We are getting more and more calls from people who have decided to give up on the hopes of principal loan balance reduction (we have always told people principal loan balance reductions are like a bigfoot sighting) and instead seek to short sell their property letting the bank deal with the property, especially where the stubborn bank (that got their bailout) refuses to help the homeowner save their home by providing a reasonable and meaningful loan modification.
Now, in the context of short sales, there are a few things to consider:
(1) Will you be liable for a deficiency judgment (meaning if the lender allows you to sell your home for less than its worth, can the lender come back against you for a deficiency judgment?
We have talked about deficiency judgments in Arizona on one of our other websites: Click here for more general legal information: (2) Are there tax implications involved with the lender forgiving debt owed?
(3) Are you entitled to $1,500 relocation expenses following a short sale under the HAFA (Short Sales Incentives law)?
(4) Do you qualify for HAFA?
We outlined the general qualifications for HAFA and some of the general rules on our HAFA short sale blog which can be found here:
(5) Can a forensic loan audit and letter to your lender help assist in them accepting a short sale over forcing you into foreclosure? Do you have any predatory lending violations that you can leverage? Is it better to file a lawsuit against your lender?
(6) What other options might you have if the lender refuses to accept your short sale? Options such as filing bankruptcy or pursuing a deed-in-lieu of foreclosure?
Our Arizona bankruptcy website can be found.
(7) If the lender insists on denying your short sale, have they followed the foreclosure process that would permit them to legally foreclose on you?
(8) Are there outstanding issues that can be solved with a Qualified Written Request under RESPA?
We have discussed in general terms the topic of Qualified Written Request under another blog that can be found here:
(9) Do you have a right to rescind your loan under Truth in Lending (TILA) extended three-year right to rescind?
We have a website dedicated to truth in lending rescission rights (TILA) which can be found here: These are some of the loss mitigation and foreclosure defense questions/issues we deal with on a daily basis. If you are facing any of the above legal issues, you might want to think about retaining a real estate and foreclosure lawyer to protect your interests. The banks, lenders, and loan servicers have lawyers on their side and they are probably hoping you don’t take this step on your end. In California, the lenders backed SB94, a law that prevents any lawyer or broker from accepting any advance fees for loan modifications which has literally allowed lenders to force California homeowners to be unrepresented in the loan modification context. This is the way they wanted it done, and the California legislature went along with it. In Arizona, you may still hire a lawyer to assist you, at least for the time being.
