Just the sound of “short sale” seems confusing and very inside real estate.
In fact, when the Statewide Abstract and TD Bank came together Tuesday morning to host a continuing education seminar on real estate short sales — what they are and how to handle them — the room in TD Bank’s Purchase conference center was packed.
But there was plenty of information conveyed to real estate lawyers who had varying experience with this type of specialized sale.
James Thanasules, vice president, agency counsel with First American Title Insurance Company (shown in photo above), said that when he started in the industry of title insurance 17 years ago he would see about one or two short sales a year. Since about 2008 he started seeing about three to five a day or a minimum of ten a week.
Here are some basics on short sales, courtesy of a hand-out from Thanasules that was prepared by Allison Luskoff, an attorney:
What is a short sale:
The services of a loan allows the borrower to list and sell mortgaged property with the understanding that the net proceeds from the sale may be less than the total amount due on the mortgage.
Servicer accepts short payoff in full satisfaction of total amount due on the first mortgage, though sometimes they seek the deficiency against the borrower, which is negotiable.
As foreclosure costs increase so do benefits of a short sale:
On a loan application with regards to future loan rates, there is a question as to whether or not you have been foreclosed upon with the last seven years. There is no such affect on your future rates if you complete a short sale.
A short sale is not reported on your credit history. The loan is typically reported as ‘paid in full, settled.’ A foreclosure affects your credit history for 10 years.
Short sale contract clauses:
Seller and buyer must be unreleated to each other by family, marriage or commercial enterprise.
Purchasers must agree that the sale of the property is subject to mortgagee approving the sale.
Properties are sold in an ‘as is’ condition.