Mortage Release Language From Central

Hi all,

I've been searching the forum and I think I have the answer to my question but thought I'd throw it out there to double check.

I received an approval letter from central for a short sale here in Washington. Only one lender. No promissory note or cash at closing.

My question is whether the release language is sufficient to prevent pursuit of deficiency a I've been told the bank won't change it.

The letter states: In exchange for the amount of $XXX,XXX.XX (net to bank) we agree to issue a
Release of the Mortgage dated June 18, 2008 in the amount of $XXX.XXX.XX (which is the full amount owed)


I've advised the sellers to run it by an attorney of course. But I don't think they will.

Thanks for any help.

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Replies to This Discussion

Permalink Reply by Joseph Alfe on February 24, 2012 at 6:16am

This is not a full release and you MUST refer this to an attorney.  Discussing approval letter language and deficiency is the practice of law.

Permalink Reply by Jae Evans on February 24, 2012 at 6:40am

Hi Joseph,

I would never practice law. I am asking for my own purposes. As you can see from my statement above I already advised the sellers to consult an attorney. All though I knew the answer it never hurts to run stuff by your piers, right? I thought that's what this forum was for?

Which brings me to my next question.

Anyone ever gotten Central Mortgage to revise their approval letter? They tell me they won't.

Permalink Reply by Smitty on February 24, 2012 at 7:40am

you should see the terms "release lien" and "full satisfaction of debt" -  If you don't see both of those phrases, it's problematic AND I agree with Joseph, they need to run it by an attorney. 

Permalink Reply by Drew Ludlow on February 24, 2012 at 2:53pm

I would hazard a guess that this is not a full satisfaction, but then again, I am not an attorney ;-)

 

By the way, in NC, the Bar and the Real Estate Commission have expressly made it clear that not only are we not supposed to discuss approval letters and deficiency, but we are not to even negotiate with the banks.  All we can do is negotiate the contract between the Buyer and the Seller.  That is it.  We can not negotiate debt at all! 

Someone tell me how this is doing any good for our Sellers.  What, am I to explain to the Sellers that I have taken them as far as we can go, and now I can't finish the deal?

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on February 26, 2012 at 3:31am

I am not an attorney - but just reading the language it seems to say two things;

1) In exchange for the amount of $XXX,XXX.XX (net to bank) we agree to issue a
Release of the Mortgage dated June 18, 2008

2) the amount of $XXX.XXX.XX (which is the full amount owed)

 

To me it reads; We'll give you a Release and we're re-affirming how much you actually owe us.........

 

You are correct to send the seller to an Attorney

 

 

Permalink Reply by Tara Samney on February 26, 2012 at 4:15am

Is it an approval letter for non-HAFA Freddie Mac backed short sale? If so they don't include a deficiency waiver.  They also don't change the letter.  .

Permalink Reply by Kevin - Greenville, SC on February 29, 2012 at 7:05pm

■ Reinforcing the requirement that the Servicer, for itself and on behalf of Freddie Mac, must waive all
rights to seek deficiencies for short payoffs and deed-in-lieu of foreclosure transactions on Freddie
Mac Mortgages that have closed in accordance with the Guide

http://stopforeclosurefraud.com/2012/02/17/freddie-mac-to-servicers...

Permalink Reply by Paula Cotton on February 26, 2012 at 9:36am

Jae,

 

I had the same thing happen with a client. Depending on your potential lost commission, you may want to pay the consultation fee or offer to pay half for your client if they are unwilling to do so. How are anti-deficiency statutes written in your state? Your client's attorney may need to write a demand letter to the lender requesting the change of language. My clients did this but lender was unwilling to change it, until I contacted the Vice President of the Servicer. You may need to take a no holds barred attitude on this one. My suggestion is to not take "NO" for an answer at this point. It is important that this letter come from an attorney to the lender. Good Luck!

Permalink Reply by Michael Schneider on February 26, 2012 at 3:08pm

I think, if the question needs to be asked, then the answer is no, this statement does not waive the right to pursue IMHO.

Permalink Reply by Patrick Perkins on February 26, 2012 at 4:07pm

As an attorney licensed in California, that language clearly does NOT prevent the lender from pursuing the deficiency. 

In California, the law was amended last July that prevents all junior liens who accept funds in a short sale from collecting on any deficiency balance.  Up to now, the law has not stopped junior liens from participating in short sales.  Probably because they are getting what they would get in the market in which they sell that junk debt.  That will eventually change as the economy improves.

Permalink Reply by Kevin - Greenville, SC on February 29, 2012 at 7:03pm

What law requires a Homeowner or anybody else for that matter to consult an Attorney for anything in life?  You can even represent yourself in court.  I am not saying you should give legal advice, but if the Homeowner is comfortable to proceed as-is without consulting an Attorney, they are within their rights to do so.

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