If you read my articles you know by now I try to base them on real life problems and concerns of all the sweet people I encounter during my work week, especially in the area of short sales and foreclosures. I have had so many different mountain climbing experiences lately in relation to this I decided to seek advice myself and make sure I was equipped for the task.
I scheduled an appointment with a Real Estate savvy lawyer so I could get his take on some of the issues my customers are wrestling with. I left feeling very confident in my stance of doing all that you can do to NOT go into foreclosure. Yes short sales are a pain in all of our @##!!%#s…. however they really are the lesser of two evils as we discussed in last week’s article.
Another good reason to try to do a short sale is that if and when you are faced with a deficiency you should have a really fat file with all your efforts to show to a judge to help mitigate your exposure to a deficiency judgment. In our discussions he shared that all the documentation that is kept during the painstaking short sale is great evidence to show a judge that the homeowner did all that he could do to stem the tide. So again the choice to just walk away is not your best choice.
Even if your home goes to foreclosure after all your efforts you will know that you have done what you could do to prevent that from happening. WE Realtors are faced each day with answering questions that we really can not legally answer so please take some time and make an appointment with an attorney who knows the laws in your state. Another important step is meeting with your accountant to know what the financial repercussions may be to you.
If you are in the middle of a short sale please know that you are not alone and there are many of your friends who are in the boat with you. So seek legal counsel, your trusted accountant and a Realtor qualified to handle short sales. And as always, remember…. “The only people we have to get even with are those that have helped us”…. so go get even!!!!
PCBDaily 
I’ve heard that in order for the lender to approve a short sale, you usually have to sign a note to repay the difference, but when they foreclose lenders will not pursue you for their losses because they know you are not collectable. So while your credit may take a hit, you won’t owe anyone anything. So I guess either choose bad credit and a new loan to repay and short sale your house, or choose really bad credit but no debt. Either way, you aren’t going to get a loan anytime soon anyway. That’s what I have heard from those who have dealt with these lenders.
Does anyone know what happens with your credit cards and other loans that are current when you conduct short sales, or foreclosures? Do your other lenders up your rate or cut you off? Do credit card companies do the same?
I’ve got a rental 100k underwater I want to short as it will be 20 years until I can break even, but I don’t want to lose my credit cards and have my HELOC rate on my personal house shoot up.
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In regards to signing a note in a short sale that is NOT always true and if you do sign a note it is for a very small amount in relation to what you owe. That is why it is VITAL to consult a professional and not listen to the word on the street. Again, a short sale is a better option in MOST all cases for you as an individual and for your neighborhood. I do many short sales and the largest note to date that a homeowner has had to sign has been $20,000 with a 0% interest. If he had gone to foreclosure he would have had a possible 300,000 judgement. Typically a short sale will ding your credit for less points and for FAR less time than a foreclosure and again if you try the short sale and fail your are setting yourself up for a good case when you have to go before a judge.
Keep in mind that all this is general information based on doing these deals all the time, it is still a great idea to consult an attorney if you have concerns and do make sure that you are working with a Realtor that has experience with Short sales.
AS to credit cards I have not had ANYONE loose their credit cards. Please call your favorite Realtor and they will answer all those hard questions for you. Thanks so very much for your input!!! This is why I love doing this.
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