Bank absolves investor from deficiency judgment
I just closed a short sale with American Home Mortgage and the bank agreed in writing not to pursue a deficiency judgment for an investor on the balance owed. I didn't even ask as I've never known a bank to forfeit their right to pursue a judgment on a borrower financing an investment. Am I just naive and this happens a lot or is this one of those once in a lifetime occurrences? Does anyone know other lenders that do the same?
Replies to This Discussion
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Permalink Reply by Marty Hackworth on
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I received an approval from Bank of America on a short sale the closed on Friday. They first sent an approval letter reserving the deficiency rights, but after a quick phone call to my negotiator she sent me a new letter with the deficiency rights removed. I get short sales approved with no deficiency rights or we don't close, but I am in California.
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Permalink Reply by Smitty on
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What state are you in?
In my state they can pursue deficiencies. I think that's awesome news. I think most investment properties the lender reserves the right as it's not a primary residence, but the lenders call the shots.
Great job.
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Permalink Reply by Amanda R. Cowan, P.A. on
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I'm from Florida and like California it's common practice for the banks to reserve their rights to pursue deficiencies. That's why I was so surprised to receive the letter. Homeowners, yes but Investors, no.
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Permalink Reply by Kimberley Kelly on
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I think they are more willing right now (I too, am in Calif.) because of SB931. It goes into law on Jan 1, 2011..primary liens, purchase money in an approved Short Sale, now gives up right to pursue. I'm getting alot of activity on my Shorts this last quarter as well. Got one approved on Friday from GMAC, two moved up with B of A, one decline from Chase..all in one day! Last quarter is more active..but I think that law is going to help a ton with those deficiency issues..
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