On March 17, 2009, I attended a brief overview class of short sales vs foreclosures. It was taught by attorney Lisa Page of L.A. Page Law Firm and Jennifer Torres of the Torres Corporation, Residential Real Estate Signings. They provided the following informative newsletter. (They made note of the fact that these rules change daily, if not hourly, due to the quantity of 2008-2009 foreclosures.) ALWAYS CONSULT A REAL ESTATE ATTORNEY!
FORECLOSURES
* Secured party executes power of sale in the deed of trust.
* Trustee files special proceeding and holds hearing to prove the following: 1. Valid Debt 2. Default 3. They have the right to foreclose 4. Notice of hearing sent to owners and all people liable for debt.
* Notice of sale posted at courthouse and in newspaper publication
* Bidding begins and ends with highest bidder.
* Trustee’s Deed executed when funds received, excess funds go to junior secured creditors.
* Final report and accounting.
** All Judgements and Junior liens are wiped out **
SHORT SALES ( PRE-FORECLOSURE SALES/SHORT PAYOFFS)
* Lender will accept a discounted payoff to release the mortgage. WHY? 1. Less time and expense than foreclosure (or smaller financial loss). 2. No home ownership, paying taxes or insurance (for bank).
* Generally, lenders will not accept any offers unless a Notice of Default has been issued AND provided extensive documentation of seller’s inability to pay.
* NEGOTIATIONS via lender’s loss mitigation department
* Obtain written payoff from lender and agreement to accept the short payoff as full satisfaction.
* NOTE: Seller who has filed for bankruptcy will kill this deal, no collection activities permitted.
** JUDGEMENTS AND JUNIOR LEANS ARE NOT WIPED OUT!!! ** >For example, second mortgages, tax liens, mechanics liens will remain title exceptions unless paid or released at closing (via further negotiations)
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AGAIN, ALWAYS CONSULT A REAL ESTATE ATTORNEY!!!
The following were some points of interest that came up in our question and answer period. These are notes that I took and therefore may be subject to my note taking capacity, as well as my interpretation:
*The bank has a 3 year statute of limitations for filing a judgement against an individual for the bank’s loss from the sale of the foreclosure. The judgement can last from 10-20 years.
* If the foreclosing homeowner talks to a counseling agency, it may buy the homeowner a 45 day delay on their foreclosure. !!!!!!!!!
For more info on how to avoid, delay or fight foreclosure read my articles FORECLOSURE FEARS? KNOWLEDGE IS POWER! and FACING FORECLOSURE?
LAST, BUT NOT LEAST, ALWAYS CONSULT A REAL ESTATE ATTORNEY!!!
Lisa A. Page
Attorney At Law
L. A. Page Law Firm, PLLC
3574 N. Davidson Street
Charlotte, NC 28205
T: 704-927-5070
F: 704-927-5079
Dawn Judge is a North Carolina Real Estate Agent with Century21 Hecht Realty, Inc. in Mooresville, NC. Contact me with your real estate questions at 704-929-2261 or email djudge@c21hecht.com
