Insider
Q&A on short sales -- a complicated move that just might be your best bet to avoid
foreclosure
Tim
McFarlin, is an Irvine attorney and real estate broker
who developed a specialty practice helping clients facing
the threat of losing their homes to foreclosure. He spoke
to the Orange County Register's John Gittelsohn.
How
did you develop this specialty?
“There are many consumers in distress and many people to help;
this practice area is in great demand. Many distressed borrowers are people who
initiated loans through subprime lenders. What's happening now is a lot of folks
don't have equity they were expecting, and can't refinance as they hoped.
Often the best solution for these borrowers is a short sale to stop foreclosure”
If you need to know more about how short sales can help you avoid foreclosure, please contact a Lawyer who is familar with forclosure short sales now!
What's
the advantage of a short sale?
“A short sale is when the borrower can't maintain mortgage payments,
and the bank allows the property to be sold at a loss instead of going all the
way through foreclosure process. With a short sale, the consumer typically doesn't
have a foreclosure or a deficiency judgment. The consumer gets to walk away with
his credit mostly intact. Frankly, a borrower can almost turn around and just
buy another property.”
(Note:
By law, if the owner still has the original purchase loan
on the property and sells the home for less, the bank can't
go after the seller for the balance of the loan. However,
the difference could be treated as income by the IRS. To
read a Register story on it CLICK HERE.)
Why
would they hire an attorney?
“Frequently, when the borrower doesn't have equity, there's not
a lot to fight over. You're only talking about some possibly unlawful fees and
damages. But it's not as easy as it seems to do a short sale. You need your documents
presented properly and you need to get them together fast. If it's not done right,
the bank will move you through to foreclosure.”
How
much does it cost a client?
“The
fee to represent a client in a short sale is typically
$1,500. There are Realtors out there who will offer to
do a short sale for free, but that's not who you want representing
you. Realtors just want to "take a shot" at putting the deal together with no legal background or ability to address
issues that often arise, such as allegations by the bank
of mortgage fraud.”
As a California foreclosure attorney, you represent borrowers in Truth in Lending Act lawsuits. What happens in these cases ?
“The
Act requires an accurate disclosure that shows how much monthly
payments are going to be, and the total finance charges,
among other things.
What
happens frequently is the terms change and there are new,
previously undisclosed, fees and charges that are only
disclosed when it's time to sign all the loan documents.
The mortgage company is required to give the borrower a
rescission period, a three-day cooling-off period, after
the documents are signed, but when they sit down to sign
the loan documents, the client doesn't have much time to
reflect.”
Is
there any lender you see more than others in these Truth-in-Lending
cases?
“There are so many different companies out there, so many different
corporate structures, it's hard to know who is actually involved in each loan
sometimes. I have had a couple of cases with People's Choice and New Century,
who have each filed for bankruptcy protection. I had just one with Quick Loan
Funding. That loan was transferred to Countrywide for servicing. It's hard to
keep up with the changing face of the mortgage industry.”
