Gilman Management
Most recently, one common trend in the REO/Short Sale sector
has been the appearance of non-mortgage type of liens such as IRS and state tax
liens. Abstracts of judgment can be a big obstacle in getting a short sale
done. Generally speaking, short sale
lenders are unwilling to use any money from the sale proceeds in order to help
the short sale seller to pay off these non-institutional liens. You can talk
with the lender until you are blue in the face, but there are certain investors
and specific lien holders that will refuse to give in and allow any money
towards these non-institutional liens.
As a result, some short sales may not be able to close and
sellers will have to wait it out until the bank forecloses on the property. What's
the best solution?
1.
Always research the title and order a statement
of information on the sellers (borrowers) prior to getting involved in the
short sale transaction. The preliminary title report will reveal many of the
liens connected with the property. The statement of information will allow the
title company to research whether there are any additional liens (e.g. child
support or tax liens) that are connected with the individual and not the
property, per se.
2.
Review those two reports at the beginning of the
transaction in order to be sure that all of the lien holders are being dealt
with during the short sale transaction. You do not want to find yourself
waiting around for short sale approval on a deal that may never close because
of the unpaid personal liens.
The good news is that investor buyers (especially those
paying cash) may be able to support the seller in liquidating these
non-institutional liens. Equity investors, as I have often said, can help to
lay a smoother path to economic recovery. Now, if we can just get all parties
to cooperate. Therein lies the challenge J
