Richard Zaretsky, Florida Real Estate Attorney

What is a short sale? When giving lectures I like to use the definition as follows:

The sale of a real estate property for a price that is less than the total amount necessary to fully satisfy the actual present encumbrance (mortgage) indebtedness on the real estate property.

Often I see a different description, one that says, The sale of real estate when the lender accepts less than its mortgage amount and forgives borrower from paying the deficiency.

Which is correct? A look at the short sale acceptance letters lender's provide is going to tell us the real truth about short sales and forgiveness of deficiencies. This article will discuss examples of short sale acceptance letters. Read carefully, as you will probably be surprised!

Before going on, it is important that you have read and understood the concept of a promissory note and of a mortgage which secures the promissory note. See my article which explains it at A LAWYER'S EXPLANATION OF THE FORECLOSURE PROCESS.

Here is Example #1 of a short sale acceptance letter:

You will notice that the letter says this is an acceptance of a short sale. It says if all the things in 1 thru 5 are done the mortgage will be discharged and a release document will be provided to be recorded and the foreclosure dismissed. There is no mention of any cancellation of the promissory note. In this example there is no forgiveness of any deficiency.

See this next example from Bank of America the language is different.

Here, the letter says the deficiency balance will be reported to credit bureaus as "charge off" and the liability for the deficiency balance is "to be determined". This is confusing but what it means is that (1) there is a deficiency and (2) the lender will later determine what to do about the deficiency.

Next, is a 2 page letter from Countrywide.

This letter is the most definitive from the three presented. At paragraph 9 it clearly states that there is no promissory note required from the borrower. When taken with paragraph 13, it is clear that Countrywide will not pursue a deficiency judgment if the short sale closes. Thus in the example presented there is no deficiency that will be collected.

This last example from Chase was not as simple.

Here it says that Chase will release its security interest (the mortgage) and forgive any deficiency balance but then says that the payment of $1,000 is only for the release of the security interest only. This I would understand to mean the mortgage and not the promissory note. At the bottom of the page (but not part of the letter) is a notation "Short Sale No Def.doc". So I sent an email to Chase about this discrepancy and they confirmed - in writing - that it was a waiver of any deficiency.

Be very careful where you see language like "release and satisfaction" of the mortgage. What about the promissory note? That language almost always means that the lender is NOT giving a forgiveness of the financial obligation and has the option to pursue the deficiency for years to come. See FORECLOSURE DEFICIENCY JUDGMENT or SHORT SALE PROMISSORY NOTE or BANKRUPTCY - REVISITED.

In summary, it is most important that you read and question the short sale approval letter you get. A "release and satisfaction" of a mortgage is NOT necessarily a cancellation of the promissory note (forgiveness of deficiency). The letter from the lender should be clear and unequivocal and not subject to supposition or interpretation. If you are uncertain, don't be bashful - ask the lender for clarification and get it in writing!

Copyright 2009 Richard P. Zaretsky, Esq.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com New Website www.Florida-Counsel.com. See our easy to find articles at Need Short Sale Information? - These Articles Probably Answer Your Question

Why does it take 3.8 contracts to sell a short sale property? Why do Realtors insist on spinning their wheels and getting nowhere selling short sale properties?

My office handles a lot of short sale transactions and we work with Realtors on the short sale negotiation side of the transaction as well as legally advise the buyer or seller in the transaction. I have long been a proponent of fixing the system because we as taxpayers are going to pay the bill for the inability or unwillingness of lenders to create the fix themselves. See BANKS CREATE BILLIONS (MORE) IN LOSSES.

Back in December I had a very interesting discussion with a senior loan mitigation officer for a national lender about multiple contracts before one became "real". I told him our experience was an unscientific 4 contracts before a buyer stayed with a deal. The loan officer said their internal study was 3.8 contracts. Close enough.

