Tip 46-2010: Short Sales - Don't Forget the 2nd

Be sure to file short sale applications with all lenders (the first and all subordinate lenders).  Obviously, the short sale package goes to the first lender, but if there is a second lender (2nd Deed of Trust, Home Equity Loan or Line of Credit) they also need a complete package.

Even if the first lender may be paid in full, I would still recommend that a complete package be sent to both the first and second lender.  The second lender may demand more money, which could result in the first agreeing to a short fall.  Because each negotiation may be different, it’s better to be safe than sorry—all lenders should get the short sale package.

Also remember that a home equity loan or line of credit is still a lien on the property.  Sometimes the Seller does not understand that a home equity loan is still a mortgage.  A good practice tip is to ask the Seller at the listing to provide copies of all payoffs to show the status of each loan.  A second tip (previously in Tip 6-2010) is to order an early title search for the Seller to be sure that all outstanding liens (including judgments) are handled and negotiated with the short sale lender.

Please contact us if you have questions or need legal advice.

Senior Partner

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBLaw.com
www.TGBLaw.com

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Tip 45-2010: Don't Be Afraid of REOs

In the last several months, there have been many news stories about alleged fraud and mishandling by banks in their foreclosure procedures.  For a while several banks even postponed all their foreclosures.  Now there are rumors that title insurance companies will not issue title insurance for Purchaser's of foreclosed properties.

These rumors are not true!  All of our local title insurance agencies are currently issuing full owner's title insurance polices on bank foreclosed properties.  With a full title search by a local title insurance agency, a Purchaser can be guaranteed that the foreclosure was conducted properly. (Remember - Do No Accept the REO free title insurance; the Purchaser should have their own independent title policy.)

Foreclosures in Virginia are not as difficult and complicated as the judicial foreclosure procedures are in most states.  There are definitely some excellent deals available on REO properties.  With a proper title search by a local insurance company and scrutiny of the actual foreclosure process by an experienced real estate attorney, the Purchaser of an REO property will be fully protected and insured.

Please contact us if you have questions or need legal advice.

Senior Partner

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBLaw.com
www.TGBLaw.com

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