Is a Short Sale Ethical? An argument in defense of mutually agreed upon debt forgiveness.

May 7, 2012 - PRLog -- With a national epidemic of unemployment or underemployment, and 25 percent of the homeowners in the country owing more on their home than they could get for it in today’s market, owning a home for many is now a liability. “2012 has made it clear that we are living in a new normal,” said Tania Michaels, a Las Vegas short sale agent  and CDPE® of Focus Commercial Group. More homeowners are now selling the houses they can no longer afford.  

According to statistics published by USA Today in December of 2011, roughly 75% of homeowners who apply for a loan modification are denied.  “Rather than just walking away and letting the bank foreclose, many property owners are taking responsibility for the mortgage contract they signed and going the route of a short sale,” says Michaels.  

Michaels has developed a free report titled, "Short Sale or Walk Away from Your Mortgage?" which can be accessed from her website at:
http://MichaelsRealEstate.com/shortorwalk

A short sale is a pre-negotiated agreement between the homeowner and the bank to sell the house for less than the current loan balance.  The bank forgives balance of the debt owed and the homeowner goes free.

Michaels says that she encounters many people that struggle with the ethics of a short sale.  “People say to me, ‘That sounds too good to be true! But I signed a contact and agreed to pay the bill… is a short sale ethical? I respond by asking them a few things:  a.) What makes a short sale unethical?  and b.) What standard or who’s ethics and morals are they trying to live up to?”  Michaels says she too felt compelled to look into this ethical dilemma before deciding to embark on the quest to help homeowners out of debt under the present circumstances.  

“I started with a premise. As a foundation for answering questions about ethics and morality, I like what Benjamin Franklin said, "‘There is a God, we will meet Him someday and He will judge us.’ Now if God is a judge then He’s also a personal God who cares about the details of our lives.”

Michaels believes Christians have a moral obligation to keep their promises which includes contracts. But the issue of not being able to keep a promise (like a mortgage contract) because of circumstances beyond a person’s control, like the Great Depression or natural disasters, seems to create confusion.  “If God is God,” says Michaels, “then we can live in the comfort that God knows what we’re dealing with. If we truly have a hardship, He knows.  If we don’t really have a hardship, well, He knows that too.  He will not be mocked.  God cannot be deceived because He is in complete knowledge of a person’s true intentions.”

Historical writings of both the Old and New Testament make provisions financial disasters. Under the Mosaic law, for example, debts could be fully forgiven on the seventh year.  The laws in the U.S. do the same thing.  “It’s a good thing if used for the right reasons and not abused.  Each person must make sure they are attempting to fulfill their obligations before taking advantage of legal options that offer leniency.  The grace of God, or the law of the land, is not a license to do something immoral,” says Michaels.

The bank that holds the loan on a property has the right to either forgive or enforce the debt.  As it relates to short sales, which Michaels defines as mutually agreed upon debt forgiveness, she cites a New Testament passage for those who believe in a personal God and/or respect the teachings of Jesus of Nazareth.  “In Luke 7, Jesus gave an example of two men who had kindly been forgiven and their debts cancelled. One was forgiven 50 pieces of silver and the other was forgiven 500 pieces of silver.  Jesus doesn’t seem to have a problem with debt forgiveness, regardless of the size, for those who have a need.”

An entire network exists with the sole purpose of solving the American foreclosure crisis one homeowner at a time.  Michaels says one simple fact is crucial for homeowners in mortgages that are crippling them: “There are options for homeowners in Las Vegas. More than at any other time in my career, there are ways to avoid foreclosure without ruining your ability to buy a home in the future.”

Lenders are allowing homeowners to successfully complete a short sale.  In addition, many are qualifying for thousands of dollars in “Cash for Keys” type programs in Nevada, being excused out of a deficiency judgment, plus the federal government has waived the taxes on the 1099 associated short sales on primary residences through 2012.  

“If a person who has a real hardship can receive forgiveness for their debt, I see that as grace.” says Michaels.

To speak to a Las Vegas short sale agent call 702-546-6432.

ABOUT
Tania Michaels is a 16 year veteran of the real estate industry who specializes in representing property owners in the sale of their real estate. Las Vegas real estate owners may benefit from her experience with the residential and land sector which allows her to offer insight from the vantage point of an all-around insider.  If you have an interest in selling your property, Tania can be reached through her website at:  http://MichaelsRealEstate.com/ScheduleAppt

*The views of Tania Michaels do not necessarily represent the views of Focus Commercial Group or it's management.

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