The problem is that we see all sorts of reasons why the buyer walks away from a short sale contract. Most of the reasons relate to the buyer having no risk in the transaction. Here is an unofficial list of RED FLAGS:

1. There is no deposit. Sometimes the deposit is to be made upon bank approval of the contract.

2. The deposit is $1000 or less and the contract states that all contingencies, including financing and inspections, don't begin until the bank approval of the contract.

3. The effective date of the contract is not until the bank approval of the contract.

4. There is a pre-approval of the financing for the buyer but not a commitment.

The problem of a buyer having no risk is that buyers can make offers on multiple properties, knowing in advance that they are only going to buy one or two and also having no risk to their deposit (if there is one) since they can legally back out during the contingency period. Additionally, the seller - already cash strapped - is probably not going to hire an attorney for the retrieval of the $1000 deposit even if it were at risk. All the "get rich in short sale" seminars promote this scheme.

Of course the banks are also to blame for the high contract number. They take way too long to process short sale files and their procedures are totally inconsistent both internally and from bank to bank (or investor to investor). But there are too many contract offers to process timely because of the way the contracts are written.

The loan officer said that to stop this waste of time, his bank wanted to receive offers that were contingent only on the bank's approval of the contract with closing within two weeks from that approval. The program they were testing was designed to process a short sale contract that met these parameters in only 21 days. This would mean the entire time from contract offer to contract closing would be 5 weeks.

Frankly, I find this to be a magnificent idea. But I could only hope that a lender that got a contract contingent only on the lender's approval would actually process that contract in 21 days.

Here is what the ideal contract would look like:

1. Contract price within parameters to current market value.

2. Financing commitment in place with lock for 45 days.

3. Inspections completed and accepted.

Any Realtor with a serious buyer - or any Realtor fed up with phony contracts - should push their buyer to submit a contract under these parameters. The result may change the way short sales are sold forevermore. And the results may give you more time for golf or skiing or time with the children instead of needlessly spinning your wheels. But the real impetus to getting this done must he the banks that have to approve the short sale. Only a concerted and cooperative effort by the banks holding these mortgages will allow a global change in the way short sale offers are received and accepted.

Copyright 2009 Richard P. Zaretsky, Esq.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com New Website www.Florida-Counsel.com. See our easy to find articles at Need Short Sale Information? - These Articles Probably Answer Your Question

Richard Zaretsky's Short Sale Blog Articles (copyright 2009) - A Monthly Updated Table of Contents of Articles by Richard P. Zaretsky, Esq

MOTION FOR SUMMARY JUDGMENT OF FORECLOSURE - DEFEATED! AND HOW I DID IT

Today I used a new technical defense to successfully defeat a motion for summary judgment for foreclosure and I wanted to pass it on to other attorneys (or those who know attorneys) helping homeowners in foreclosure. This happened in Florida, but other states' rules could provide the same type of relief.

SHORT SALE BUYER CANCELLED CONTRACT EPIDEMIC - DIAGNOSIS AND CURE

This past week my office had 5 short sale buyer's walk from their contracts! Although I use an exclamation mark, it is not an unusual occurrence. In fact it seems that it takes 4 contact buyers to make a short sale finally happen. If that was an average for a traditional sale situation, Realtors and title agencies would be climbing the walls.

REALTOR GETS NAILED ON MORTGAGE RESCUE SERVICE

Florida Attorney General Begins Enforcement of Mortgage Modification FirmsI just received an email from an ActiveRain Realtor member that stated basically the following: "The Florida Attorney General office has set up "spot checkers" to find people/companies accepting up-front fees for negotiating loan modifications.

FORECLOSURE RESCUE AND MORTGAGE MODIFICATION FRAUD - LAWYER ALERT ISSUED

This week the Florida Bar made public the outlandish and misleading representations that have recently plagued the mortgage modification industry in this state and probably nationwide. The mortgage modification industry has sprung up faster than mushrooms - mostly through mortgage brokers that have seen their ability to make loans dry up in this recession and are applying net office sales techniques to the mortgage modification boom. The problem is that many states have enacted new laws to put them out of business.

