Short Sale, Foreclosure and Strategic Default

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Wednesday, May 23, 2007

Are short sale "advisers" - working for the Banks

You are a Realtor in California or Florida acting as a short sale adviser...
or you are a former "loss mitigation" employee
and you have been advising homeowners on short sales.

You open your mail and see... legal paperwork... you scan it further and you realize it is a subpoena from a banks attorney...

You see you are compelled to:

1. Produce all information (including digitally stored information) you have pertaining to "former homeowner" and his or her assets.

2. Produce all information you have about "former homeowner" and the location and size of his/her assets.

3. Produce a list of all information you no longer have in your control.

What will you do? What have you done? Who advised you to do it? How well are your assets protected?

Why?

A few months later you may be getting another package from a lawyer and this time you will see the former homeowner named as plaintiff and you and your broker named as defendant.

Why?

During a suit to recover a deficiency (the shortfall between the debt and the value of the property) one of the first questions asked to the homeowner by the bank's attorneys will be -

Have you spoken with anyone about your financial situation besides an attorney?
Did you get advice on short sales or foreclosure?
What was that advice?
Did you disclose the amount of your assets?
Did you disclose the location of your assets?
What happened to all that money?


Right now if you are advising on short sales and you are not working with an attorney... you are working for the bank... or at least that is how it is going to look by the time a Plaintiff's lawyer is done with you.

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