Tuesday, February 23, 2010

Short Sale Timing

My belief is that the purpose of a short sale is to have the bank forgive the deficiency. Yes, getting the Lis Pendens lifted and the sale approved is important. Nonetheless, if not for the waiver, you will owe whatever the sale price doesn't cover from the mortgage and all the costs of the foreclosure. For example if you owe $500,000 on the mortgage and both the foreclosure action costs and closing costs were $30,000 and the auction sale price was only $400,000, you would still owe $130,000 after the sale if the mortgage company did not waive the deficiency. Thats a lot of money to be in the whole. Its worth fighting for the bank to waive that money and by fighting I mean going on the offensive and seeing whatever mistakes they made on their end and using those mistakes as negotiation leverage.

I met with a potential client today and with her real estate agent (I like the agents in on my meetings so we can collaborate) and the whole chat was about how much money we can get forgiven. I will tell you why. The clients back was against the wall having already received a Judgment of Foreclosure. Therefore, the Loss Mitigation Department at the bank (or risk assessment department as I characterize them) has all the bargaining chips. If they approve the short sale they will get less than they are owed just as if they perform the sale, but they have already financially and emotionally invested in the sale. Moreover, my ability to determine if predatory lending existed and if I can set forth such a claim is handcuffed by the fact that we have an impending auction sale. Therefore, I put forth to all of you that this could all have been potentially avoided and the short sale could have been approved with the deficiency waived if the client would have come to their lawyer earlier. By the way, this was the second client I met with in the same day with an upcoming auction. I want to help, I even agreed to try, but please stop waiting for the last minute to come to me. This is the difference between going to a doctor with a cut and with an infection from the cut that requires amputation. More importantly, you get to decide how injured you are by determining how long you want to wait. The longer you wait after you are served with legal papers to contact an attorney, the worse chances there are that the attorney can help you.

Why does everyone think that people wait so long to ask an attorney for help?