MORTGAGE FORECLOSURE RESCUE - THE BAD GUYS DON'T WEAR BLACK!

In last week's New York Times an article focuses on how Home Savers Consulting is accused of committing fraud and profited handsomely at the expense of the former homeowner. Worse, the former homeowner thought she still owned the home - she did not.

SHORT SALES PRIMER - BACK TO BASICS UPDATED

Short Sale Primer For Brokers, Sellers and Buyers - A Primer -

Since I wrote the Short Sale Primer the short sale methodology used by lenders has morphed several times. It is a different animal than it was almost 10 months ago. The passage of time requires that the original article, which was very popular (thank you) be revised to reflect new policies by the lenders. I have also added several pertinent links to more detailed discussions on the various subjects in this article.

SHORT SALE AND FIRPTA TAX WITHHOLDING - IRS ISSUES PRIVATE GUIDANCE

Back around Christmas, 2008 I co-authored a blog with Miami tax attorney Shawn Wolf, Esq. on the issue of a FIRPTA transaction coupled with a short sale. The analysis showed that there were no specific IRS regulations and no rulings regarding a short sale transaction that was subject to FIRPTA. See FIRPTA and SHORT SALES - DANGEROUS LIABILITY TO BUYER AND CLOSING AGENT.

Last month a communication came through from the IRS that confirmed the conclusion made in that article. I am providing to you the question that was posed to the IRS and the answer received from the IRS for those of you that meet this type of situation

TENANT RIGHTS AND FORECLOSURE - A DISCUSSION OF SAFEGUARDS

The unintended victims of the foreclosure process are often the occupant of the home that is a tenant. The landlord is a borrower under a mortgage that has gone into default and is now being foreclosed. What is going to happen to the tenant as a result of the foreclosure? How can a tenant or future tenant be protected from the ill effects of a foreclosure? This article will attempt to address these issues.

LENDER SHORT SALE ACCEPTANCE LETTER EXAMPLES - READ WITH CAUTION!

What is a short sale? When giving lectures I like to use the definition as follows: The sale of a real estate property for a price that is less than the total amount necessary to fully satisfy the actual present encumbrance (mortgage) indebtedness on the real estate property.Often I see a different description, one that says, The sale of real estate when the lender accepts less than its mortgage amount and forgives borrower from paying the deficiency.

MULTIPLE SHORT SALE CONTRACTS AND HOW TO AVOID THEM

Why does it take 3.8 contracts to sell a short sale property? Why do Realtors insist on spinning their wheels and getting nowhere selling short sale properties?

FORECLOSURE DEFICIENCY JUDGMENT or SHORT SALE PROMISSORY NOTE or BANKRUPTCY? - REVISITED

Whether to agree to a negotiated promissory note in a short sale or allow the house to go to foreclosure is one of the most discussed topics around. It deserves a simple comparison

FLORIDA REAL ESTATE MARKET CONDITIONS RELEASED TODAY

Today one of the state's largest title insurance underwriters release its 2009 Real Estate Forecast and Southeast Florida focus. To those of us that live here it is no surprise that the numbers are grim. To those outside of Florida the numbers are shocking! The report, issued by Attorneys Title Insurance Fund, makes several projections and findings.

FIRPTA and SHORT SALES - DANGEROUS LIABILITY TO BUYER AND CLOSING AGENT

It is critical for Realtors, Buyers, Closing Agents and Lenders to understand the important issues of the short sale when applied to the Internal Revenue Code's Foreign Investment in Real Property Tax Act of 1980 or FIRPTA transaction because disregard for following the FIRPTA rules will make the Buyer and Closing Agent and possibly the Lender liable to the IRS for the Seller's Tax Liability!!!!! The problem is that right now there is NO RULE by the Internal Revenue Service ("IRS") for FIRPTA Short Sales.

