Replies to This Discussion

Permalink Reply by Kent Dills on May 20, 2010 at 2:48pm

Mike, my understanding is that HUD never comes after the borrowers for a deficiency. So you don't need to worry about a release.

Can anyone else confirm or deny this!

Permalink Reply by Ben Benita on May 20, 2010 at 6:20pm

Blah Blah Blah that is BS.....the Chase negotiator is only doing his job. Try telling the guy:

"NO, that is not good enough......"

and see what happens. Remember, they are called negotiators for a reason my friend.
BEST 2 ways to get deficiecies removed:
Send them some cashola,
or,
threaten to advise the Seller to just let the home go to foreclosure so you can stop wasting your time with it.

Note those 2 choices above to the right person (not the ding dong negotiator you are dealing with) and watch how they "come around", or, "make an exception for you just this once"
Try calling these 2 numbers:
Executive Resolution Group for Chase, 866-605-9253
888-310-7995 (Executive office for Chase)

I have direct contacts at Chase if you want to contact me off of [email protected]

Best of luck

Permalink Reply by John Edelman on May 20, 2010 at 6:43pm

The HUD FHA short sale program (PFS program) eliminates any future deficiecy when the property is sold. This is in the PFS guidelines (Mortgagee Letter 2008-43). Page 15 "Mortgagor Consideration" - Mortgagors, acting in good faith, who successfully sell their properties using this option are relieved of their mortgage obligation and are entitled to a consideration of $750. Additionally, in the same paragraph- If the PFS program is unsuccessful and foreclosure occurs, mortgagors who participate in the PFS program in good faith will not be pursued for deficiency judgements by the mortgagee or HUD.

So - once you are in the PFS program - there will be no deficiency whether you sell the property, execute a deed in lieu or get foreclosed on. However, if the property has not been put into the PFS program - then the rules do not apply.

You will know that you are in the PFS program once the negotiator sends you or the seller the HUD Approval to Participate form (ATP) and the seller(s) sign it and you return it. This form also established the date that the PFS program was started - which is needed to know which tier you are in for the net amount they will expect for acceptance.

Permalink Reply by Ben Benita on May 20, 2010 at 7:18pm

John is 100% correct.....I need to stay off of here when it is late at night, I tend to "react" to negotiator ignorance rather than think things through before responding.....
It is not an exciting read by any means, but, you can easily see a copy if you Google "Mortgagee Letter 2008-43".
Also, a quick update, the Seller is now actually allowed $1000 in concessions for an FHA short sale and I believe $1500 if the short sale is run through HAFA.
That HUD Form John refers to is HUD-90045 (again you can Google it to see samples). It does show pricing and acceptable NET amounts......it is EXCELLENT if you take the time to get a copy.

Permalink Reply by Mike Zwarick on May 21, 2010 at 12:53am

Thank you for everyone's response! Great information.

Permalink Reply by John Edelman on May 21, 2010 at 1:36am

Ben is correct. The maximum amount the seller can get in the HUD "seller incentive" is $1000. However, in order to get the full $1000 - the property must be sold and closed within 90 days of the PFS date (shown on the top right corner of the ATP form. If it takes longer than 90 days to sell, then the "seller incentive" will be reduced to $750. If you read thru the PFS program (yes it is pretty dry) - it will explain all of this. I was just typing the exact language in the sentence from the PFS guidelines.

Also, keep in mind that there are some costs or fees that you may run into that will eat into or totally eliminate the "seller incentive" - 2nd liens, sometimes HOA fees, home warranty is the seller allows it, etc.

Permalink Reply by steve Letterman on May 21, 2010 at 4:06am

Look into HAFA, FHA/CHASE are part of the program and all deficiency will be relased.
Good Luck,

Steve Letterman

Permalink Reply by Phil Hanner on June 3, 2010 at 9:29am

Ask to see a copy of the satisfaction the lender will file in public records - it may satisfy your seller - see below.

If a lender satisfies the mortgage and removes the lien to allow a short sale, and 1099s the borrower for the difference, how can they come after the borrower later? The debt is gone, the lien is gone - they even told the US Gov't that they forgave the debt completely (via 1099). Are you going to pay taxes on a forgiven debt that wasn't really forgiven?

I hear "deficiency" thrown around too often. To me a deficiency is associated with a foreclosure - not a short sale. They might ask a borrower to sign an unsecured note for a negotiated amount - but that is not a deficiency in my book. Only a judge can order a deficiency judgement.

