Short Sale Advice

1. Starting January 1, 2009, the DRE in California can suspend or revoke a license for an inaccurate opinion of value for a short sale of residential property. It would be wise therefore to have all sellers sign a Estimated Net Sheet and above their signature have the wording, "All information provided by the seller" since it will be the seller giving you information at this time.
    
2. Be sure to include in your listing agreement and MLS data sheet that "Any sale is subject to Lender(s) Approval".
    
3. For the sellers protection be sure to include the following statement in your purchase and sale agreement. "Seller to obtain written statement from Lender(s) that Lender(s) shall waive and hold seller harmless for the amount of reduction in seller's payoff of Lender(s) note. This has brought up an interesting question according to my E & O company- If the Lender agrees to a reduction in the Seller's payoff, can the lender still enforce the terms of the Note secured by the Trust Deed? The answer appears to be YES. This is really confusing because of the "anti-deficiency" statutes and case law in some states. The perception is that these statutes and case law apply to short sales. Not true! Here in California anti-deficiency statutes apply to trustee foreclosure, not short sales.
    
4. Be sure that a "Stop notice" is sent to the lender(s) foreclosure department and that you get a copy of it. You don't want to have the home sold on the court house steps before you can get your transaction closed.
    
5. It is a DRE violation for the broker or agent to have any position of their commission used to pay for a Facilitator company who has put together a short sale. It is a violation of RESPA to have seller, buyer or both pay these fees upfront. These companies must be licensed in California by the DRE.

My thanks to CRES Insurance Services for keeping me updated on new market concerns.

New Year-New Laws