Hope For Homeowners Act a Failure

I have many desperate homeowners coming to my office begging for ways to save their homes. Often times the homeowners qualify under the published criteria for the hyped Hope For Homeowners program also called H4H by the FHA. The program, passed by Congress in July 2008 was to save the homes of 400,000 homeowners. So far only 300 or so have applied! Why?

A LAWYER'S EXPLANATION OF THE FORECLOSURE PROCESS

As an attorney I often consult with homeowners that are in distress along with the Realtors that represent them in trying to accomplish a short sale. Often a detailed explanation of the foreclosure process would be very worth while for my client to have a thorough understanding of what they may be facing as the lender seeks to enforce the promissory note and mortgage. We usually don't have enough time to explain the process in full, so here is an article that should help non-lawyers understand what is happening according to rules of procedure in the court system and what options lenders have for enforcing the money they loaned to the homeowner.

WHAT'S WRONG WITH THE FAR SHORT SALE LISTING AND CONTRACT ADDENDA - AND HOW YOU CAN FIX IT

The Florida Association of Realtors took the lead in making some semblance of consistency, order, and standardized forms for use by Realtors for Short Sale transactions. I doubt many Sellers or brokers realize the draconian conditions of the documents they are using. If you are among them, this article may open your eyes. Because the evolution of Short Sales in 2007 and 2008 has been so dramatic, the forms became problematic at the outset.

FORECLOSURE DEFENSE FALLACY

If you are a listingRealtor or a person who has just gotten foreclosure notice from your lender(s), no doubt you have heard about a myriad of "Foreclosure Defense" firms that promise to delay or prevent foreclosure or even prevent the enforcement of the mortgage because if irregularities in the loan. What in fact are foreclosure defenses?

SHORT SALE DEFICIENCY DEMANDS AND DEFENSES - The Interstate Highway Analogy

"What chance is there that the bank is going to make me pay the difference (or deficiency) when we are through?" This is the most often asked question I get as an attorney that specializes in residential mortgage loan workouts and (avoiding foreclosure through short sales or modification). If you need basic information to understand the short sale and deficiency issue, see Back to Basics - a Review on Short Sales.

BAILOUT BOGDOWN

It is only 3 weeks since the new bailout programs "started" but don't ask for any testimonials from any homeowner whose home has been saved.

BANK REJECTS SHORT SALE OPPORTUNITY AND MAKES BIGGER LOSS

Here is more proof that the loss mitigators used by some banks just don't quite "get it". In an article this morning in the Palm Beach Post, by staff writer Eve Samples, Wells Fargo is targeted for its botched handling of a short sale opportunity, resulting in a loss to the bank of at least $40,000 more than it would have experienced in the short sale opportunity.

BAILOUT MISREPRESETATIONS AND MISCONCEPTIONS

The government bail out of the housing crisis has created wonderfully conceived programs to keep homeowners in their homes with re-negotiated mortgages or refinanced mortgages. The specific programs for the home saving legislation are the HOPE for Homeowners (H4H) and FHASecure programs.

I THOUGHT IT OUTRAGEOUS THAT ANYBODY HAS TO STEP IN TO BAIL OUT A BUNCH OF 29 YEAR OLDS DRIVING MASERATIS

Sometimes you get a frank speaking knowledgable person that sums up the day's thought succintly and in one sentence. Speaking on the Financial Crisis, legenday investor Jim Rogers, in an interview reported on CNBC this morning said the irresponsible people need to go bankrupt if necessary. Here is the quote - you'll love it since it is So True!

ARE WE IN SHUT DOWN MODE?

The stock market is at equivalent lows to times dating back to the Great Depression (which for those of you needed date measurements is almost 75 years ago).

TOP TEN LIST OF SHORT SALE OBSERVATIONS

For all you short sale Realtors - Here is my list of the top ten short sale rules when dealing with sellers and buyers. What is your top ten list for YOUR favorite category involved in the short sale process (lender, buyer, seller, buyer Realtor, Seller Realtor, processor, loss mitigator and servicing agent, etc.)?

