Shannon Skurner photo_2008_small
Shannon Skurner
Vice President 

Texas Agency Manager
713-877-1780
sskurner@oldrepublictitle.com

ALERT!

 

 

Please read the information below regarding an urgent matter which may affect upcoming transactions.

 

Regards,

Shannon Skurner

      Closing Activities Concerning "Short Sales"

 

It has recently been discovered that personnel involved in closing transactions are being asked to actively participate in negotiating short sale pay offs or other terms.  These requests can come from any person interested in the sale, but in particular, the sellers or the real estate agentParticipating in such negotiations or closing short sales could expose an individual, the title agency or the underwriter to any number of claims or lawsuits. 

 

   What is a short sale?

 

A short sale is commonly described as an agreement between the sellers and their current lender, and often other secured creditors, to allow the property to be sold for less than the amount owed on the mortgage or other claims.  Short sales are often associated with "flip" transactions .  Justifiably or not, a short sale followed by another sale for a higher price has all of the appearances of a flip transaction. 

 

To view ORT's underwriting guideline on flip transactions, click here.  

 

The legal and tax consequences of short sales are complicated and numerous.  Great caution should be exercised to avoid giving or appearing to give, tax or legal advice, particularly to the sellers.  Short sales may also implicate IRS or other reporting (by the sellers, lender or other persons) for personal and other income taxes that are above and beyond typical IRS 1099-S or similar state real estate reporting requirements. 

 

Negotiating short sale terms on behalf of anyone interested in the sale likely violates the unauthorized practice of law of any state and exposes individuals and the companies to claims of breach of contract or fudiciary obligations. Never assume that the person receiving a draft or pro forma HUD-1 has all the facts that you have, and visa versa. 

 

Complete and accurate disclosure of all facts is the best defense to the potential claims as mentioned above.  Follow instructions carefully, obtain written authorization whenever possible and ensure that the final HUD-1 is complete and accurate.

Should you have any questions or require further information, please contact
David Rhodes or Steve Streiff in our Legal Department.

 

David Rhodes Photo4
David Rhodes
Senior Underwriting Counsel
888-678-1700
drhodes@oldrepublictitle.com

Steve Streiff Photo02
Steve Streiff
Underwriting Counsel
888-678-1700
sstreiff@oldrepublictitle.com

FTAF 6

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