Comment

Comment by Catherine Myers on November 30, 2009 at 4:19pm

David, are we talking B of A or Chase? I have had Chase recently remove this language.. but B of A is by FAR the absolute worst and you will probably have very little luck with them changing their letter.

Comment by Catherine Myers on November 30, 2009 at 4:15pm

Bettie, but in california we have non recourse (purchase money) loans. My understanding from David is that this was an original loan, never refinanced, no cash out.. but the original purchase money loan which puts this in the "non recourse" recourse. No recourse , means no recourse. Now, that applies in a foreclosure.. so if these borrowers walk away.. they can NOT be pursued for a purchase money/non recourse loan in California. BUT, if they sign a short sale approval agreement and AGREE to give up this non recourse protection and AGREE the bank can pursue the deficiency, therein lies the problem. I think the banks count on this. But this right here is the reason many in California are "forced" to foreclose to protect themselves.

Comment by David Dee on November 30, 2009 at 4:15pm

Kent, good points regarding the deficiency judgment. However, as you can see from my comment to Bettie, it appears that the seller is consulting someone who is providing different information. BofA has a boiletplate verbage they used which includes the deficiency judgment and will not remove it. I'll go to the BofA group to see if that is still the case.

Comment by David Dee on November 30, 2009 at 4:11pm

Bettie, the seller consulted with someone who indicated that if they let the house go to foreclosure that there will be no deficiency pursued by the 2nd lien but if they go through a shortsale that the 2nd lien can still go after the borrower. There seemed to be conflicting information from the person they consulted.

Comment by David Dee on November 30, 2009 at 4:09pm

Catherine, thanks for the follow up. Just out of curiosity, how do you find out whether the note has an anti-deficiency clause in it?

Comment by Kent Dills on November 30, 2009 at 10:01am

Bettie is absolutely right. The Deficiency Judgment gets bigger after the auction and that should always be put in perspective. I don't mean to speak for others who started this discussion; but, it's my understanding that we're still in the negotiation phase and we've only just received the first Approval Letter from the bank's negotiator. If I'm right, we've just gotten the first letter, and it just so happens that it has deficiency language on it, no problemo. We just push back and ask them to remove it and see if they fold. Next, ask for a promissory note to take off the deficiency language if have to. But - as a matter of course - we should never just accept the deficiency language without putting up an argument/discussion!

Comment by Bettie Meadows on November 30, 2009 at 9:34am

If the seller decides to not go through with the short sale., he will still get the deficiiency when it goes to the auction block and through REO. And the deficiecny judgment will probaly be more than if he had accepted the short sale.

Comment by Katerina Gasset on November 30, 2009 at 4:03am

David- It all depends on their PAS agreement with the note owner. While the law is state specific, the note owners will also each have their own stipulations. Note owners are looking out for their investors- the people buying their stocks- their duty is to make sure their shareholders are protected. Our duty is to do all we can to get our sellers the best deal.
Just remember, if you can't get it, it is still better than a foreclosure.
Also, not all California notes are anti- deficiency. You have to check which ones are and which ones are not. You can not just assume that all CA notes can not be pursued as deficiencies.

Comment by David Dee on November 29, 2009 at 8:40pm

The negotiator is from the East Coast. I wonder if that is the reason why they sent that "verbage about pursuing the deficiency" even though the property is located here in Southern CA which is an anti-deficiency state. Hmm..interesting that the negotiator mentioned this is a "new" California letter. Will need to follow up with them to see about getting the wording changed as the seller is not comfortable with the approval letter as presently shown.

Comment by Catherine Myers on November 29, 2009 at 8:30pm

For the first time that was the verbiage the first time. As others have noted, they are typically very tough. But the negotiator on this one told me that this is the "new" California letter. But it sounds like not for all of their notes.

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