Replies to This Discussion

Permalink Reply by Bill Black on July 15, 2010 at 12:25pm

Well let's start with the fact that your Real Estate Attorney AND your Realtor did not know that when you have a first and second they have NO relationship together. FIRE THEM BOTH! You can try to ask them how many short sales have they successfully completed with a first and 2nd lien....then fire them. Sorry if that sounds harsh but we have been fixing these types of issues from so called "short sale specialist and it really frustrates me when people have no clue what they are doing to someones future..

Now to explain this you need to understand the lending industry and servicing side of things. When you received your loan it was two complete different sets of documents, terms and conditions including rates. These are bundled into portfolios at different risk levels and different profit margins. One could be sold off without the other so they are NEVER tied together. Once could be on the books for the equity division and one on the books for a specific branches portfolio loans. So ALWAYS plan on submitting TWO packages and TRY to get them to converse but sometimes they have no access to the others systems.

Now- US Bank and deficeincies. I am in Washington State and in our State if you foreclose you remove yourself from the right of a deficiency. We had a short sale under management and the balance owed was $220,000. Our net to them was around $127,000. They agreed to remove lien in order to sell but required a signed agreement to be able to collect on the deficiency which is 6 years from 1st delinquency in Washington. So that means IF we let it go to foreclosure the seller is clear of all future debt. If he agrees to the deficiency then they or some other bottom feeding collection company will be able to persue a deficency judgment for the $100K and if they get it they have 10 years to collect including garnish the wages. We educate the seller and let them make the decision. I personally would let it go to foreclosure.

US Bank is forcing people to foreclose or they pressure Realtors into assisting the home seller to agree and then later get sued. US Bank are not flexible and seems to have an attitude like they can care less.

Good luck and sorry to sound negative- battled the banks and Realtors today but I do feel like I won for the home sellers which is what is important in the end.

Bill Black CMP,.CDPE
Mortgage Banker-
Loan Network LLC www.aofdowntown.com
Business Development Manager
NW Loan Modification Center www.nwlmc.com
NW Short Sale Network www.nwssn.com

Permalink Reply by Jennifer McNitt on July 16, 2010 at 5:02am

I think some of it has been that we were not asking the right questions. I'm in Minnesota and have asked if we are a non deficiency state or not.

When my ex-husband called the bank he had to ask to talk to a supervisor to get anywhere in the discussion to find out what we needed to do.

What he was told though is that US Bank is not doing HAFA yet until Aug. We started the process in mid-April with the assumption that it was eventually going through HAFA. At that time we received a letter from USBank that outlined all of the records that we had to send them including our hardship letter. That letter was dated April 23rd and we sent everything in around May 17th. We received an offer on Jun 14th.

We finally received another letter from US Bank on June 24th that the request had been received for the short sale review. We were told that this would take another month for the short sale review. The BPO was just done yesterday.

So it *seems* like we're moving ahead other than for the 2nd lien gotcha. I have a feeling that we really wouldn't have been able to do much with the 2nd lien anyway until now though.

I just don't understand why it took so long for US Bank to turn our file over as a short sale from when the information was first received. We asked for the short sale from the get-go so why did it have to take a month go through the initial look through to say 'yes this is a short sale'.

Just a little fustrated with the bank, but I know that I'm not the only one sharing this fustration.

Permalink Reply by Elise Fay on July 19, 2010 at 9:31am

I just received an approval letter from US Bank. I must say they were wonderful to deal with even thru a few buyer cancellations. The approval letter is great BUT...I am concerned and have advised my seller to consult an attorney, because it says NOTHING about a Deficiency. It does NOT say that they reserve the right to pursue a deficiency judgement and it does NOT say that they Waive the right for a Deficiency judgement.

This is an original, single loan, owned by Freddie. Any thoughts or concerns about the lack of language on the approval?

