Accepting a no-to-be-taken mortgage using an SRS

We recently held a seminar on Short Selling and Other Alternatives to Bring Your Home Foreclosure. Many of you were shocked to find that over 82% of short sales are rejected by banks in the current economy. We also discussed other viable alternatives to moving away from a property, including what is known as a strategic or structured reallocation sale (SRS).

What is the difference between a short sale and a strategic reallocation sale?

A short sale can get you out of a bad or underwater mortgage situation – if you can find a qualified buyer quickly and the lender approves it. Note, however, that a short sale is not intended for your benefit. Your agent continues to receive a 6% commission on the sale price, while you typically walk away for nothing. If your home is short in many states, the lender can still sue you for the short amount (known as a shortage). Regardless of what a real estate agent or advisor tells you, you are still responsible for making your mortgage payments as you sit there day in and day out wishing a buyer magically show up and choose YOUR home over everyone else potentially bigger to buy. nicer and newer foreclosures and short sales in your area. If you’ve stopped your payments and the short sale is declined (again over 82%), most agents will simply offer you some sort of “I’m sorry” sort of thing and the lender will in most cases immediately move on to the foreclosure process.

The foundation of a strategic reallocation sale is a proven way to quickly sell a home or property that is surprisingly over 150 years old. This is probably one of the most relevant and efficient ways to sell an unwanted or over hyped property in today’s incredibly challenging and frustrating economy.

What can you do when you can no longer afford your home? or you’ve tried to go short (and now found that up to 82% rejects); or you called your lender and they politely told you to “pound the sand?”

This is where a strategic reallocation sale can help. The one question that was asked more than anything was, “How do I reassign an unacceptable mortgage?”

While it is true that most non-FHA / VA loans are technically “unacceptable”, you need to be careful about what “unacceptable” actually means. The wording of the clause commonly referred to as “Due on Sale” is generally as follows:

“If all or part or a portion of the home is sold or transferred by the borrower without the lender’s prior written consent … the lender, at the lender’s option, may declare the entire amount secured by the mortgage due and payable immediately.”

There’s nothing in the infamous paragraph 17 stopping you from selling your property without paying back the mortgage loan. Nor does it say anywhere that you will get into any kind of “trouble” for doing this. This paragraph only gives the lender the right to request the new buyer to repay the entire loan in full if you transfer the loan to a new buyer without “the lender’s prior written consent”. It is then the sole responsibility of the new buyer to repay that loan through negotiation, modification, or refinancing.

Understand that, like any other lien, a mortgage is a lien that is secured against the PROPERTY and not against you individually.

All of this means that with the right documentation and approval, you can sell your home to whoever you want, how you want. A cash deal is always the easiest and “cleanest” transaction, but several others are available to you – especially if you are trying to “sell” or “sell” your property. Just make sure you have the correct legal documentation and sales contracts.

Real estate agent Heidelberg
Broker Heidelberg

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