Replies to This Discussion

Permalink Reply by Terry L. Osburn on May 23, 2010 at 5:14pm

Most likely the attorney is reviewing the verbiage to ensure the seller is not ensnared for future deficiency judgment.
It is unfortunate but sometimes the lack of verbiage, how it is stated etc unless rewritten will require the seller to reject signing and moving forward with a short sale. OR it may mean that the listing agent needs to determine what the seller needs to bring in or whether the buyer can contribute more that would allow the removal of such verbiage.

Permalink Reply by Neil L. on May 24, 2010 at 1:54am

Even though a lender doesn't put the verbiage in there to waive the deficiency, how often does the lender actually pursue the homeowner, really? To reject a short sale acceptance because the lender won't put it in writing to waive the deficiency is an extremely silly thing to do IMO.

I would love to hear of some instances where the lender DID pursue them and GOT the deficiency judgement against the homeowner from the judge, but i doubt there are many out there--even on shortsalesuperstars. Why? because if they accept a short sale, the lender already knows it's not worth pursuing the owner. The lender is far better off sending a 1099 instead rather than rack up more attorney fees in this market.


Terry L. Osburn said:

Most likely the attorney is reviewing the verbiage to ensure the seller is not ensnared for future deficiency judgment.
It is unfortunate but sometimes the lack of verbiage, how it is stated etc unless rewritten will require the seller to reject signing and moving forward with a short sale. OR it may mean that the listing agent needs to determine what the seller needs to bring in or whether the buyer can contribute more that would allow the removal of such verbiage.

Permalink Reply by Margaret C. Taylor on May 24, 2010 at 2:06am

Surely this may be setting up your client for collection in the future. The Lender can sell the Deficiency Note for pennies on the dollar and a collection agent can start pursing your client.

Permalink Reply by Alan Remigio on May 24, 2010 at 3:31am

Linda, In your case, I do not know why an attorney is "looking over" the short sale for approval, unless the attorney is the real negotiator. You did indicate that you have a negotiator and if you are unclear on your negotiator's duties, you must have it defined now. It is my experience the listing agent's "attorney" is doing the actual negotiating, unless that duty was given to you and your representatives via contract addendum. Can't have two negotiating with the lender rep.
"Close to closing" does not guarantee closing, as past responses on this site have indicated. On a positive note, the negotiators may be near a final decision. Your negotiator may have a feel for the outcome and a discussion in that direction might give you a little more comfort.

Permalink Reply by Alan Remigio on May 24, 2010 at 3:57am

On the collection issue, there is certainly a chance to collect a deficiency judgment.You can Google "deficiency judgment" for your state and see what is enforceable. Arizona, for example will deny deficiency judgments on purchase money mortgages for homes with less than two and a half acres of property, in spite of the lenders' insistence that the seller agree to it. Law overrides business practices.
The cost to the lender to pursue this avenue may not be economically viable today, but in a better business climate it could come back to bite the seller in a short sale. It is still (if judgment is awarded) an income producer for the lender as it could sell this judgment to a collection agency for a discount, or just not pursue it at all. However, it is a "future" item and one that does not have strong data, currently.
There are daily changes in the foreclosure arena with each individual lender as well as the state and national governing bodies as they move to protect their constituents. Look at your state and see what protections the seller has and also what is in the works. You'll be way ahead of the game when negotiating.