Replies to This Discussion

Permalink Reply by Jeff Payne on August 19, 2010 at 1:58am

We are in Florida so the laws are different but yes we have removed the deficiency language. My thought on it is that it really does not matter if it is in there or not. I will probably get crucified for saying this but, anyway you look at it, the seller can either sell and take the chance of a deficiency judgement or let it foreclose and get a much larger deficiency judgement that is most likely a sure thing. Once the property is sold and the release of mortgage is recorded, I believe that the lenders now come from a position of weakness because there is no longer a secured note and they would have to start from the beginning and intiate new legal proceedings that cost alot of money, money that most likely they will never recover thru a deficiency judgement or collections. Most likely if a seller is in bad enough financial shape, a judgement against them is tough to collect by the lenders or debt collectors. This is my lowly, uneducated, non attorney opinion :)

Permalink Reply by Wendy Cutrufelli on August 19, 2010 at 3:02am

Hi Jeff,

Thank you for your reply. In this case, they won't get a deficiency judgment in foreclosure because it is a non-recourse loan under CA law.

Jeff Payne said:

We are in Florida so the laws are different but yes we have removed the deficiency language. My thought on it is that it really does not matter if it is in there or not. I will probably get crucified for saying this but, anyway you look at it, the seller can either sell and take the chance of a deficiency judgement or let it foreclose and get a much larger deficiency judgement that is most likely a sure thing. Once the property is sold and the release of mortgage is recorded, I believe that the lenders now come from a position of weakness because there is no longer a secured note and they would have to start from the beginning and intiate new legal proceedings that cost alot of money, money that most likely they will never recover thru a deficiency judgement or collections. Most likely if a seller is in bad enough financial shape, a judgement against them is tough to collect by the lenders or debt collectors. This is my lowly, uneducated, non attorney opinion :)

Permalink Reply by Kyle Souza on August 19, 2010 at 4:14am

Don't forget that BAC owns the trustee, Recontrust, so they make money either way. Does the seller's attorney practice mortgage and RE law? There are some attorneys that are beating the banks when trying to pursue after short sale in CA. Maybe they should seek another opinion.

Permalink Reply by Sonia Carver on August 19, 2010 at 5:52am

AZ is also a non-recourse state. Real estate attorneys have advised our clients that the deficiency language on a purchase $ mortgages for primary residences doesn't matter because they are protected under state statutes and then some. It's standard language and we have had it removed where it matters, but the primary residence with purchase $ hasn't been one where the client's attorneys here have advised it....