Keller Williams Realty Atlanta – Peachtree Road

Real Estate Legal Tip

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Watch Language in Short Sale Letters

Watch out for these phrases in Short Sale Approval Letters:
 
 
“Arm’s Length Transaction”
 Many lenders send an affidavit for the buyers and sellers to sign stating that they do not have a personal or business relationship.
 
“Release of Liability”
 Sellers always want this and expect this, but short sale letters rarely provide a full release, meaning that the lender does have the right to pursue payment of the shortage after the closing.
 
“Subsequent Sales by Buyer”
Many letters prohibit short sale buyers from flipping, selling, or otherwise transferring the property to anyone else within the first 30 days after closing.  The lender can void its approval and release of the mortgage, and the buyer is not protected by owner’s title insurance if the buyer violates this condition. 
 
“Waiver of Escrow Refund and Mortgage Insurance Refund”
Any escrow balance held by the short sale lender will be retained and applied to the payoff.  The seller waives any right to receive an escrow refund.  Also, any FHA refund of MIP goes to the lender.
 
“FHA Incentive to Seller”
In a short sale of an FHA loan, the seller may be able to receive up to $1,000 out of the payoff, but these funds are usually needed for liens, taxes, judgments, or HOA dues.
 
 
 
Presented by Leigh Clack, Attorney
Neel & Robinson Attorneys at Law, LLC
22 Lenox Pointe, Atlanta, GA 30324
lenox@neelandrobinson.com
404-705-3690       fax 404-705-3697

More Legal Tips From Neel & Robinson:

Flood Insurance Is Not Always Available

Make Sure You Know Who Owns The Property!

Quit Claim Deeds & Owner Title Insurance 

Choosing A Settlement Agent When Buying A Fannie Mae Property

KW Atlanta Legal Tip: Georgia 2010 Filing Deadlines Coming Soon!

Due Diligence When Buying a Condo, Townhome or In a Planned Community

 Try To Avoid Credits & Allowances!

Special Issues with Buying/Selling Condominiums

 First-Time Home Buyer’s Tax Credit – Don’t Wait Till The Last Minute!

 Buying Property From The Bank: Tips For Buyers

Waiting Periods Required Under New Truth in Lending Law

  Termite Letters – Still a Good Idea

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