Approval letter does will NOT waive the deficiency, can it be amended?
Has anyone recently been successful in getting Wells fargo to change the verbaige in their approval letters to waive the deficiency? The way it reads clearly states that they do NOT waive the deficiency balance and they even list the amount they will still owe!
Page 1: "In a short sale transaction, when a property is sold for less than the amount still owed on the first mortgage, the dollar difference between the mortgage amount due and the sales proceeds is known as a "deficiency balance". Nothing in this Demand Statement or in the release of the mortgage shall waive the right to seek a deficiency under the loan documents or any of its other rights thereunder, and the obligations evidenced by the note shall remain in full force and effect until paid in full."
Page 2: "Based on the terms of this letter, the unpaid principal balance, and estimated costs and fees associated with the mortgage loan, the deficiency balance is estimated to be $XX,XXX.XX if the short sale is completed by the date of closing referenced above. The Lender (and other interested parties) retains the right to seek your payment of the remaining deficiency in the future (although this rarely happens). Please understand that Wells Fargo Bank, N.A. will report amounts of debt that have been cancelled to the IRS, if required to do so under IRS regulations. As a mortgage servicer, Wells Fargo Bank, N.A. cannot provide tax advice. Please consult a tax or legal advisor for assistance regarding any tax or legal implications associated with a short sale and the cancellation of debt that may result. "
It's reassuring that they state "Although this rarely happens" but I'd like to hear from others if you've been able to get them to change the wording completely.
Replies to This Discussion
-
Permalink Reply by Michael Hayley on
-
This is the letter used when deficiency is not waived. You want to negotiate for the letter that expressly waives deficiency. See the sample letter at the top of this section for a contrast. "Under what conditions-terms will you fully release from deficiency? The seller cannot close under these terms".
-
-
Permalink Reply by Neil L. on
-
So it does exist? We asked them to waive it with the initial offer but got this letter as a response. Do you have any suggestions on how to get it approved quickly?
-
-
Permalink Reply by Cheri Smith on
-
Hi Neil,
Is it the seller's principal residence or an investment property? It looks like you're in Kentucky. Is your state a judicial or non-judicial foreclosure state? I ask because here in Oregon we're primarily a non-judicial foreclosure state, which means if the 1st lien holder completes a non-judicial foreclosure, they have no right to pursue a deficiency, and I often use this fact in negotiations with the lender. For example, if the seller has already received a notice of default, I would send a message in Equator that says "Wells Fargo has elected to pursue a non-judicial foreclosure on this property. In the state of Oregon, a deficiency judgment cannot be obtained through a non-judicial foreclosure. The sellers' attorney has advised them not to move forward with this short sale unless Wells Fargo agrees to waive their deficiency rights. Without this guarantee, there is no incentive for the sellers to continue with the short sale. They would simply allow WF to foreclose knowing that WF cannot pursue a deficiency." Of course it will depend on your state foreclosure laws but I always start there.
-
-
-
We have no such laws here in Kentucky and we're a Judicial State. Those are good ideas for your area though. Have you ever had a lender tell you no when you put it that way?
-
-
-
I have not done a Wells loan for 6 months, starting one now, but I'd say that some 15% of my short sales are approved with deficiency at first and then negotiated to deficiency-waived later. Negotiate...
-
© 2024 Created by Short Sale Superstars LLC.
Powered by
**********************************
like buttons