Realtor: “Jillayne I have nine short sales going on right now and,”
Jillayne: “Wait a sec, did you say NINE short sales?”
Realtor: “Yes, and here’s my question. One of my clients refinanced her Redmond home and took 89,000 cash out. Then she bought another home in another state with that cash. Now she wants to do a short sale on her home here in Redmond. It looks like she’s going to be short about 100,000. The lender on the Redmond home can’t go after her new home out of state, right?”
Jillayne: “Short sales are for homeowners in financial distress with no assets. The lender being shorted will ask your client to sign a new note/deed of trust in the amount of the shortfall and this new deed of trust will be recorded against your client’s new home.”
Realtor: “Yes, but their home is out of state. The shorted lender can’t do that, can they?”
Jillayne: “Yes, the lender can do that.”
Realtor: “But the home is in another state.”
Jillayne: “Your client is going to have to prove that they do not have any other assets. Just because a piece of real property is not located in Washington state doesn’t mean it’s not an asset. Washington state is not that special.”
Readers, why should lenders just randomly “forgive” the shortfall for all homeowners wishing to sell short? Especially homeowners who took cash-out equity loans to buy other real property. Surely there are some hard luck, true financial distress situations going on nationwide, but this is not one of them.
Besides, I thought homes in Redmond were holding their value.
Reminder: Homeowners selling short and/or in foreclosure should always obtain legal counsel. Google your state bar association to get started.