I had an interesting conversation yesterday with a seller. The seller owns property in Florida which was purchased as an investment. The property's just value according to the property appraiser is about $225,000. The owner owes over $400,000. The proeprty has been listed for some time and I was discussing the possible opportunity of a short sale. The seller's intent was to allow the bank to foreclose with the expectation that she would be finished with it. Unfortunately, she didn't understand that the bank has rights beyond the mortgage. Specifically, that the bank has the right to come after a seller if the property sale does not cover the value of the mortgage.
In the local paper in our area we read about stories of people mailing their keys to the bank or allowing the bank to have the property and walking away. In these cases, I assume that they are referring to a deed in lieu, however, I don't think many owners understand the opportunities available to them. I am further concerned that sellers believe that they can simply stop payment on their investments and the bank will take the proeprty and drop the issue. Is anyone else experiencing these types of problems? How are brokers and agents educating property owners as to their options?
Thanks for you input...
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