Elise Fay

Permalink Reply by Richard Reeves on August 16, 2010 at 2:43pm

Jennifer

I also live in Minnesota and am in a similar situation. Usbank holds both my first and second mortgage. My first has gone into default because my ex-wife would not sign the papers to reset the balloon. I am told that Freddie Mac holds the first and it seems that they are open to a short sale but when I called the loss mitigation department in Oregon all I got was "You have to sign a deficiency agreement or we will not approve the short sale." My attorney thinks that this is the standard first reply. What I do not know is if there is anyone in Usbank who is willing to negotiate or will they have the same attitude all the way to foreclosure. I would be interested if anyone knows a number to someone who is able and willing to negotiate at Usbank. I share your frustration! I have been with Usbank for 20 years and the local branch has been great to deal with but once an issue leaves their jurisdiction it seems to fall into a black hole.

Jennifer McNitt said:

I think some of it has been that we were not asking the right questions. I'm in Minnesota and have asked if we are a non deficiency state or not.

When my ex-husband called the bank he had to ask to talk to a supervisor to get anywhere in the discussion to find out what we needed to do.

What he was told though is that US Bank is not doing HAFA yet until Aug. We started the process in mid-April with the assumption that it was eventually going through HAFA. At that time we received a letter from USBank that outlined all of the records that we had to send them including our hardship letter. That letter was dated April 23rd and we sent everything in around May 17th. We received an offer on Jun 14th.

We finally received another letter from US Bank on June 24th that the request had been received for the short sale review. We were told that this would take another month for the short sale review. The BPO was just done yesterday.

So it *seems* like we're moving ahead other than for the 2nd lien gotcha. I have a feeling that we really wouldn't have been able to do much with the 2nd lien anyway until now though.

I just don't understand why it took so long for US Bank to turn our file over as a short sale from when the information was first received. We asked for the short sale from the get-go so why did it have to take a month go through the initial look through to say 'yes this is a short sale'.

Just a little fustrated with the bank, but I know that I'm not the only one sharing this fustration.

Permalink Reply by Jennifer McNitt on August 17, 2010 at 3:54pm

"You have to sign a deficiency agreement or we will not approve the short sale."

This is the standard line that we've been told also. Our attorney was even told that our real estate agent agreed to the deficiency when she never did! Her last conversation with them was that she was going to discuss this with us before any decision was made.

They also told our attorney that our line of credit was an unsecured loan when that is definitely not the case. We talked to a banker at USBank who faxed us the paperwork that shows that it is a secured loan.

Our attorney eventually talked to a supervisor in the loss mitigation department after a bit of a run around. He was told that they WILL negotiate a settlement for the deficiency so we only have to pay a small fraction of the entire amount. We came up with a number that we could afford to pay and he sent them a letter with our settlement offer. He was told that it would take them 2 weeks to review the letter. He's under the assumption that they will come back with a counter offer though.

So never say yes to the deficiency on the phone! (for they seem to record everything you say) and make sure you have your attorney talk to a supervisor in loss mitigation about a settlement offer. Also a part of the language of the settlement offer is that the line of credit will be marked as paid in full.

Permalink Reply by Kathleen Lordbock on August 17, 2010 at 4:05pm

Minnesota questions on deficiency and timelines for redemption:
Minnesota prefers conducting foreclosures by non-judicial foreclosure/foreclosure by advertisement. Lenders can also file a judicial foreclosure action/foreclosure by action.
Notice Requirements for Foreclosure in Minnesota

Prior to commencing foreclosure, the attorney conducting the foreclosure must file a power of attorney indicating the foreclosure will be pending. A notice of sale must be published for six weeks in a newspaper of general circulation in the county where the property is located. The notice must be served on all property occupants/owners at least four weeks prior to the sale or eight weeks prior to the sale for homestead properties.

Minnesota Deficiency and Anti-Deficiency Laws

The lender may obtain a deficiency judgment if the property is sold at public sale for less than the loan amount.

Minnesota Redemption Rights

Minnesota has a post-sale statutory right of redemption is twelve months if the amount due as of the date of the filing of the notice of sale is less than 2/3 of the original amount of the loan and the property exceeds 10 acres or 40 acres.

Mortgages executed after December 31, 1989 may have the redemption period shorted by court order to five weeks if the property has been abandoned.

