In the July, 2009 Illinois REALTOR® Magazine there was an article outlining a fact situation
where an “investor” was seeking to purchase the property that would be a short sale subject to lender approval
under an option contract and the investor/intermediary was then seeking another buyer to close immediately after the intermediary
exercised the option and closed on deal #1 (after lender approval).
The Seller then assumes
that the lender has the property “off the books” and they are out of trouble. Well, that may not necessarily be
the case. The original distressed Seller is now receiving a "bill" for the unpaid amount of his note that he thought
While these scenarios may release the mortgage or security interest in the
loan, they are not necessarily releasing the note obligation to pay the loan in full. The short sale seller should receive
something from the bank stating that the obligation is "paid in full" or that the obligation has otherwise been
forgiven by the lender.
Be wary of situations where there is an “investor”
or “intermediary” in the middle. It is very important for these clients to seek legal advice in these situations.