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Absolutely not. If there is a prom note, make sure that the letter of approval gives full satisfaction. Otherwise, the prom note is just increasing the deficiency. I just had that happen to me. I told the lender that I wasn't even going to ask the homeowner to sign if there isn't full satisfaction.An hour later they faxed me a new L.O.A. with full sat.
"Mr./Mrs. Homeowner, please sign this prom note so you can increase your liability to the lender and I can still get my commission." HAHA
It doesn't take an attorney to realize that the new prom note does not legally wipe out or "modify" the original note. I understand you are hoping it does for your clients sake and for your sake of time, but, it doesn't. In order to "modify" something, there has to be a paper trail. A verbal "yes" from the lender doesn't count. If you can show the new note stating that it replaces "loan XXXX as recorded in public record XXXX on XXXX date" then you would be right to assume the new note replaces the old note.
HOWEVER, that being said, I think a judge might rule in favor of the homeowner if something like this ever did go to court because the judge would wonder how asinine the lender was for doing this. 8-D
Yea, I know, wishful thinking :) But my thought is still that since the original loan number is on the promissory note itself, I think the lender would have a hard time collecting a deficiency.
Try thinking in legal terms, not logical terms. LOL
I think the bank would argue in court that the original loan number on the note is simply a file #. I'd have to see the letter to know for sure. I do hope you are right, though! Good luck
Logic? I forgot what that means since I started doing short sales! The letter says lender loan # AND Fannie Mae Loan # on it.
Doesn't really matter, my seller is going to sign it and if they try to pursue a deficiency, he is just going BK. He is trying to do the right thing by signing the note but his credit is ruined and he would not lose much if they force him to BK
I don't think a prom note would result in an automatic waiver of the right to pursue the deficiency, unless this is stated somewhere in the note or other agreement, or prohibited by state law.
Logically, it makes no sense to agree to a substantial cash payment or prom note, without the wavier. But, I think the waiver would need to be stated explicitly, at least, here in CT.
Jeff, just thinking out loud...on of these days I will learn :) Would love to know if anyone has ever fought this and what the outcome would be.
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