YOUR Ticket to Normalcy? THE BAILOUT BILL

The Emergency Economic Stabilization Act just passed on October 3rd is not the cure-all you might hope for. The Act authorizes the creation or expansion of governmental entities and departments to deal with the housing crisis. Implimenting these provision is what will create the "cures". Assuming the "cures" are in place, there are going to be effects upon Realtors, Mortgage Brokers and Distressed Homeowners. This is how I see the Act helping each group.

EMERGENCY ECONOMIC STABILIZATION ACT - WHAT IT MEANS FOR YOU

My wife asked a very important question this morning - so what does this new Act do for the housing market?

NUTSHELL VERSION - EMERGENCY ECONOMIC STABILIZATION ACT

The BIG news this week is the passage on Friday of the Emergency Economic Stabilization Act of 2008 - or more formally called "Secure Rural Schools and Community Self-Determination Act of 2000". Yes, that is how it started and it is known as H.R. 1424. What it says will change our economic horizon for decades and this article will discuss its major imports for the real estate buyer and seller and homeowners.

BAILOUT FOR HOMEOWNERS - WITHOUT WALL STREET

149 years ago today, Abraham Lincoln stated an important fact for today's financial crisis. But first a word of hope. It is human to think that when times are good, they will stay good. And when times are bad we all hope for good times. King Solomon went on a quest to find one item that would remind him to realize that good times or bad times, neither is permanent and to be prepared for the other. He found a ring imprinted with the saying, "this too shall pass".

FLORIDA FORECLOSURE FRAUD BILL - UPDATE

Government can react positively when enough people raise their voice - and the law is clearly against public policy. This post updates my article on the Florida Foreclosure Fraud Bill

Second Mortgage Short Sale - Holding Up the Railroad Loot

The Second Mortgage Dilemma can ruin your short sale - Like the old West, the stagecoach holding the railroad's payroll was always getting held up by the bad guys - at least in the movies. Has much changed in the Wild West environment of short sales and the fight between primary and secondary mortgage holders?

BANKS CREATE BILLIONS (MORE) IN LOSSES -

Short Sale Buyers are increasingly investors seeking to buy and flip or buy and rent for positive cash flow. Missing from the field are homebuyers seeking a place to live. Why?

Foreclosure Deficiency Judgment Compared to Deed In Lieu and Short Sale Scenarios -

Basic Primer - the Mechanics of a Mortgage Foreclosure Deficiency Judgment Compared to Deed In Lieu and Short Sale Scenarios - We get so many questions about having a "deficiency judgment" entered and how it differs from other possibilities in a deed in lieu of foreclosure or short sale, that a refresher article seems appropriate for Activerain. If you are unsure of what a Short Sale is, then first read the Back to Basics - a Review on Short Sales

Back to Basics - a Review of Short Sales

Short Sale Primer - Back Room Lender Decisions - Short sales are nothing new. When I represented a national lender for all of their foreclosures in the State of Florida several years ago, we negotiated "loan workouts" which are now called "short sales". Since they have been around so long, I did some digging with my old pals that were the executives I worked with in the loan workout and REO department of this national lender (the lender has since been merged into Bank of America).

THE BANK CHANGED THE LOCKS! -

There is discussion on Active Rain from time to time on whether in a short sale it is advisable to move out of the house. The real issue is the clause in the mortgage that says the bank can change the locks on the house if it is "abandoned".

A-T-T-O-R-N-E-Y Spells T-R-O-U-B-L-E in Short Sale -

Sad Facts about Attorney Misconduct in a Short Sale

FLORIDA FORECLOSURE FRAUD BILL - MY LETTER TO GOV. CRIST

See UPDATE to this blog and how it was resolved - at FLORIDA FORECLOSURE FRAUD BILL - UPDATE

SHORT SELLER STILL MUST DECLARE INCOME ON SALE! -

The Mystery of income you can't spend - but do you have to declare it? When DON'T you have to report forgiven debt (from a short sale, deed in lieu or foreclosure with release from the lender) as income?

