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Short Sales, Do I need an Attorney?

April 29, 2012 By John Day 2 Comments

Short Sales continue to grow in numbers as lenders push the process instead of forcing foreclosure.  In recent months there has been a lot of pressure on lenders to shorten the time-lines on Short Sale decisions.  Beginning in the middle of June, two of the biggest lenders are promising to reduce time-lines for approval to 60 days.  This would be a remarkable improvement. After reading a title attorney’s take on short selling,     Review my Knowing your short selling options page.

The below email came to me by way of a well respected Title company owner.  John Brennan of Brennan title sent this to real estate agents.  Much of his email deals with Short Sale information.  I have great respect for Mr. Brennan and what he says about the process and seller options is similar to what I have been saying here for months.  He discusses the Short sale process some and also touches on deeds in-lieu of foreclosure as alternatives for sellers to escape foreclosure.  He also states as I have in the past, that sometimes we are left no options except to let the property be foreclosed upon.  It’s sad that some lenders remain so disconnected from reality.  If you get a fair offer after months of marketing a property, then, it’s probably all the lender will end up getting 2 years later when they offer the property as a foreclosed asset.

I do suggest that anyone facing foreclosure attempts a short sale. I also continue to suggest that sellers discuss their options with an attorney.  Real Estate agents do not, should not and can be prosecuted for practicing law without a license.  Yes, an attorney can be an expense, in an already bad situation.  If you want closure to the nightmare, it’s best to do it right.  Right, can be different for every persons situation.  Contact a qualified real estate agent and an attorney if you are in a distressed housing situation.

If you are in a potential short sale situation, it’s time to get started, the tax laws may change    Contact me now to get started

 

Reprinted with permission of John Brennan

Brennan Title – April News 2012

BTC Newsletter – April 2012

To: Realtors AND Loan Officers
         

From: John M. Brennan, Attorney – President, Brennan Title Company

 

Here are some recent issues that may be of interest to you!

 

 

 

BRENNAN TITLE COMPANY LAUNCHES NEW (INTERACTIVE) WEB SITE Last month BTC launched its new web site which allows Realtors and Loan Officers to obtain a GFE quote, order title, and track their file as it moves toward the closing table. You can upload title orders and contracts. While we are processing your case, you and your client will have daily access to your file and track its progress online. You can also e-mail other parties in the transaction directly from the website so that everyone has a record of the conversations related to the file, and download title commitments, preliminary HUD-1′s, and other documents. Finally, once the settlement is completed, all parties will have access to their documents online for seven years! You can also obtain transfer and recordation rates, necessary forms for buyers and sellers in Md, DC, VA, and Delaware, get directions and maps to our offices, and contact each of our managers through our website. Please visit us online at www.brennantitle.com and give us a call if you’d like help navigating! We would appreciate your comments and suggestions after you have had an opportunity to view our website.

 

BRENNANTITLE.COM QUICK LINKS –

HOME       |       GET A QUOTE       |       ORDER TITLE       |       LOCATIONS       |      CONTACT US

 

 

LEGAL: For those of you who operate as an LLC and wonder about individual protection from liability, a recent Maryland Court of Appeals decision applied the “Corporate Shield” protection to an individual operating as and LLC, stating that, absent Fraud, the court makes no distinction between an LLC or any other type of Corporation. The court stated that “Maryland is averse to disregarding the entity shield in a business situation in the absence of fraud.” (This ruling was provided to BTC by the Baltimore law firm of Gordon Feinblatt, LLC.).

 
SHORT SALES - We are receiving short sale approvals in less than 45 days on average. The key is giving the Short Sale Lender what they want – a complete package. We will be happy to negotiate your short sale, contact Lisa Borza at 410-224-1400 or 301-261-8999. Some of the issues we have faced recently involved sellers who change their mind and think that somehow they are better off going to foreclosure. You may want to consider having this be part and parcel of your short sale listing presentation and having your favorite Loan Officer assist in explaining the credit consequences of a Short Sale versus a Foreclosure.

 

 

In some situations, the property is just not going to work for either a Modification or Short Sale. In those cases a Deed in Lieu of Foreclosure may be in the best interest of your seller and may prevent you from spending your time and talent on a listing that just will NOT sell. In this situation the property owner deeds the property back to the lender in return for the lender agreeing to accept the property and forgive any claim for a deficiency. Since there are numerous legal ramifications of a Deed in Lieu, I suggest that your seller seek legal counsel!

 

We have seen some instances where despite the market analysis you have done, the lender insists on a higher negotiated price. Where the differences are not too great, the buyer will sometimes agree to the counter offer. In other cases the lender is just not in touch with the market and you may be just delaying the inevitable.

 

 

If you are working on your Short Sale, you may want to have your title company do a records check and check with the HOA or Condo Association. We have seen instances where the Short Sale lender has approved the proposed sale and preliminary HUD-1. The title company then finds out that there are outstanding liens and judgments which affect the title, only to be disappointed to learn that the lender will not revise its approval to allow for these items. BTC WILL BE HAPPY TO DO THIS FOR YOU IF WE ARE HANDLING YOUR SHORT SALES. 