If anybody has other ideas I am very open. They might come after you on the original note - but not if they 1099 you, and not if they file a satisfaction related to the note. Go look at the satisfaction filed on one of your old short sales - here is what is in the public record on one of mine from 2005. "Holder hereby certifies as to the full payment and satisfaction of said mortgage deed and note, and surrenders same as canceled, and hereby directs same be canceled of record." This makes it clear to me that there is no more debt at all - they cannot claim any further rights.

Please note that this is a Florida case and Florida is a judicial foreclosure state.

Phil

Permalink Reply by Ben Benita on June 4, 2010 at 12:51am

Phil -- I am 99% certain the Lender can do either a 1099 OR file for deficiency, but not both. Given a choice, both can be cleared though the tax issue is usually easier as I understand it (the Seller can file IRS Form 982 to get out of tax consequences if eligible, Google "IRS Form 982" and have them go see their accountant).

Deficiency - these can usually get waived by throwing some cash out to the lender either at closing, or, sometime down the road.

I have been told MANY times the ivenstor will very rarely go after the Seller, primarily b/c of logistics (they need to hire an attorney, trck down your Seller, verify he/she HAS the deficiency amount, file and win in court, then, try to collect......all the whil HOPING the Seller does not file bankruptcy or learn how to protect assets)

Phil Hanner said:

Ask to see a copy of the satisfaction the lender will file in public records - it may satisfy your seller - see below.

If a lender satisfies the mortgage and removes the lien to allow a short sale, and 1099s the borrower for the difference, how can they come after the borrower later? The debt is gone, the lien is gone - they even told the US Gov't that they forgave the debt completely (via 1099). Are you going to pay taxes on a forgiven debt that wasn't really forgiven?

I hear "deficiency" thrown around too often. To me a deficiency is associated with a foreclosure - not a short sale. They might ask a borrower to sign an unsecured note for a negotiated amount - but that is not a deficiency in my book. Only a judge can order a deficiency judgement.

If anybody has other ideas I am very open. They might come after you on the original note - but not if they 1099 you, and not if they file a satisfaction related to the note. Go look at the satisfaction filed on one of your old short sales - here is what is in the public record on one of mine from 2005. "Holder hereby certifies as to the full payment and satisfaction of said mortgage deed and note, and surrenders same as canceled, and hereby directs same be canceled of record." This makes it clear to me that there is no more debt at all - they cannot claim any further rights.

Please note that this is a Florida case and Florida is a judicial foreclosure state.

Phil

Permalink Reply by Phil Hanner on June 4, 2010 at 1:01am

Thanks Ben - I may be calling you - have one going on with Chase right now, waiting on a contract. I am so glad I found this website.

Ben Benita said:

Phil -- I am 99% certain the Lender can do either a 1099 OR file for deficiency, but not both. Given a choice, both can be cleared though the tax issue is usually easier as I understand it (the Seller can file IRS Form 982 to get out of tax consequences if eligible, Google "IRS Form 982" and have them go see their accountant).

Deficiency - these can usually get waived by throwing some cash out to the lender either at closing, or, sometime down the road.

I have been told MANY times the ivenstor will very rarely go after the Seller, primarily b/c of logistics (they need to hire an attorney, trck down your Seller, verify he/she HAS the deficiency amount, file and win in court, then, try to collect......all the whil HOPING the Seller does not file bankruptcy or learn how to protect assets)

Phil Hanner said:

Ask to see a copy of the satisfaction the lender will file in public records - it may satisfy your seller - see below.

If a lender satisfies the mortgage and removes the lien to allow a short sale, and 1099s the borrower for the difference, how can they come after the borrower later? The debt is gone, the lien is gone - they even told the US Gov't that they forgave the debt completely (via 1099). Are you going to pay taxes on a forgiven debt that wasn't really forgiven?

I hear "deficiency" thrown around too often. To me a deficiency is associated with a foreclosure - not a short sale. They might ask a borrower to sign an unsecured note for a negotiated amount - but that is not a deficiency in my book. Only a judge can order a deficiency judgement.

If anybody has other ideas I am very open. They might come after you on the original note - but not if they 1099 you, and not if they file a satisfaction related to the note. Go look at the satisfaction filed on one of your old short sales - here is what is in the public record on one of mine from 2005. "Holder hereby certifies as to the full payment and satisfaction of said mortgage deed and note, and surrenders same as canceled, and hereby directs same be canceled of record." This makes it clear to me that there is no more debt at all - they cannot claim any further rights.

Please note that this is a Florida case and Florida is a judicial foreclosure state.

Phil

Permalink Reply by Ben Benita on June 4, 2010 at 3:32am

Phil -- I am hard to reach on the phone, e-mail is best - [email protected] to help where I can.