I was told yesterday by my negotiator that Nationstar does not waive deficiency and that I need to address with them after the short sale closes. Does anyone have an approval from them with waiver of Deficiency language in the Approval documents?
thank you
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Nationstar typically requires a promissory note/cash payment from the seller at closing. They required my seller to sign a promissory note for $1,500 to waive the deficiency.
Cech first if the property cann go in the Act 2007 Mortgage Forgiveness after close following year they will send a 1099 to the sellers/borrower and they can use an accountant that will help them with that 1099. I have one that close and they receive that 1099 thats the way they forgive it. Hope this help.
You do realize that a deficiency judgment and the 1099 have NOTHING to do with each other. Federal law requires that any debt forgiveness over $600.00 gets a1099. The mortgage forgivenss act addresses the tax issue of the shortage being chraged to teh debtor as income. A deficiency judgment is what the lender can get via the Court system that could require the borrower to repay the shortage that was due to the short sale.
I'm in the state of Va. where we are a deficiency state. The language should be typically the same from bank to bank. It also depends on the investor behind the loan. I was able to get a deficiency waived from another bank. It was a second loan, and I new I needed to speak to the manger over the negotiator and plead my case. My sellers are truly without means to repay anything and all the documentation showed this. If this is the case for your sellers then try to get up as high as you can and talk to them. Be understanding to the fact that they are working on around 300+ files and it could have been an oversite on their part. Remember, the managers do not make the decision the underwriters do, so the managers need to see what the mind set of underwriters are not waiving the deficiency. If they can see by bank documents and income etc. that they can actually pay for some of it your chances are less likely they will release or they may require some contribution from the sellers. Be persistant though.
A better strategy for eliminating the deficiency is to buy the note rather than deal with the headaches of a short sale. Nationstar is one of the lenders we deal with. We buy them in bulk--avoid the short sale, eliminate the deficiency for your seller, no 1099C. You get paid whether you have a buyer or not! Here's how we do it: http://www.shortershortsale.com
Depending on the underlying investor, I have had many approvals with a waiver of deficiency from Nationstar. Normally they will require a samll contribution from the seller. I have seen it range from and amount equal to 1 or a high as 2 P&I Payments. Email me @ jroath@dmslawpa.com I will will provide you with a redacted copy of the approval language.