New Information on Short Sales

Attention homeowners...if you are having problems making mortgage payments and your lender can't (or won't) help you, be very careful if you are considering a short sale.

Last week I received information from our staff attorney at Washington REALTORS stating that some (but not all) mortgage lenders are deciding not to release sellers from the unpaid debt amount on a short sale. The end result is the lender has six years to sue the seller for repayment.

The lender can also sell the right to collect the debt to a collection agency or other third party. If a court issues a judgement against the seller for the unpaid amount, that judgement will attach to any real property (i.e., a home or rental property) owned by that seller. This judgement is valid for another 20 years. Ouch!

You must seek legal advice before you choose the short sale alternative!