CALLING ALL ETHICAL LOAN OFFICERS - HELLO? ANYONE THERE?

CREDIT REPORTING AND SHORT SALES / FORECLOSURES - REVISITED -

I received an email on my quest to find the real answers to the incessant question of how a foreclosure vs. short sale vs. deed in lieu all affect the credit report of the borrower.

1099 REPORTING - IT'S THE LAW! - OR IS IT??? -

1099 SHORT SALE REPORTING - IT'S THE LAW! - OR IS IT??? Since I have developed my SHORT SALE law practice I have a lot of clients that are in foreclosure or close to it. They all ask me about 1099 reporting and if the bank can forgive the debt and not issue a 1099. Now let's see what the law really says.

DIVORCE - CHAINS TO THE UPSIDE DOWN HOUSE VALUE CAN BE BROKEN!!! -

Chained to your home and can't get a divorce? You are not alone!

SHORT SALE FLIP - QUESTIONABLE METHODS -

SHORT SALE FLIP - QUESTIONABLE METHODS - This article is a follow up to an issue discussed in December titled Short Sales and Title Insurance - Critical Look at Hybrid Closing Schemes.

FORECLOSURE DEFICIENCY ORDER VS SHORT SALE NEGOTIATED PAYBACK -

I was negotiating on a very large problem mortgage today with a high-up executive at the servicing firm. He made a comment that I thought peculiar and I called him to task on the matter. The comment was that "after the foreclosure sale, lenders seldom bother to get a court ordered deficiency judgment". I knew this to be false, because lenders today - more than in the past - are investing a few hundred more in attorney fees to get a deficiency judgment. I will tell you why.

REAL QUESTIONS - HOW DOES A SHORT SALE AFFECT CREDIT SCORES???

In a discussion today with a client we addressed the question of credit scores and short sales. This is a hot topic and there is information everywhere on what happens and when and for how long.

FORM RELEASED BY IRS FOR DEBT RELIEF ACT FILING -

New IRS Form for Filing for Debt Relief

No-Conflict Considerations in Short Sale Fees

As short sales and pre-foreclosure assistance servicers proliferate, the type, style and amount of fees that these individuals and companies charge has become ingenious and varied. This article discusses the rights and wrongs regarding the most popular of the charging methods.

TOO MUCH MONEY IN THE BANK TO DO A SHORT SALE? - ECONOMIC LOGIC -

This week I spoke with several people that wanted to do a short sale of investment property that is upside down in value. They are sick and tired of the short fall on rental income (if they are lucky to have a renter that actually pays rent) vs the mortgage payment, taxes, insurance and maintenance costs.

Who Says Owner Doesn't Have Time To Do a Short Sale? -

Some writers to my blogs have commented that "they don't have time to do a short sale".

WHAT DO I DO? -- I'M UNABLE TO PAY MY MORTGAGE -

As an attorney, I receive plenty of telephone calls and visits from people that are no longer able to pay their mortgage on their home or investment property. They all have endless questions and usually tell me they are getting all sorts of advice that they don't like. They come to me to find their BEST solution.

SHORT SALE TRILOGY -

It is really amazing how many people - professionals as well as potential sellers - do not even know what the term "short sale" means. This blog assumes you have actually worked a short sale already -- if you have -- or if you are curious -- read on!

Mortgage Forgiveness Debt Relief Act of 2007- Another Look -

I have been getting a lot of calls and emails about the Mortgage Forgiveness Debt Relief Act of 2007. The new law became effective today, and applies to 1099's on short sales or foreclosures retroactive to January 1, 2007.

MORTGAGE RELIEF ACT - CHRISTMAS PRESENT TO PRIMARY HOMEOWNERS -

On Thursday the President signed into law - effective New Years Day, the Mortgage Forgiveness Debt Relief Act of 2007.

