What is a "Short Sale" and why do some realtors want to bully creditors?

During the Great Recession, the phrase “Short Sale” was used in almost every news story and in every coffee shop that discussed the housing problems in the country.  A short sale is simply the debtor who owns the home selling their property for what they owe, or less, instead of having the bank foreclose them.  It can benefit the homeowner, as they will not have a foreclosure on their credit record, and the bank is usually content as they can move the property quickly.  Short sales do not always work though, as the bank may not be able to write off the entire loss (if the original loan value was created in 2006 for example, the “real” value of the home may be so low they will not be able to craft a short sale and still take the loss.  In these instances, the bank MUST foreclose and then sell the property on the open market to “prove” to the government the real value of the home).

As the housing market around southern Oregon has improved, our office has been dealing with more and more short sales.  Why is the collection agency involved in these, you ask?  Because we may have a judgment-lien on the property, and the sale cannot go through unless we release our lien.  Recently, there has been a real estate company that has decided to try to bully our office and some of our clients into accepting their offers.  We work with dozens of realtors and attorneys on short sales and lien releases every month, and generally we have no problems. They ask what it will take to release the lien, we ask for the HUD statement, and then we tell them what it will take.  Sometimes we need to negotiate more, sometimes it works, sometimes it doesn’t. In the case of this realtor and his company though, he has demanded we take $.08 on the dollar to release a lien of over $18,000 while he pockets a cool $10,000 commission!  (The HUD statement shows all the liens, costs, and commissions to be paid.  We never negotiate without knowing this information.)

Needless to say, we have all the leverage in this deal and do not take kindly to this unprofessional and rude behavior.  A few months ago, a different agent from the same company tried to bully us into accepting $15,000 to satisfy a $140,000 debt, in the process earning a $44,000 commission!  We held firm, and now we have a payoff directly from the bank ($65,000) and there will be NO agent commission.  We generally ask to split the difference to release a lien, and that generally works.  But some agents want to play the bully, and we will always stand firm in representing our clients’ interests and thereby advocating for all consumers who pay their bills and play by the rules!

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