent went so far as to say: "They all have that language but they cannot collect from you as this is a Non-recourse loan! I have done hundreds of these! None of my other clients have had a problem signing this!" I immediately told my past client that the way I read it, the lender has recourse and she should definitely talk to an attorney!

Thank goodness, she listened to me and the attorney told her absolutely Not to sign the agreement. He also went on to say that no one should sign any of these agreements from any lender without the bank signature on it. Always have an attorney review any documents that your clients are receiving from the lenders on short sales and or loan modifications.

We should not be advising our clients, friends or family as to the legal ramifications of these documents! If it sounds too good to be true, it is probably no good at all!

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