Some things can come back to haunt. You might think you no longer own a home, for example, but you do. If a deed is not recorded, either from you or from an entity with the power to transfer title, you may still own that home.
A client told me the other day that he didn't care if his short sale fell apart because he had included it in his bankruptcy. What he did not stop to consider is he was released from his obligation to pay the debt but he still owns that home. He's responsible for that home. You can't stick out your arm, turn your head and say talk to the hand. Ignoring it doesn't make it true.
Unfortunately, I had spotted the warning signs that his short sale probably wasn't closing the minute the agent / buyer couldn't get a loan. This guy dinged about trying to get a conventional loan, then a VA loan, and at the 11th hour switched to cash. But when he switched to a cash offer, the bank would no longer approve a seller concession for his short sale. Not to mention, the bank's short sale approval letter had expired. He refused to listen when I explained how a short sale works.
The agent / buyer says he's closed a few, implying that he knows everything about a short sale. Yup, no. Funny how a couple of sales suddenly makes an agent a short sale expert, huh? This agent / buyer was lucky the bank had agreed to give him a commission. Many agents when buying short sale homes for their own portfolio are not allowed to receive a commission -- some investor guidelines don't allow it. But he was receiving a commission which sort of made up for the fact the concession for closing costs was removed. Instead, he threw a hissy fit and canceled. Banks don't negotiate with hissy-fit throwers. They barely negotiate with me, and I'm pretty level headed and consistent.
This seller now either needs to sell this home as a short sale or hope a foreclosure will transfer title. There is also the sticky problem that if a home is included in a bankruptcy, some banks won't do a short sale until after the bankruptcy is final. But the discharge of debt itself doesn't transfer title.
In another short sale in Rocklin, the sellers called me because their bank had called them. These sellers had thought they no longer owned a home. It had been sitting vacant for several years. Turns out there was no title transfer. The home was still in their name! After all of this time! The bank did not want to take a deed and accept title. The bank wanted the home sold as a short sale. It wanted the home sold as a short sale so badly that the bank offered to pay the sellers cash for the short sale to induce cooperation.
A short sale is a good solution for many who need to transfer title to a home they no longer care about. Just because the loan is larger than the value of the home doesn't mean you can't get rid of it. Make sure you hire an experienced short sale agent. I've closed hundreds of short sales in the Sacramento four-county area. You can call Elizabeth Weintraub at 916 233 6759.
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