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Short Sales Help, Frequently
Asked Questions Part III

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Who Will Pay The Real Estate Commission, Attorneys Fees And Other Costs In A Short Sale?

In a successful short sale negotiation the lender will pay the real estate commission and any other fees involved. Currently we are accepting these cases on a Contingency Fee basis. Fees that are usually included:

Real Estate Commission - 6% Of The Cost Of The Home

Attorney Fees - $1500 Or More Depending On Hourly Rate

Any Back Taxes, Condo Fees, Water/ Sewer Bills, Etc....- Many Times There Are Unpaid Taxes Or BillsSecondary Notes Or Home Equity Lines Of Credit- This May Not Be Paid In Full But Again Negotiated

Typical Closing Costs, Including Tax Stamps, Deed Preparation and Other Closing Costs

These fees will all be paid by the bank in a successful transaction. A $200,000 sale price could have anywhere between $12,000 to $15,000 in fees on top of any secondary notes and what it will cost to eliminate the secondary note. Most likely, you as the seller, have no money to bring to the closing table, if the short sale has been negotiated properly.

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The Most Important Thing Is To
Realize That You Have Options
And Not Give Up Hope!

How Will a Short Sale Impact My Credit?

Your credit will be negatively impacted for 3 to 5 years depending. A short sale, or deed in lieu according to credit experts are equally as damaging to your credit, although it depends on how many months (if any) you were required to be late on payments, or if you were already late on your payments. They come under a category called 'customer did not pay as agreed.

However, it is believed that legislation may soon be enacted significantly minimizing credit damage for short sellers. For now, there is one credit advantage a short sale confers. Currently you will be able to obtain a home loan in 2 years whereas you will have to wait about 5 years for a foreclosure. You need to check your lenders guidelines about obtaining a mortgage and your original closing package.

What is the Mortgage Forgiveness Debt Relief Act of 2007?

Prior to the implementation of this act, the law required taxpayers to include discharges of mortgage indebtedness as income for the calculation of income tax. This Act provides an exclusion for discharges of some types of mortgage indebtedness. Check with your tax advisor early on as to whether your transaction will qualify for income tax exclusion.

What is a Deficiency Judgment?

Even if a short sale is negotiated a lender may refuse to release the deficient portion of the note. In both short sales and foreclosures you will have a deficient amount (unless at auction someone bids more than the mortgage note, which is highly rare.) If your home is auctioned off for $125,000 and you owe $200,000, you now have an automatic deficiency of $75,000.

The deficiency is the balance owed. If the lender chooses not to forgive the balance (debt) then they will "reserve the right to pursue" the deficiency. In Massachusetts a lender has 2 years to pursue a judgment. If judgment is ordered they have up to 20 years to collect. So they could pass your file off to a collections agency to try to chase you for twenty years on that remaining balance.

If your financial lender has obtained a judgment against you, they can target you despite your location. They have the power to ask for your financial records, hold your wages and put you in jail if you continued to turn away from their requests.

If you feel insecure of a probable deficiency judgment, it is highly encouraged to employ a real estate lawyer so as to be certain that there are no remaining deficiencies in the short-sale or deed in lieu agreement.

I Live in a Homestead State. What Protection Does This Provide?

The Homestead Exemption is designed to protect the value of the homes of residents from property taxes, creditors, and circumstances arising from the death of the homeowner spouse. However, protections vary according to state law. In Massachusetts, for example, the Homestead Exemption only protects against unsecured creditors. Other states have more comprehensive protections.

For the rest of this article please go to

Short Sales Help FAQ, Part I

Short Sales Help FAQ, Part II