New WA State Short Sale Seller Advisory and Licensee Guidance Bulletins

The Real Estate Division of the Washington State Department of Licensing and the Department of Financial Institutions have issued two bulletins about short sales. The DOL  Short Sale Advisory is for home sellers but really should be for both sellers AND their Realtors/real estate brokers.  DFI’s companion advisory is titled “Short Sale Guidance for Licensees” and contains many Q&As for both loan modification and short sale negotiation services. 

The DOL Seller Advisory contains basic education about short sales, the deficiency, “walking away” by letting the home go into foreclosure, options for homeowners in financial distress, warnings about predatory loan mod firms and other scams, and where to go for free help. The DOL Advisory also offers a signature page for the seller. There’s not a place for the real estate listing broker to sign the DOL Advisory.  I’d also like to see the Advisory offered in different languages. From the Advisory:

“FIRST, Understand that a Short Sale May not Discharge the Debt. You should know whether you will still owe your lender money (a deficiency) after the short sale. You should know this BEFORE you close the sale of your home. Even if a lender agrees to a short sale, the lender and any junior lien holders, may not agree to forgive the debt entirely and may require you to pay the difference as a personal obligation. This outstanding personal obligation could result in a subsequent collection action against you. For example, a lender may accept the short sale purchase price to “release the lien

About Jillayne Schlicke

Educator in the field of mortgage lending and real estate. Follow me on Google+

Comments

  1. J- A very informative post that may head off
    some problems for those seeing Short Sales
    as an unalloyed big bargain opportunity. JG-

  2. Whenever I see a post like this about short sales I ask out loud, “What if you bought a short sale two years ago, wouldn’t you be at fair market value today?” What if you bought a short sale today, depending on the property, will you be under water with it in another year?

    The only thing I see floating the market right now is the tax credit. This next spring I expect to see the price of housing decline a lot, at least 10% from today.

    This whole idea that banks are selling at a discount, or short sales are a bargain, or that banks are so overwhelmed they don’t know what they are doing, in my opinion, wishful thinking.

    I understand some one wanting to sell short, I just don’t understand the people who are buying them.

    For that matter I can’t imagine any one hiring a Real Estate agent for either side of the transaction. A bank is going to have language that will need to be signed. Only a lawyer can draft or interpret contracts. The buyer will need legal advice, and for sure the seller needs to be represented. The seller needs to be represented by a lawyer, no matter what. The fees for that lawyer for the seller needs to be a part of the listing contract.

    In that way, in today’s market, I would think, and do think, lawyers have a niche. I think there is a lot of work for lawyers today in dealing with banks, debt, and contracts.

  3. Great post, and good information!

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