Home Closing Process

Like we discussed earlier, a short sale approval and ultimately successful sale do not guarantee…

This is the 6th step in our series: “12 Things You Should Know to Survive a Short Sale.”

that the borrower’s liability will be extinguished as it relates to their obligation under the Note.

A Realtor should have an honest perspective for a short seller before short sale approval wondering about their post-short sale liability:

“Yes, you may be liable after a short sale based on your obligation to the lender under the Note.”

It is important to continue the dialogue though, and to acknowledge the issues in order to set the seller’s expectations correctly.

When a lender gives short sale approval, there are basically four possibilities for future liability.

The four possibilities are:

1. The lender agrees to release the mortgage lien and to release the borrower from all future liability.
2. The lender agrees to release the mortgage lien and to release the borrower from future liability in exchange for a cash contribution at closing.
3. The lender agrees to release the mortgage lien and to release the borrower from future liability in exchange for a promissory note.
4. The lender agrees to release the mortgage lien but retains its right to pursue the borrower for future liability either implicitly, by its silence, or explicitly.

Only when the prospective seller is presented with and understands their options should they make the decision to proceed with a short sale.

It is imperative for the Realtor that the client understands the fact that these may be what will face them at the end of the process. If they do not understand and have not so resigned, the Realtor may find herself having spent many months and many dollars on the marketing and sale of a property which will never close.

The short sale process is not as “short” as you’d think it would be. Winged Foot Title are specialists in this field and make the process more efficient for you. Take this Wells Fargo short sale approval letter, which closed 04/09/2010. The short sale approval came within approximately 44 days from the date of short sale package submission. The original loan amount was for 90k and lender accepted 36k with a commission of 6% to real estate agents.

“12 Things You Should Know to Survive a Short Sale” is a FREE eBook that is available for immediate download at www.WingedFootTitle.com.

If you have any real estate or short sales questions – please don’t hesitate to contact us, or call us at (239) 985-4142. We service all of Southwest Florida including: Fort Myers Estero, Bonita Springs, Naples, Cape Coral, Pine Island, Punta Gorda, and Port Charlotte.

-Chris