Chase deficiency

Hi all,

I completed a short sale two years ago on a Chase first and now Chase is pursuing the seller for the deficiency (through Allied Intl Credit). Chase says they have not sold the loan to Allied. I'm trying to get the deficiency waived (about $44K).

The seller actually had to bring $6,200 to closing to settle a second with HSBC. She received nothing at closing and could have done a bankruptcy for less money but chose to do the right thing. She doesn't have the money to pay and I'm getting the usual run around at Chase trying to get an answer.

When I am really stuck on a BofA issue I either use the Twitter team or the office of the preisdent. Does anyone have similar kinds of contacts at Chase that will help to get an answer.

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Permalink Reply by SE Davis on April 5, 2012 at 9:48am

Have your client dispute that debt in writing with certified mail to Allied Intl Credit.

Sometimes these are accidents via poor communcaition between the bank collection department and their loss mitigation department.

If the written dispute is done properly and within a time frame window Allied will send the account back to Chase.

I've done this many times for past referrals when their RE agents did not negotiate the DJ out of the short sale written approvals.

This works buddy next time make sure you get rid of that DJ language in the SS approval before closing.

Permalink Reply by Michelle Calandro on April 9, 2012 at 12:22pm

SE Davis-Can you help me?

I am an agent working on the short sale of my own property.  We received the approval letter from Wells Fargo today.  It states, "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."   They previously requested a $4,000 cash contribution at closing.  We replied that we have no cash, as they have seen on our bank statements and we are considering bankruptcy.  In the end they agreed to no cash contribution.   After receiving the approval today I emailed the negotiator stating that we need the right to deficiency removed.   She replied, " a payment towards the loss was requested because this was denied a waiver is not a possibility. Thanks!"

Permalink Reply by Eric Mieles on April 8, 2012 at 1:34am
My question is did you get the deficiency waived in the approval letter when you did the short sale?? Can you check and read the verbiage to be sure.
Permalink Reply by Kevin Rhatigan on April 9, 2012 at 3:39am

The approval letter was not clear. First paragraph said "Chase has agreed to accept less than full payoff to release its lien interest for the referenced loan". Page 2 said  "The terms of this agreement may constitute a forgiveness of debt for the referenced seller". When this short sale closed two years ago most Chase short sales of first mtgs were forgiving the debt even though we could not get them to change the approval letter to state clearly that the deficiency would be waived. Under the terms of the approval letter it looks to me like they could pursue. I am trying to get them to forgive not based on the legal terms but on ethical terms. Why should they go after someone with very limited assets who did the riht thing? They now routinely forgive deficiencies on first mtgs and on a lot of seconds. So I am looking for someone at Chase to whom we can make our case.

Permalink Reply by Smitty on April 9, 2012 at 2:19pm

Does it say the debt will be reported as "paid in full?"  Exactly how did they say they were going to report the debt to the credit bureau?

Permalink Reply by SE Davis on April 9, 2012 at 3:55am

I understand Kevin;

Dispute the debt in writing with the collection agent.

The account will be sent back to Chase and you can discuss it with them at that time.

I've had clients dispute this debt category two and three times with different agents and they finally just go away.

Permalink Reply by Joseph Alfe on April 9, 2012 at 8:05am

wait...did the Chase approval letter waive deficiency  If not, she owes it, and you are now moving into practicing law by trying to negotiate further.  You should have had an attorney on this two years ago, turn it over to one now before you get sued.

Permalink Reply by SE Davis on April 9, 2012 at 9:36am

Allow me to re-phrase my previous comment.

Helping your client dispute a debt by mail is not practicing law.

Google a free template letter on the internet, send it to your client then have them complete the process. Send it to the collection agent via certified mail.

Your client’s addition of incendiary language works very well.

This will cost $4 (certified mail) and the chance of success is sky high. This account may eventually disappear. If it pop’s back up your client simply disputes it again.

Assisting your client in good faith will minimize the chance of a past client lawsuit.

WHY THIS WORKS: Lenders collection departments and loss mitigation departments are still not communicating with one another. As you mentioned short sale approval language has changed quite a lot in 3 years. If that lender is not prosecuting deficiency balance collections now it is highly likely that they are not going to try to collect on the old ones either. Disputing that debt from a collection agent gets that debt sent back to the original lender where it will eventually languish and may even vaporize itself. This debt collection via third party agent is an occasional occurrence on second mortgages even with very clear waiver of deficiency balance language in the short sale written approvals.

  

Permalink Reply by Kevin Rhatigan on April 9, 2012 at 10:11am

Thank you so much !  Any idea on the key phrase to google for the template letter? Would "short sale deficiency forgiveness" work?

Permalink Reply by SE Davis on April 9, 2012 at 10:40am

Kevin; 

Waiver of deficiency balance terminolgy is long gone and does not apply to a third party collection agent.

Debt Validation is the key phrase:

Here are some links that will provide a mini-clinic on the what, how and why?

http://www.debt-n-credit-letters.com/Debt-Dispute/debt-dispute-lett...

http://www.debt-n-credit-letters.com/Debt-Dispute/previously-settle...

http://consumerist.com/2007/07/sample-letter-for-disputing-a-debt-c...

http://www.debtletter.com/Initial-validate-debt-dispute-letter.html

http://www.debtvalidationletter.net/debt-dispute-letter/

Understand your clients premise is that this debt does not exist and is not valid.  Your name does not appear anywhere in the letter.

Don't forget to have them customize their letter with incendiary language. I've condensed these templates down to three paragraphs with the third paragraph being TOTAL NUKEM TILL THEY GLOW without using curse words.

Good luck!

Permalink Reply by Joseph Alfe on April 9, 2012 at 1:49pm

Negotiating terms of a deficiency or debt is absolutely beyond the scope of your duties as an agent and considered the practice of law, or at the very least, that of a debt settlement licensee  Don't believe me?  Call your state comissioner or Attorney Generals office and find out for yourself.

Yes, you CAN do it, but ask yourself if you SHOULD.  Is it worth the liability?

Permalink Reply by SE Davis on April 9, 2012 at 2:07pm

Michelle;

It appears they are trying to penalize you.

Why in the world would you be doing your own short sale?

I may be able to give you some suggestions however doing this privately would be better for you.

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