Underwater - The Cycle Repeats Itself -

I cannot be surprised at the stories in the newspapers about homeowners, investors and even commercial property owners being "Underwater" with today's depressed real estate market values. Many people that own real estate today were just pre-teens when the last deep cycle occurred. Or if they are older, they were not in the real estate market at that previous time.

Short Sales and Title Insurance - Critical Look at Hybrid Closing Schemes -

Recently I have seen various schemes for streamlining the short sale process for the buyer/investor. Some discussions have been somewhat heated and involved concepts like dual contracts or even insolvent borrower creating a Land Trust for use by the investor/buyer. At best, the agreement amongst the blog commentors has been to agree to disagree.

WHO CONTROLS THE SHORT SALE? -

In this environment of the short sale it seems apparent that the bank controls the sale. Some might say the buyer controls the sale. My opinion is that both statements are primarily incorrect. The seller owns the house. The seller must sign the contract. The seller must sign the deed.

TAX DEEDS - COURT DEVELOPMENTS NIX SALE! -

Tax Deed purchases are popular in many states as a way to acquire real estate at truly rock bottom prices. Generally a tax deed purchase is first in line after just a few significant "super" lienholders: (1) God, and (2) Code Enforcement Liens. Practically all others having an interest in the property are wiped out in a tax deed sale.

LOW BALL SHORT SALES - PLAYING THE ODDS? -

Short Sales are the buyer road to riches - if you believe the promo advertising that is all over the place. But the road is not a short one nor is it a smooth one. It is best covered with professional help and guidance.

BORROWERS FACING FORECLOSURE OFTEN OVERPAY - STUDY FINDS

Is our system of foreclosure out of control? Are the banks acting fiduciarily to their borrowers in the loan management process - are they requred to?

Beware the White Knight! -

Apparently there are lots of "White Knight Claims" being made against title insurance policies. Here are some of the fact patterns:

SHORT SALES AND IRS LIENS -

In my law practice we see a lot of short sales. Indeed, we offer a service to Realtors and Sellers to process their short sale material with the lenders (without the downward pressure and lowball influence from an investor handling the process). I have worked statewide with lenders - visiting their loss mitigation departments and sitting in on committee meetings. Knowing the process is key knowledge to improving the percent of short sale lender approval.

TRUE STORY - Renter forges deed, then conspires to sell house and pocket mortgage proceeds -

It is a day past Halloween, but here is a scary TRUE story

Some Sellers Think They Are ENTITLED To A SHORT SALE -

I had just too many borrowers that "should have known better" in the office this week - so I feel very conservative just now

Whether to agree to a negotiated promissory note in a short sale or allow the house to go to foreclosure is one of the most discussed topics around. It deserves a simple comparison.

My previous article on this subject can be found at Negotiated Payback or Foreclosure Judgment Deficiency? Compared.

A negotiated promissory note is ALWAYS better than a deficiency judgment resulting from a foreclosure. Here is why:

Deficiency Judgment -

1. You have a foreclosure judgment against you and if you fill out most applications about your background you will have a question on if you had a property foreclosed upon you.

2. You have a deficiency judgment which is a money judgment against you which means ANYTHING you buy is subject to attachment by the creditor, be it a car, a toaster, or a new swing-set for your kids.

3. Your wages can be garnished.

4. Your bank accounts can be frozen and attached - without any notice in advance to you.

5. You will be subject to periodic depositions in aid of execution and have to provide copies of all of your financial matters - several times a year. If you repeatedly don't show up the court can hold you in contempt of court and even put you in jail (YES - JAIL!!) until you comply.

6. In Florida (check other states) you can enjoy each of the above for 20 full years before the judgment is no longer enforceable.

7. The judgment usually carries interest. Check your state for the rate. For judgments rendered in 2009 the Florida statutory rate is 8%.

