Short Sale Liens Get Mean

Posted on November 3, 2012 by

Now IS the perfect time to purchase and resell short sale properties. Why? Due to major mistakes by Lenders made at the time Homeowners obtained financing, our market is flooded with homes in which the Lenders are willing to accept short sales. Lenders such as Bank of America, Wells Fargo, GMAC, CitiMortgage and Chase from 2006 to 2008, have major mistakes in their paperwork. They are reaching out to Homeowners asking them to do a Short Sale or Deed-in-Lieu. However, many of the Homeowners aren’t aware of the fact that they can’t do a Deed-in-Lieu if they have a second lien. And, if they owe Homeowners Association dues, which are a personal debt against the Homeowner, they may still be liable for the difference.

Homeowners Association dues need to be satisfied in full so that if a house is deeded back to the Lender, the Homeowners are no longer responsible for any more dues. There is a statute which states that the Lender that forecloses on the property is responsible to pay only one year of Homeowners Association dues. When conducting a short sale, this statute has little or no meaning to the short sale Lenders, meaning they may not agree to even pay one full year. I have seen Homeowners deed their property back to the Lender only later to find out that they are still liable for the difference owed on the Homeowner Association dues. Brutal!

TRUE STORY: Nationstar would not agree to pay the full year of past HOA dues, even though the statute states they are responsible for that. In addition, the A/C failed the inspection and required repairs. Deal killers? If you aren’t experienced…..absolutely. And I wasn’t about to give away over $500 from my profit. When you know what you are doing, you can even get the Sellers to help close your deals. Yes, the Sellers who have NO MONEY. Well, I closed this deal about 30 days ago!

Having the Homeowner take control of their property is the best thing that they can do, versus letting it just go to foreclosure. They can decide whether they want to do a short sale the property with me ensuring that all liens are paid off and confirming there is no one able to come back after them….or, they can let the Lender and/or Homeowners Association chase them for up to 25 years. Yes, I said 25 years! The lien holder has the right to file a Complaint in order to obtain a Judgment for the balance still owed to them plus interest and attorney fees for up to 5 years from the initial foreclosure action. Once a Judgment is obtained, then it is valid for 10 years and after the 10 years, they can re-certify the Judgment for another 10 years.

TRUE STORY: An Investor friend from out of state had her Listing Agent negotiate her short sale instead of using me. Her Agent negotiated a lien “release” only for her 2nd lien. Now Chase Bank has been calling her every day for the last 21 months. Yes, she closed in December of 2010 and they are still pursuing her.

Many Homeowners are downright tired. They are tired of being taken advantage of; it has affected their health, confidence, financial situation and their family. Investors and Realtors need to learn how they can help the Homeowner by either purchasing or selling their home and obtaining a full satisfaction of all liens. Next month, I will share with you the 14 Steps to a successful short sale. Having the best tools (not just the right ones) and having a Mentor are crucial to consistent closings and CA$H in your pocket with short sales!

Short sales are changing DAILY…..how are you keeping up with the requirements??

Many Investors still use old techniques that are no longer even applicable. They are not reading or understanding the documents they are signing which is resulting in dangerous consequences. Make sure you read everything so you can embrace all of the “Ah-ha’s” and avoid the “Ouches” on short sale transactions.

Kimberlee FrankKimberlee Frank is a Master Negotiator who has closed over 600 deals since 1998. She is a Mentor, Trainer, Author and Real Estate Broker teaching Investors and Realtors how to creatively purchase and sell short sales with her Step-by-Step System. She has helped Investors and Realtors earn hundreds of thousands of dollars.

Contact Kimberlee Frank

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