Hello all.  I just received an approval letter from Indymac stating

"The borrower must sign the attached acknowledgement to all terms specified in this approval and

must acknowledge that Indymac Mortgage Services retains all deficiency rights as provided by the

note, deed of trust and/or security agreement in accordance with local and federal laws".  The negotiator said they will not change the language.  Has anyone had any luck getting the language removed?  Should we have an attorney write a letter stating that Oregon is a non-def. judgement state and that he will advise his client to go to foreclosure?  Thanks so much.  Robin

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Hi robin...I just received an approval letter today from indymac without that language....sellers have been released of all liability. This is Washington state.

Wow, thanks Shannon.  Looks like I need to do battle!

Thus far you have a failed short sale. Make it clear your seller will not close with deficiency. Its in seller's economic best interests to ride out foreclosure rather than take deficiency.  The subject short sale provides lender with its best net cash alternative to foreclosure...

Sell the negotiator. Sell his/her supervisor, and then sell the ultimate investor. Or give up. 

Hi robin...my email address is [email protected] if you want to contact me directly. I can fill you in on the details of mine and what I had to do to escalate.

Hi Robin. I too just closed with IndyMac with full waiver of deficiency. Maybe you are not asking the right question. The question to the negotiator should be "What would it take to get the deficiency waived?" IT could be as simple as the seller making a small cash contribution at closing. If you are stating that OR is a non deficiency judgment state and the lender has no rights according to state law then what difference does it make? Negotiate the best deal you can for the sellers then have them seek legal advice about whether to accept the terms and conditions or not. That's really all we can ever do.

I have asked Chase to change the language and they have changed. Sometimes we need to be willing to lose in order to get something. Tell the client will prefer to stay in the house, don't pay rental and go to foreclosure....

Thanks everyone for your great comments.  You are correct that foreclosure may be the best option for the client if we can't get the deficiency language removed.  Escalating is the plan for the day, and I like the idea of a small cash contribution.  It is interesting how things change.  Two years ago I had a 500K home go to foreclosure with Chase because they refused to remove the deficiency language, even with an attorney writing a letter regarding state law.  I guess they figured it out.  The other thing which was ridiculous is that we had a sale date of Feb. 1 which I was able to get postponed to March 5, and then when the letter came yesterday they want a decision by the 8th and the buyer to close (who needs a loan) by the 27th!  Yup I need a supervisor!  Best to all.  Robin

Robin, I'm confused, and I assume this is an issue for a local attorney. If you are in a no-deficiency state, and the short sale agreement has a deficiency clause, isn't the deficiency language worthless? They cannot sue for it? If true, then get an attorney opinion confirming that and close. I work in a deficiency state so it is not an issue we deal with. I'm interested in the answer, though!

It only applies to foreclosures.  We have past a law recently though that the banks have to choose to 1099 or pursue the deficiency, they can't do both.

Thanks for the knowledge, Robin, that deficiency waiver only applies to foreclosure per state law. So, I see it as a matter for salesmanship. Make the negotiator understand Owner's legal position, that is is logical that they would rather go to foreclosure to get deficiency waived, and sell for short sale with no deficiency. Then go around the negotiator if nothing happens. Use charm and guile. good luck. 

Hey Superstars!

I have an IndyMac one for you.  Just received an approval letter with no mention of deficiency waiver.  Here is the wording:

If all conditions are followed the property/borrower(s) will be released from this lien. OWB will report a Special
Comment Code of “AU: Account paid in full for less than the full balance” to the credit repositories for both the 1st
and 2nd loans referenced on this Approval Letter.


I went back to the Servicelink person and asked what it would take to insert deficiency waiver language thinking she might give me an amount that my seller could negotiate.  She came back with a response of:

 ...the directive from the Legal Department and the Client is “No Deficiency Letter”. The state law supersedes the letter and if the seller does not wish to move forward the loan will be removed from the short sale workstation.


To me that reads that they are willing to waive deficiency but the demand letter I presented to my client does not have that.  I want to go back to her (negotiator from ServiceLink) and say thanks for the no deficiency but I would like the wording to be in the demand letter.


Does anybody have an IndyMac / OWB demand letter that clearly calls out waiving of deficiency that they would be willing to share (without your client details) so I can tell her "make my client's letter just like this..."?


This transaction is in Minnesota and we are a hybrid deficiency state - deficiencies are legal prior to the sheriff's sale but during redemption (6 months) no deficiency allowed for the creditor that started the foreclosure process

Thanks,

Steve


This is an issue for a local attorney, but I'm wondering, doesn't "will be released from lien" mean no deficiency? 

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