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BEWARE: "Confession of Judgement"

By
Real Estate Agent with KEIRE Realty Group

I'm going to lean on the lawyers a bit here on this one to elaborate as much as they can on this topic. I just learned of this today. Essentially, this is how it goes...let's say you have a client who owns a property and they are considering doing a short sale or just let the lender foreclose on the property. If the lender approaches the Owner of the property in question and has them sign a "Confession of Judgment" that means that the Lender is holding the Borrower (or, Owner in this case) on the hook for repayment of the debt.

Let me give you an example, a fellow agent told me the story of a legal immigrant who purchased two homes within the last five years. She is a housekeeper/janitor at a local hospital...probably only make maybe $40k a year if that. She started falling behind in her mortgage payments and got to the point whereby the Lender visited her at her home and had her sign a "Confession of Judgment" in the amount of $180,000. Then they proceeded in the following weeks to Foreclose on her home and the additional one that she also owned.

Now the Lender has her on the hook....if she does not pay the Lender back, they can go to Court and present this legally binding document in which the Judge will most definately rule in the Lender's favor. Afterall, they have a signed document where the Owner agrees to pay back all of the money that is outstanding on her home.

I thought I would bring this story up, not only to solicit additional feedback on this item but to also help inform other Agents out there who may be working with a Client. PLEASE MAKE SURE YOU ASK YOUR CLIENT IF THEY HAVE ALREADY SIGNED SUCH A DOCUMENT FOR THEIR LENDER! While we as Agents and Realtors have a fiduciary responsiblity to our Clients we must help educate them regarding all of the possible negative impacts they might be held accountable for down the road should they decide to go the Short Sale route.

I appreciate any and all comments on this topic!

-Keith

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Brady Pevehouse
RE/MAX Downtown - Orlando, FL
Your Orlando Real Estate Professional

Keith,

   Great Post, education is key when dealing with short sales and foreclosures.

I am not a lawyer, but I side with your opinion of, the lender / lawyer got the client to sign a document while the client / homeowner had no representation to review the document with them and were not aware of the consequences.

Sep 11, 2007 07:06 AM
Lisa David
Re/Max Gateway - Reston, VA

Keith,

Each realtor should have a list of qualifying questions before they begin the short sale listing process...beyond the normal questions that we usually ask when listing a property. The confession of Judgement could be one of them. There's a whole new set of rules in the market where foreclosures and short sales are happening daily. It makes our job as realtors a little tougher. It would be nice if our broker took on this responsibity, since there are usually so many agents per office (why reinvent the wheel?).

 www.haymarketrealtygroup.com

 

Sep 11, 2007 01:02 PM
Keith Elliott Jr
KEIRE Realty Group - Manassas, VA
Principal Broker/Owner

Hi Lisa,

I think that is a great suggestion. Have you mentioned it to him/her? Maybe they would be willing to schedule a one or two hour training class on the topic. You're right they are happening all the time and there really is a tremendous amount of information Agents need to know to do them well and at the same time, meet the Client's objectives before they are forced out of their home by Foreclosure.

-Keith

RE/MAX Olympic, Manassas VA

www.MyRealtorKeith.com

 

Sep 11, 2007 01:16 PM