Thursday, February 25, 2010

Guest writer - J. Byron Wyndham, Real Estate Attorney, blogs on “Short Sales”

Blue Ridge Georgia Real Estate is pleased to welcome guest blogger and local real estate attorney J. Byron Wyndham.  Today, Byron shares with us his perspectives on understanding the secret side of short sales.

Short Sales...Continued

We are seeing more and more “short sales” in recent transactions. With many homes being “underwater” (the outstanding mortgage is more than the home value) in order to sell the house, the owners are asking lenders to accept less than the outstanding loan balance to release the house from the lien of the loan.

The “catch” ? Many owners don’t realize that just because the lender agrees to accept less than the loan balance to release the lien, that does NOT relieve the owner (the maker under the Note) from the obligation to repay the balance of the loan. The lender may file suit against the owner/seller for the balance of the loan that was not paid at the short sale.

The owners may also not understand that their credit can be adversely affected by the short sale. Usually, by the time the seller/owner has requested the short sale, they have missed several payments and have accrued late charges. This will appear on their credit report. But the seller may think that by doing a short sale, at least the stigma of a foreclosure has been avoided. However, in a short sale situation, the lender may “write off” the loan. This write off will appear on the credit report as a negative credit factor.

What options does a seller have? The seller can request that the lender agree to accept the short sale balance in full satisfaction of the loan and that it be marked “paid in full” on the credit report. This will avoid the actions noted above. However, the lender is NOT required to agree to these terms. It is an affirmative request to avoid the negative affects of the short sale. Though the Lender does not have to agree to this, many lenders are trying to avoid foreclosures and having more real estate on their books. In order to have a smaller loss than what would happen in the case of a foreclosure, the Lender might agree to this scenario.

The bottom line-it doesn’t hurt to ask. All they can do is say No! But if they say Yes, the seller can realize the full benefits of a short sale. JBW

For more information about short sales or other real estate related matters, please visit his website or email him at

J. Byron Wyndham
2460 E. First St. Suite B-6
Blue Ridge, GA 30513

This North Georgia Real Estate blog is hosted by
Gayle Barton of BERKSHIRE HATHAWAY Georgia Properties  located in the quaint mountain town of Blue Ridge, GA.

Please feel free to call (866-413-1781) or drop me an email if I can assist you with buying or selling your mountain home or property.

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