Question: I've being in real estate for nearly 20 months. I've passed my ABR designation and completed my required hours for renewing my license. I feel that I'm ready to learn something new. Will you please share information about short sales?

Answer: Probably we're going to see a lot more of them, given the rising level of foreclosures and distressed homeowners.

With a short-sale a lender accepts less than the loan balance in settlement of the mortgage. Depending on various circumstances, the unpaid balance may or may not be imputed, taxable income to the seller.

Needless to say, lenders are not thrilled with the idea of a short-sale and the only reason for them to agree to such an arrangement is that the alternative may be worse -- a typical foreclosure results in a $40,000 loss according to congressional testimony.

To see how short-sales work in your community, speak with brokers who handle foreclosures and with loan executives who work with REOs -- real estate owned by lenders.

Question: I'm a real estate salesperson and I own a property that I want to sell. Can I sell the property using a broker who is not the one sponsoring my license? In other words, am I obliged to list it with the company for whom I work?

Answer: Your first step should be to review any agreements between your broker and yourself. If the matter is not directly addressed in such written arrangements then you must sit down with the broker.

At first it may seem to be an affront to market a property without your broker, but there may be sensible reasons for such a choice. For instance, if the property is outside the area typically served by the broker or the broker does not normally sell the type of property you now own.

You need to explain to the broker why you want another professional to sell the property. Any financial arrangements with your broker will then need to be worked out in writing.

Alternatively, if you do not have confidence in the broker's abilities, then you need to affiliate elsewhere.

Question: I own a home with an appraised value of $368,000 and little left on the mortgage. Is now the time to sell or hold? An agent wants to list the home for $300,000.

Answer: Why do you want to sell? Is there some place you would like to move?

Do you have a surplus of cash? If not, and if the property is worth $368,000, why would you want to sell for $300,000? That's better than a 20 percent discount and you haven't even bargained with a buyer.

You need to speak with several brokers in your local community to determine a market value for the property -- have them each prepare a listing presentation for you. Then determine the pros and cons of a sale -- for you.

Question: My mom has a wraparound mortgage on her personal home. The title is in her name and her bank is holding it. She makes the payments every month on the mortgage. The time has ran out on the buyer's obligation to buy the house and my mom can foreclose on her and get it back in her name.

Now the buyer is trying to refinance the house instead of getting a loan which she couldn't do because of her past credit. Can the buyer get a second mortgage or refinance the house and pull money out?

Answer: As I understand your question, your mother sold a home using a wraparound contract; that is, the original loan has remained in place and your mother has added a second loan. Title to the property remains in your mother's name until the buyer can refinance.

It seems likely that the buyer wants to pay-off the current loans by refinancing the property. To do this, she will have to secure any new loans with the property. At the same time the property is refinanced, the financing will be paid off and title will go to the new buyer.

Isn't this exactly the point of a sale with a wrap-around mortgage? The original loan and your mother's loan will be repaid? What, exactly, is the alternative?

Your mother can "foreclose" unless the buyer actually has title. Once your buyer refinances, however, your mother will not have a claim because her loan will be repaid.

Please have a local attorney review the wraparound agreement. It sounds as though the buyer is exercising her option to gain title by paying off your mother and the lender in full.

Question: In September 2006 I received a loan. The lender told me they would be selling the loan. I was told to send an interest payment for October only. In November I called the lender and told them I had not received a payment for my loan payment. They told me to contact the new lender.

When I finally got in touch with the new lender, the account information was wrong and they told me they never heard of me. This went on for months. Finally the first lender told me not to call back unless I needed a new loan.

In April of this year I finally got to speak to someone from the new lender. They told me I was more than $8,000 behind in my payment. They had my address and phone number wrong. They had me living in a town I have never been to. I got the payments caught up.

The problem is they have me late on my credit report up to 120 days. I have written all three credit reporting agencies disputing this problem. They told me I had to contact the new loan company and talk with them.

Is there a time frame after a loan is sold before they can claim a payment is late?

Answer: Realty Times columnist and attorney Benny Kass has a really good explanation of borrower rights when a loan is sold. For details see, "What It Means When Your Loan Is Sold.".

"Congress," says Kass, "also was concerned about payments made during the transition period when a loan is transferred. The 1990 law specifically provides a 60-day grace period if the borrower misdirects payments. For 60 days from the effective date of the transfer, as long as the borrower makes the payment on time in accordance with the terms of the note, no late fee can be charged. The payment cannot be deemed late for any purpose whatsoever, even if that payment is misdirected."

In your situation, however, the issue is somewhat different in that the replacement lender apparently had incorrect account information. The Federal Trade Commission has an interesting discussion of lender obligations when loans are sold, including a model complaint letter to the lender and to credit bureaus.

When you send a letter to a lender or credit bureau, always mail by certified mail with a return receipt requested so there is no question that your letter arrived and when it arrived.

Question: I am a married woman who is getting a divorce and buying a house. I am concerned about the sales contract in that my spouse's name is required to be on it and he has to sign. They have the contract written as a sale to both of us. The financing contract will only be in my name. What is the best way or the correct way for this contract to be filled out? I'm worried that he won't sign if it states that he is also buying the property. What is the best way to also have him sign a waiver to the title at closing?

Answer: If your husband's name is on the title but not on the mortgage, you have debt and he has equity. That sounds like a really good arrangement for your husband.

The purchase of a home during the divorce process should not be undertaken without advice in advance from your attorney. State rules vary, a house is a significant asset and you could hurt your bargaining position in the divorce process without proper counsel.

Question: My husband and I purchased out first home 14 months ago. Our real estate agent told us that a home inspection was a waste of money and that he would do the inspection for us. Not knowing any better, we said alright, that's fine, thinking we would be saving money in the long run.

After the sale was complete, we moved into the house that is full of pests and the foundation and wiring are bad. What can we do? We cannot afford to pay $20,000 out of pocket for a foundation fix and $2,000 for wiring.

Answer: Did you engage the broker as buyer broker or did he represent the seller? Did he make his inspection suggestion in writing? Did he provide any evidence that he was qualified to act as your home inspector? Are home inspectors licensed in your state?

What might be useful is to speak with someone from your state real estate commission. A list of such regulators can be found at ARELLO.com.

Have a real estate question? Send your inquiry to Ask Realty Times. Because of the volume of mail received, Mr. Miller cannot respond to questions individually or privately. Published letters may be edited for space and style. For comments regarding other Realty Times articles, please contact individual authors by pressing here. For past columns, please press Ask Realty Times.

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Published: September 7, 2007

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Have a real estate question for Realty Times? Wondering about buying, selling, financing, refinancing or renting? Here's where you can send your question to Peter G. Miller, OurBroker®, a nationally-known columnist, author and reporter. Peter G. Miller has written six books -- including The Common-Sense Mortgage -- a guide with hundreds of thousands of copies in print. Miller was the original creator and host of America Online's Real Estate Center and joined Realty Times in 1998. Send your questions to . Because of the volume of mail received, individual questions cannot be answered privately and not all questions can be used. Published letters may be edited for space and style and all letters become the property of Realty Times upon receipt.