2nd Lienholder Deficiency Judgment Statement
Okay, so I received ss approval from 1st, B of A. They even agreed to REMOVE the statement regarding a deficiency judgment. Now I receive ss approval from the 2nd. Approval states the sum of not less than $3K for the release of lien on the mortgage only. The amount will be applied to the principal amount of the loan. The release of mortgage does not constitue a release of lien on the existing note or liability for the remaining balance on this account unless it has been discharged in bankrupcy.
Seller is unwilling to move forward to sell as short sale based on the above verbiage. 2nd still wants their money (by the way, 2nd is with Principal Bank) and states Sellers still owe the deficiency amount.
I have waited since July for approval letters. B of A has agreed to remove deficiency statement; 2nd is another story. 2nd will take a settlement from the Sellers but I told them if there is an exchange of money it will go to the 1st. They let me know they can agree to some type of settlement after transaction closes. Is this legal? Please help............Sellers do not want to agree to accepting a deficiency judgement; 2nd states they will not remove deficiency statement.
Any input is much appreciated.
Replies to This Discussion
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Permalink Reply by Cheri Smith on
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Diane, I would LOVE to know how you got B of A to agree to remove the statement regarding a deficiency judgment. I've been hearing that they absolutely will not do it and many seasoned short sale listing agents in my area (Bend, OR) are no longer willing to take on B of A short sales because of it.
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Permalink Reply by David Dee on
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Diana, same question as Cheri. From my understanding, having BofA remove the deficiency judgment is a challenge compared to other banks. How did you happen to get them to waive this particular clause?
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Permalink Reply by Diane and Doug Briggs on
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I explained to negotiator this file has been with B of A since July and it's been a long, slow process and my credibility with sellers, buyer's agent and buyers is non-existent. I shared this with the Ph. 2 negotiator. In the meantime the file went to the Ph. 3 negotiator who explained the deficiency could not be removed from the approval letter. The Ph. 3 negotiator stated in writing that "Only 1% of homeowners out of 50,000.00 will BAC come after for the deficiency." Shortly thereafter I received revised approval letter from the Ph. 2 negotiator with the deficiency judgment sentence removed. Don't know how this happened but the sellers are happy.
Now it's the 2nd who is being a pain. They will release the lien on the mortgage only. Will not discharge deficiency. One bank agrees to remove; then the other rears its ugly self up!
David Dee said:Diana, same question as Cheri. From my understanding, having BofA remove the deficiency judgment is a challenge compared to other banks. How did you happen to get them to waive this particular clause? -
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Permalink Reply by Darlene Krause on
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We are finding that lenders in second lien position are requiring that the owner remain liable for the outstanding balance. Last year they were more inclined to just accept the amount from the first lender and maybe call for a note for a portion of the amount owing.
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