FORGIVENESS OF SHORT SALES DEBT - in our last letter we told you that the exemption of forgiveness of debt for homeowners in short sales would expire at the end of 2012. We are still not hearing anything about an extention of this exemption. Remember also, that to qualify for the forgiveness of debt exclusion, the debt must have been to buy, build or substantially improve your PRINCIPAL RESIDENCE, AND, if the debt is for refinance purposes it must be used to substantially improve the residence. Proceeds of refinance debt used to pay off credit cards, for example, do not qualify. Debt on second homes or business property does not qualify for the exclusion. (This was provided to us by Askey, Askey and Associates, CPA, LLC 301-475-5671).

 

 

 

MARYLAND EMPLOYMENT increased by the addition of 5,000 jobs in January according to the Baltimore Business Journal. The unemployment rate dropped to 6.7%. The Washington Business Journal reported that the Washington, D.C. area had the 9th largest growth in its job market, increasing by 1.2% year over year. 

 

HOUSING AFFORDIBILITY – In an article written by Bob and Donna McWilliams and published by The Sunday Capitol, the housing affordability Index was published demonstrating that housing affordability is now at its highest ever since records were kept on this issue going back to 1970.

 

 

BRENNAN TITLE COMPANY OPENS IN WEST VIRGINIA. Our newest office, managed and directed by Attorney Kim Gilbert-Toelle, is located in Martinsburg, West Virginia. This means that we can now handle your real estate settlements in Maryland, Virginia, Delaware, West Virginia and Washingto n, D.C. If you have something going in any of these areas, you can go on our new web-site and find the office and manager of that area!!

 

 

LIMITATION ON RESALE OF FNMA – POST FORCLOSUE DEED - Fannie Mae is frequently the

recipient of a property following a foreclosure sale. It is typical for Fannie Mae to deed out to a buyer in a post-foreclosure sale via Special Warranty deed. Relying on the conveyance via Special Warranty Deed is acceptable; however, please note that many of these deeds contain a restriction prohibiting the Grantee from conveying or encumbering (i.e., a Deed of Trust or Mortgage) the property for a period of three months from the date of the deed. The restriction typically provides a specific dollar amount associated with the restrictions. For example, the deed may state that “the Grantee is prohibited from conveying the property to a bona fide purchaser for value for a sales price of greater than $100,000 for a period of 3 months from the date of this Deed.”  It may also state “Grantee shall be prohibited from encumbering the subject property with a security interest in the principal amount of greater than $100,000 for a period of 3 months from the date of this deed.” Dollar amounts will vary, and they are not necessarily consistent with the consideration amount paid for by the new owner. In these instances, the buyer’s owner’s title insurance policy will typically carry an exception for any conveyance that violates this restriction.

 
THE DISTRICT OF COLUMBIA DEPARTMENT OF INSURANCE (DISB) continues to make changes to it’s rules regarding title insurance and fee concessions. The latest bulletin restricts the discounts that title agents are able to offer clients, either directly or indirectly. Any credit or discount of settlement fees that effectively serves as a discount of title insurance premium, even if it is not explicitly stated, or by virtue of the credit or discount exceeding the amount of settlement service fees charge, would violate the District’s anti-rebating provision.
 
The DISB continues its work on amending and finalizing DC foreclosure regulations; in the meantime, foreclosure of DC loans have essentially stopped, as the sale of DC properties foreclosed after November 17, 2010 are currently uninsurable.

 

Need a lawyer’s point of view on something you are working on? Brennan Title Company has attorneys who are admitted to practice in Maryland, Virginia, Delaware and Washington, D.C.

 

Are you working on a transaction in Maryland, Virginia, Washington, D.C. or Delaware? We have offices in each of these jurisdictions with personable and experienced managers who will be very happy to handle your closing!!

 

Call me at 301-261-8177 for any of your closing, settlement or other needs! I will be happy to speak with you at any time!!

Letter prepared by,

 

 

John M. Brennan

 

Attorney

 
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This email was sent to john.day@longandfoster.com by jbrennan@btc-ann.com |

 
Brennan Title Company | 116 Defense Highway | Ste 205 | Annapolis | MD | 21401

 

 

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Filed Under Real Estate News Tagged With Sell Short, Selling your home, Short Sale

Comments

  1. fredericksburg short sales says:
    February 25, 2013 at 12:56 am

    I like your information which is very useful for me. Thanks.

  2. John Day says:
    March 1, 2013 at 3:46 pm

    No,
    You don’t need an attorney to do a short sale. You need to contact the lender and see if they are willing to allow you to offer your home for sale short. They may have a package for you to fill out forms, etc; I would also contact a local agent there and make sure they have extensive Short Sale experience.

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