Permalink Reply by Gwen Mark on August 28, 2010 at 1:03pm

You don't say what state you are in. Do they have anti deficiency laws? If the HELOC was purchase money for the downpayment, you have a good chance to get the deficiency removed. Sometimes it just takes perserverance. Did they ask for cash contribution from you? I have had luck getting the 2nd to remove the language by offering cash contribution that along with the $3000 from the 1st, adds up to about 10% of the 2nd balance. For instance you owe $50,000 on the 2nd, the 1st is offering $3000, so you offer to cash contribute $2000. with the stipulation that you have to have the deficiency language removed. Tell them you have to borrow it from family members. A little cash now would be worth not being hastled later. A letter from the attorney stating that you will not sign deficiency under any circumstance would't hurt.

Permalink Reply by Tina Encheva on August 28, 2010 at 10:08pm

I am in Nevada and just received a short sale approval on the 1st and 2nd from US Bank with FreddieMac as investor on the loan.It does not say anything about defficiency judgment or promissory note.The US Bank told me the 2nd had been released and because is with the same bank there will be no money going for it.

Does anybody experienced similiar situation with US Bank please let me know.



Elise Fay said:

I just received an approval letter from US Bank. I must say they were wonderful to deal with even thru a few buyer cancellations. The approval letter is great BUT...I am concerned and have advised my seller to consult an attorney, because it says NOTHING about a Deficiency. It does NOT say that they reserve the right to pursue a deficiency judgement and it does NOT say that they Waive the right for a Deficiency judgement.

This is an original, single loan, owned by Freddie. Any thoughts or concerns about the lack of language on the approval?

Elise Fay

Permalink Reply by Jennifer McNitt on August 29, 2010 at 4:25am

Tina,

Which department did you work with at USBank? Did you work with both loss mitigation departments separately or did you just work with the first mortgage's department? When we first started the process for our short sale, we tried to get the primary mortgage department to handle the 2nd also. We were told that they had no information about the second and that we would have to work with the other loan loss mitigation department just as if they were a different bank who had the 2nd.

We had to have our attorney send the 2nd's department a settlement letter stating that we were unable to pay the deficiency and were willing to settle for a much lesser amount. Anytime we called before we were told they would not release the lein without agreeing to the deficiency (even though it is the same bank who holds both of our loans).

Right now we're waiting for our attorney to hear something back. Last we heard, the two departments are talking to each other now about our case.

Permalink Reply by Jennifer McNitt on September 15, 2010 at 3:17am

Update:

We're still trying to work with USBank to lower the deficiency that my ex-husband and myself will have to pay. USBank has not been very helpful at all. What we're short on is on the line of credit, not our primary mortgage. Our intial offer would have been enough to cover the mortgage but we would be short 40-45K on the line of credit.

Our attorney was told to send in a settlement letter to have the deficiency lowered. He's called back several times over the past 2-3 weeks and was told that there was no determination on the settlement yet. He called back today and found out that both the short sale and settlement request for the second were both marked inactive. He asked why and was told that the settlement was not even being reviewed because they still think we can short sale the house. They will not even consider a settlement unless the house can not be sold or is taken off of the market.

They just will not approve the short sale unless we say YES to the full deficiency. Every time we call it seems like we're told misinformation. It almost seems that they want us to go into foreclosure.

We also found out for the first time today that even if we go through the short sale, that we still will have to bring $5K or more to the closing to do the short sale. This was the first time anyone ever said that we would have to bring money to close a short sale.

Has anyone else run into this?

Permalink Reply by Jennifer McNitt on September 15, 2010 at 4:39am

Our attorney called USBank again this morning and was able to gather more information about how the ddeficiency judgements work. It sounds like there may have been a time where they would have waived the judgements, but now that is not the case.

What they do is take what is still owed, and keep the original terms and interest rate on the original mortgage. So example for us they will take the 60K difficiency and turn it into a 25 yr note with the interest that we currently have (I'm not certain if it is the interest on the primary mortgage or the line of credit). He asked if they would create two notes since we were just divorced and he was told no. Both our names would still be on the note so both will still be liable if one doesn't pay.

Those of you who have gone through this recently, could you verify any of this? Thanks!!