When I work with a seller on a short sale, I always tell them to get appropriate legal and financial advice*. But my clients often wonder how they’re going to pay these professionals for advice when they can’t even afford to make their mortgage payments. The answer is, they must find a way.
According to RisMedia, lenders are selling second mortgages and home equity lines that have been left unpaid as a result of short sales and foreclosures. They’re selling them for deep discounts to collection agencies - the companies that know how to go about collecting debt. Collection agencies can pursue the borrowers for years to come, potentially bringing about another financial crisis to families who are just getting back on their feet.
In a short sale, experienced real estate agents can try to negotiate away the debt from the second mortgage or home equity line. But if the seller doesn’t know that they should try to get these liens released, they may end up signing something that gives the lender the right to pursue them later.
Be cautious and take my advice, the cost of hiring a professional now far out ways the risks of finding yourself in the hands of a collection agency.
*You should to consult with a Certified Public Accountant, credit counselor, and/or an attorney specializing in real property, taxation and bankruptcy issues before you start the short sale process.
RisMedia Article
Copyright 2010 by Robyn McKeon Powers
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