CHASE WANTS TO GIVE SELLER A DEFICIENCY JUDGMENT

One of our clients has a Chase 80/20.  Chase approved a regular short sale but is expressly asking seller to agree that there will be a deficiency judgment.  Any suggestions as what to do?  Seller won't sign if there is a deficiency (because doesn't want to file for bankruptcy to get rid of it...)  Thank you

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Permalink Reply by Wendy Martin on August 5, 2011 at 9:53am

1. Escalate, with a letter from seller explaining why they cannot pay...and perhaps they will go bankrupt. 2. Often Chase will give full settlement language if seller makes a small contribution, it has worked many times for us as CASH is KING.

Permalink Reply by MESARE DONDA on August 5, 2011 at 1:17pm
Thanks, Wendy... I will escalate... Only problem with seller making a small contribution is that seller has no money!  Will try and let you know...

Wendy Martin said:

1. Escalate, with a letter from seller explaining why they cannot pay...and perhaps they will go bankrupt. 2. Often Chase will give full settlement language if seller makes a small contribution, it has worked many times for us as CASH is KING.

Permalink Reply by MESARE DONDA on August 5, 2011 at 1:18pm
Oh, Wendy... and how much is a "small contribution"...???
Permalink Reply by Bryant Tutas on August 5, 2011 at 1:46pm

Mesare. A judgment comes from a Judge. Chase may not be waiving their right to sue for a judgment but they can't give the seller a deficiency judgment. There is always a deficiency with a short sale. The deficiency is the different between what the borrower owes and what they pay.

So the question is "What is going to happen to that deficiency?"

What exactly is the wording that Chase has put forth that is scaring the seller?

 

 

Permalink Reply by MESARE DONDA on August 5, 2011 at 2:33pm

Thanks, Bryan, good point!  It says:  "Acknowledgment of borrower:  By signing below, the debtor acknowledges that he remains liable for any amount still owed under the first lien mortgage transaction".  And the approval's short sale terms and conditions states:  "Please note this amount is for the release of the lien only and that you are responsible for all deficiency balances per the terms of the original loan documents"...

Any suggestions???
Bryant Tutas said:

Mesare. A judgment comes from a Judge. Chase may not be waiving their right to sue for a judgment but they can't give the seller a deficiency judgment. There is always a deficiency with a short sale. The deficiency is the different between what the borrower owes and what they pay.

So the question is "What is going to happen to that deficiency?"

What exactly is the wording that Chase has put forth that is scaring the seller?

 

 

Permalink Reply by MESARE DONDA on August 5, 2011 at 2:49pm
By the way, Bryant... how do we get a hold of your newsletter? (you mention it often...)
Permalink Reply by DoesntMatter on August 5, 2011 at 4:08pm
Why not agree to the deficiency? Would you rather be pursued for a fraction, or the full balance if you dont resolve the loan?
Permalink Reply by Bryant Tutas on August 6, 2011 at 1:08am

Mesare. It basically means they may or may not contact the borrower after closing to make some arrangements for the balance owed. At that time they can certainly try and negotiate a settlement if they are able. Usually the lender is using this wording because the borrower has inco9me and assets that would justify some sort of contribution on their part. OR it could just be a requirement from the investor to leave that language in the approval. Unless the borrower has high income and assets the chances of the lender going in front of a judge to get a judgment are probably slim to none.

 

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Permalink Reply by Wendy Martin on August 6, 2011 at 1:12am
In a few cases, $500 has sufficed.  Small price to pay (if the seller has it) for full settlement language.  So many times lenders/servicers have asked for the world, 5k AND a 20-30k promissory note (and not only from folks with some $$). $500-1,000 has worked 9 out of ten times.

MESARE DONDA said:
Oh, Wendy... and how much is a "small contribution"...???
Permalink Reply by Richard on August 6, 2011 at 2:00am

I don't know all the deatils and how many dollars are involved, however it looks like Chase is willing to let this short sale proceed.  Given the seller's alternatives and based on the circumstances, I feel the options are pretty good for the seller. 

 

If the seller can't get a modification or, if it goes to foreclosure, then a small contribution or even small deficiency judgement all of sudden doesn't look so bad, right?

Permalink Reply by MESARE DONDA on August 6, 2011 at 7:17am

Great, guys... Will keep fighting... Seller will probably be OK with the $500... better than a bankruptcy that will stay for 10 years!

Bryant, who does the newsletter come from (what address?). How can we get the older issues?

Permalink Reply by Bryant Tutas on August 6, 2011 at 7:50am

Mesare. They come form Short Sale Superstars. Check you spam folder tomorrow in the morning if you don't receive it.

 

The older ones are here

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