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7527 N. Seeley Avenue, Suite 1, Chicago, IL 60645 | Phone: 773.818.9054| Fax: 866.381.4238 |

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Wednesday, September 2, 2009

A Word of Caution on Short Sales to Sellers, Agents and Attorneys

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 was forgiven!

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.

12:01 pm cdt 

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Preferred Investors Realty, LLC ** 7527 N. Seeley Avenue, Suite 1, Chicago, IL 60645 ** 773.818.9054 office ** 866.381.4238 fax

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