PNC clause locks in borrower for balance

Early in the process with PNC on a second deed of trust in Arizona.  This clause they have in the packet is very scary.  Myself and by attorney don't want the borrower to sign.  It states if they sign they will still be held responsible for the balance even if we come up with a settlement figure.  If the packet is not fully filled out they will not process the file.   I emailed the negoiator that sent me a list of items needed that we have a problem with this clause: 

 

If your creditor agrees to enter into a short sale, the mortgage or deed of trust securing my/our Account will be

released upon payment of the agreed upon proceeds from the sale of my/our property. Because it is a short sale,

the amount that will be paid to your creditor is less than the balance owed on my/our Account. Unless

prohibited by applicable law, I/we agree to remain responsible for the repayment of the remaining balance on

my/our Account pursuant to the terms of my/our note or line of credit agreement. By signing below, I/we

acknowledge and agree to the foregoing.

Notice: This Short Sale Deficiency Agreement is not applicable to any debts which have been discharged

in a bankruptcy proceeding under the U.S. Bankruptcy Code.

 

 

Any suggestions on how to handle.  Borrower signs this and I will be in potential hot water.

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Replies to This Discussion

Permalink Reply by Lauren Mayer on April 25, 2013 at 1:52am

Hello All, I want to let you know how this turned out and hopefully it will help others with this same question or problem.  Just to remind everyone, this was a HELOC 2nd and the first was being paid in full so only short sale the HELOC loan. In hindsight, I would have tried marking through the section of the paperwork where the Seller agress to remain responsible - try sending that first and see what happens.  I didn't think to do that but it might be worth a try?  We offered $28,000 and they countered (see comments above) but I went back and forth with the negotiator via email and explained that my seller was unable to contribute any more.  This back-and-forth negotiation results in a couple of reductions but eventually we agreed that the seller would increase the contribution to $33,000 and they sent me a letter agreeing to release the lien and waive deficiency.  This whole process - from start where I sent the paperwork to PNC Bank - took about 3 weeks total.  So they were very quick to respond and it was actually a pretty good experience.  Not sure if I just lucked into a great person to work with there but this is how it went for me.  If anyone has more questions, let me know.  Thanks to all who helped me here!

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