Hi all and Happy New Year. May 2012 be the best offer. For those of you doing short sale, let's talk about this topic. Does it makes sense to have a short sale lawyer assisting in the short sale process?
Here is a list of reasons I feel it is beneficial to have a California real estate lawyer assist with the short sale process.
TOP 10 REASONS EVERY CALIFORNIA BORROWER SHOULD HAVE A SHORT SALE LAWYER ASSIST THEM ON THEIR SHORT SALE:
1. You need to make sure a short sale is your best option. Many short sale agents may just guide you into that option because that is how they make money. You should first review your options and make sure the short sale option is the best one for you. For example, might a chapter 7 or chapter 13 bankruptcy be better? What about Deed in Lieu of Foreclosure? These are just two examples.
2. A short sale agent can review the potential for deficiency judgment liability following the short sale (with new and old laws like SB 931, SB 458, ccp 580e, ccp 726, etc.) it is important to know when or if a lender is able to come back after you following a short sale in California. In California the general rule now is that if the first and second mortgagees agree to the short sale, they cannot come back at you for any deficiencies in the sale. But what if the second refuses to negotiate or permit the short sale for this very reason? What if the junior lender is holding out or wants to move to foreclosure instead and take their chances as a "sold out junior"? Realtors cannot, or at least should not be adivsing on these issues.
3. A California short sale lawyer can send out a Qualified Written Request (QWR) under RESPA and seek to identify the true owner of the loan under 15 U.S.C. 1641, so that it may be possible to present the short sale offer to the party that may have a real interest in the outcome of the short sale negotiations. This may help get consent to the short sale where the loan servicer representing the second mortgagee investor may not want to negotiate.
4. A Californa short sale attorney can review the purcahse and sale agreement, advise on earnest deposits, and hold the buyer to their deal if they try to back out. Many realtor negotiated short sales fail and one reason is the buyers backing out because the process is taking too long, or a better deal comes up. A larger earnest money deposit may help keep the short sale buyer in check.
5. A short sale lawyer can send demand letters to lender or loan servicers demanding that the honor laws like HAFA for example, or follow the California non-judicial foreclosure laws (ex. if there is a new trustee, they need to be properly substituted under California Civil Code Section 2934a(1)(A) before they can non-judicially foreclose. This may help postpone a foreclosure sale date where the process is not being followed. We have also seen situations such as the lender failing to give the proper notice of sale and the proper time frames for the sale. A California Real Estate lawyer can help keep the lender or loan servicer in check and demand they folow the law. This might help in moving the short sale.
6. Where a sold out junior (non-purchase money) might be holding out, discussion TILA recoupment, bankruptcy, or other options may convince them that agreeing to a short sale is a better option that waiting for foreclosure and then seeking to collect on their debt.
7. A California Real Estate and short sale attorney can review any agreements to ensure no potential for seeking a deficieny judgment will exist following a short sale.
8. A California short sale lawyer can demand that title and escrow companies honor the escrow instructions and complete the deal where they are seen to be the roadblock stopping the short sale from happening.
9. A California short sale lawyer can also assist a short sale buyer where there offers are not being presented (MLS rules require offers to be presented, or a reason why not in wirting. There are also provisions that normally allow the buyer to present the offer unless the seller objects in writing). These are hot buttons that can be pushed to try to assist in the short sale offer being accepted.
10. Most of the lenders and loan servicers have lawyers on their side protecting their interests. Would you feel better if you had someone on your side keeping an eye on the process?
At any rate, these are general ideas to consider. Happy New Year!
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