New Twist on Buyer Beware

By:  Lori T. Williams, Esq., Oakland County Legal News Examiner

We’ve all heard about the rising foreclosures and falling property values in Michigan and around the Country.  Homeowners may qualify for Government refinance programs or a loan modification.  However, homeowners need to proceed with caution, because not all companies are living up to their claims of ‘helping’ borrowers through the loan modification process. It’s ‘buyer beware’ when dealing with your professionals these days.

The common pitfalls include:

1)       Some Banks have been improperly calculating the borrower’s income, and therefore denying a modification request of someone who should have qualified.

2)      Some realtors and banks are forcing homeowners into short sales, when it would have made more financial sense for the homeowner to do a loan modification.

3)      Some companies are charging high fees for the promise of a loan modification, and then not completing it and failing to refund the money to their client.  One homeowner found out that the company he was working with went out of business and did not modify his loan, after he paid them $5,000 to do so.  The Attorney General has been proactive in shutting down such companies, but unfortunately some innocent homeowners suffered in the process.

These problems can be avoided or rectified by having the matter reviewed early on by a licensed attorney, practicing real estate law, who is familiar with the loan modification and short sale process.  The attorney’s focus is on the homeowner client’s rights, while realtors and banks are focused on the sale.  In a short sale or foreclosure, banks can sue the homeowner for the deficiency balance.  This fact is often not disclosed to the homeowner, and they need to know this up front and be advised of their legal rights and liabilities by proper legal counsel in advance of a short sale or foreclosure.

There are advantages to having an attorney represent you through a loan modification, foreclosure,  or short sale.  Attorneys are bound by rules of professional conduct that other business people  are not.  Attorneys can lose their license for charging for a service and not delivering that service.   The Attorney Grievance Commission handles this type of misconduct.  Most attorneys also carry malpractice insurance which provides another avenue of recovery for the client if there is a mistake or misconduct.  Additionally, Attorneys are trained in the art of negotiation, and understand the legal aspects of contracts and real estate law.

Philip Seaver, President of Philip R. Seaver Title Co., Inc., in Bloomfield Hills has been working with borrowers, lenders, and their attorneys during foreclosures, by helping with the bidding process during a sheriff’s sale.   Seaver explains, “in the case of an “under bid”, the lender bids less than what is owed on the property.  This allows the borrower to receive some much needed proceeds, even when there is a deficiency balance on the mortgage.”

Ellen Mahoney also works closely with attorneys, realtors, and banks on short sales and loan modifications.  Mahoney spent 16 years working as a paralegal for large law firm commercial real estate attorneys.  She also has experience working in a title company and was a mortgage broker for 6 years.  In 2008, Mahoney created Loss Mitigation Consulting Services, LLC, now a division of Complete Title in Birmingham, to guide homeowners through the short sale and loan modification process.  Mahoney states,  “most homeowners do not understand the process, or that they won’t automatically qualify for a loan modification.  The banks sometimes string them along for years in the loan modification process, and then force them into a foreclosure.”

Realtors, mortgage brokers, and title companies handle different parts of a real estate transaction and can work well together to complete a transaction, but real estate attorneys are  qualified to  interpret contract language, and advise you of your rights in a real estate transaction.  Whether you are facing foreclosure, or considering a short sale or loan modification, you may want to seek legal advice from an experienced real estate attorney early on in the process.

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Lori T. Williams is a 25 year attorney based in Birmingham, MI.  As owner of a legal referral business called Your Legal Resource, PLLC, Lori personally assists individuals and small businesses in need of legal advice or representation in Metro Detroit by connecting them with the right legal specialist to meet their needs. Click here for a pdf of legal referral services. 

Through group training and events, Lori also focuses on referral marketing strategies for attorneys and other professionals. For more information about Lori or Your Legal Resource, visit www.bestlegalresource.com.  For networking events, training programs, and workshop information, visit: www.bestlegalresource.com/events.

 

2 responses to “New Twist on Buyer Beware”

  1. Annamarie Moore

    I just wish I could buy a house in the first place. I am SO sick of apartment living. If we could find a way to roll the closing costs and down payment into the loan then we could do it – but simply cannot come up with the closing costs all at once. And since we pay so much for the apartment, we’re actually losing money that way too.

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