8. FANNIE-MAE underwritten mortgages cannot be obtained until 5 years after the foreclosure judgment.

Negotiated Promissory Note -

1. You pay an agreed amount according to the promissory note, which is usually monthly and often at no interest.

2. If you no longer can pay you may be able to negotiate a new payment amount or abate payments for a period of time.

3. You may be able to re-negotiate the terms of the promissory note in the future.

4. The promissory note is not a judgment so it does not show up on the credit report.

5. If a foreclosure suit was entered, even if it went to a foreclosure judgment (but not a sale), the lender will likely dismiss the suit and vacate the judgment, clearing your record - even before you start paying on the promissory note.

6. If you stop paying on the promissory note the note holder can then seek a money judgment for the unpaid amount.

7. FANNIE-MAE underwritten mortgages can be obtained after a short sale in just 2 years.

8. Once you repay the promissory note the lender should remove degrogatory credit report postings regarding the payment of the mortgage for "less than the agreed amount", instantly repairing your credit score.

Bankruptcy -

Many people speak to me about Bankruptcy as the better option. It is an option - but when it should be used is a big issue.

Declaring bankruptcy is a LAST RESORT. In a chapter 13 (personal reorganization) you are effectively "betting the farm" that you can perform for the 5 or so years of planned payments. If you default you revert to either a dismissal or a chapter 7 total liquidation- and you cannot refilefor many years. Bankruptcy also is a final chapter so to speak. There are no further remedies available to you for protection from creditors. It is like one bullet in a pistol - you need to decide when is it absolutely, positively without any doubt necessary to pull the trigger. You need to expand your horizons to not just today, but tomorrow and maybe thousands of tomorrows (days) before you can walk back into bankruptcy court. Chapter 13 and Chapter 7 have their useful purposes but they must be used prudently and carefully. A bankruptcy is the worst hit you can give your credit report.

If a promissory note just does not work out and the lender is relentless and THEN gets a judgment for payment of the note amounts, you will then be in no worse situation than if there was a deficiency judgment. In my opinion you will be in a better position if you weigh the positive and negatives of each position and work your way slowly and methodically through the available remedies step by step. If at the end of the line it did not work out, then you have the bankruptcy alternative remedy. But without giving each step an opportunity to work for you makes no sense - don't throw your self overboard!

Copyright 2009 Richard P. Zaretsky, Esq.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com New Website www.Florida-Counsel.com. See our easy to find articles at Need Short Sale Information? - These Articles Probably Answer Your Question

Today one of the state's largest title insurance underwriters release its 2009 Real Estate Forecast and Southeast Florida focus. To those of us that live here it is no surprise that the numbers are grim. To those outside of Florida the numbers are shocking! The report, issued by Attorneys Title Insurance Fund, makes several projections and findings.

First, it expects no housing rebound until at least 2010, largely because of declines in population and employment growth.

Existing Palm Beach County single family homes average price peaked in 2006 and will be off 50% in 2009. Broward and Miami-Dade Counties are already at or very near their bottom. Average prices across the region will be around $300,000, which is down 40 to 50% from the peak.

New home sales and prices are dramatically changed. Last year saw Palm Beach average less than 133 new home sales a month, which is perhaps only 15% of the peak monthly sales from before. Broward County saw only 350 units sold in 2008 and projects about 1000 units yearly through 2012.

Housing starts in Palm Beach County went from a 14,000 high to a 2007 low of 3,000 units. Look for a rebound to 6,000 but gradually with that figure being reached in 3 more years.

Condominium sales for existing homes was also off about two-thirds from 2005 peaks and prices are still softening for the coming year. Look for a gradual improvement through 2012 but only to about half of the peak 2005 levels. Prices will fare somewhat better for this part of the product line, but will not recover to the lofty heights for any foreseeable future.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com New Website www.Florida-Counsel.com. See our easy to find articles at Need Short Sale Information? - These Articles Probably Answer Your Question