Why You Want to Avoid a Short Sale Charge Off If You Can

Real Estate Agent with RE/MAX Gold DRE #00697006

short sale charge offI've had clients ask me if they should make a payment to avoid a charge off on a short sale. It's a risky situation if they don't. But I can't tell them to do it one way or the other. Every short sale seller has to make that decision for herself. I know it is often better to deal with the devil you know.

I closed a short sale in Sacramento a few days ago that was a HAFA short sale. I was very concerned that a second mortgage might go to charge off and land at another institution. That new collection agency might not participate in HAFA. The seller was taking a big chance by letting the loan go to charge off when one little payment of, say, $300, would guarantee she would receive $3,000 through her HAFA short sale. But I'm not the charge off police.

Read more about reasons to Avoid a Short Sale Charge Off.

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elizabeth weintraub



Weintraub and Wallace Realtors



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Elizabeth Weintraub is co-partner of Weintraub & Wallace Team of Top Producing Realtors, an author, home buying expert at The Balance, a Land Park resident, and a veteran real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown, Carmichael and East Sacramento, as well as tract homes in Elk Grove, Natomas, Roseville and Lincoln. Call Elizabeth Weintraub at 916.233.6759. Put our combined 80 years of real estate experience to work for you. Broker-Associate at RE/MAX Gold. DRE License # 00697006.

Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.The views expressed herein are Weintraub's personal views and do not reflect the views of RE/MAX Gold. Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice; it could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.


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Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

I would think $300. would be an inexpensive insurance for the peace of mind against that risk, Elizabeth!  But, it is as you say, not our decision!   I hope you have a GREAT weekend!

Aug 25, 2012 12:42 AM #1
Gary Frimann, CRS, GRI
Eagle Ridge Realty / Signature Homes & Estates - Gilroy, CA
REALTOR and Broker

Good info to know.  The laws have gotten so complex, both in CA and Fed law that I'm glad you pointed this out to everyone.

Aug 25, 2012 12:42 AM #2
Dan Hopper
Keller Williams Realty Downtown LLC - Denver, CO
Denver Realtor / Author / Advocate/Short Sale

You are so right, Elizabeth.... it is always best to work a short sale that has NOT gone to a charge off.  The sellers do need to understand the consequences.  Many out there really believe if it is charged off, it is GONE!  Far from the truth.  With that being said... we have worked some charge offs during our short sale process and were able to get them to waive any recourse.  These were outside of the HAFA process. 

Aug 25, 2012 01:00 AM #3
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

My standard answer to those type of questions is:  Ask which ever of those attorneys I recommoned that you decided to call.  I don't take short sales unless they agree to hire an attorney.

Aug 25, 2012 06:25 AM #4
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Trying to explain the ins and outs of short sales to potential sellers sometimes feels like you are taking a plate of spaghetti and pulling a noodle at a time and explaining how that one scenario represented by that particular noodle would affect the other noodles.  So many considerations.  

Aug 25, 2012 07:41 AM #5
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Elizabeth - just another proof that your posts should be a must read for agents as great educational material. Excellent information and so well written

Aug 25, 2012 03:39 PM #6
James Dray
Fathom Realty - Rogers, AR
Exceptional Agents, Outstanding Results

Morning Elizabeth some chances we all take in life are those we fear most.  The question and the decision to make the payment or not as you pointed out remains with the seller

Aug 25, 2012 09:38 PM #7
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

I often say to my sellers that I want what is best for them. And I do. But they have to decide what that is -- I can't tell them because I am not them. I can say what I would do, but what I would do and what they would do can be 2 different things.

Aug 25, 2012 11:52 PM #8
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