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Chase 1st & 2nd and Judicial Foreclosure in Anti-Deficiency State

Posted by Tina Porter on December 21, 2010 at 7:12am in Short Sale Discussions

Just received an approval from Chase on 1st and 2nd. 1st is not asking for anything. 2nd has defiency judgment verbiage in approval. 1st and 2nd is purchase money. The 2nd loan is $155,000 and Chase Freddie Mac is giving the 2nd loan $3000. Negotiator states they will not remove verbiage and will close judicially even in CA. Should she just go into foreclosure?  Please help!!!!

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Replies

  • Kimberley Kelly December 24, 2010 at 3:12am
    I read this exchange and it was what I thought so thanks to you both.  PML's, even piggy-back's that go to Foreclosure in CA are wiped out.  This is why SB931 is going into law on 1/1..to encourage more Sellers to do Shorts over Foreclosures and help reduce the inventory without abandoning properties etc.  This bill should help Sellers choose Short Sales because they will get same deficiency protection as with a Foreclosure..also will help push Lenders to accept Short Sales without the "right to pursue verbage" in the Demand Letters.  I am hopeful..
  • Tina Porter December 23, 2010 at 3:04pm

    Hi Laura,

    I did seek legal counsel and the attorney stated that she does not sign the approval letter. I called Chase and negotiator stated that escrow can continue without the seller's signature because she is not agreeing to the DJ. Once the escrow closes, CA law will come into effect.  Which means, she is protected because both loans are purchase money loans. Title company stated that because the loans are purchase m0ney, they can proceed with the letter not being signed by seller.  This is such a relief!!!! I do thank you so much for continuing to reply to my questions. You are very giving and I truly appreciate it!  Happy Holidays to you and your family!

    Laura Marshall said:

    I would seek legal counsel, but I believe if the 1st forecloses, the 2nd is out as it was purchase money.  If  aNOD is filed and it is a Notice of Default and Election to Sell, it is non-judicial. I would suggest that once you have a negotiator assigned, ask them to pull the 2nd back from the collection company. That is #1. I have had chase do this on many of my files. The collection companies can be difficult to deal with, and I know they have the authority to pull the file back.  If the seller agrees to the short sale with the deficiency language and the 1st does not foreclose, she may be liable for the money, where if the 1st forecloses they may not be.  Maybe someone here can be of more help.

    Tina Porter said:

    Hi Laura,

    Thank you so much for your reply.  Negotiator stated that seller did not qualify for a HAFA because the difference between the market value and what was owed was too way off.  Seller owes the Chase FM 1st $375,000 and the Chase 2nd $125,000 (not $155,000 as I previously stated).  The Cash offer is $326,000 and has been on the market since June.  Also, I do know that the 2nd was a charge off.  I am not exactly sure if that is making a difference.  An NOD has not been filed. What would you or anyone suggest.  I would be so ever grateful for your help!!!!

  • Laura Marshall December 23, 2010 at 2:55pm
    I would seek legal counsel, but I believe if the 1st forecloses, the 2nd is out as it was purchase money.  If  aNOD is filed and it is a Notice of Default and Election to Sell, it is non-judicial. I would suggest that once you have a negotiator assigned, ask them to pull the 2nd back from the collection company. That is #1. I have had chase do this on many of my files. The collection companies can be difficult to deal with, and I know they have the authority to pull the file back.  If the seller agrees to the short sale with the deficiency language and the 1st does not foreclose, she may be liable for the money, where if the 1st forecloses they may not be.  Maybe someone here can be of more help.

    Tina Porter said:

    Hi Laura,

    Thank you so much for your reply.  Negotiator stated that seller did not qualify for a HAFA because the difference between the market value and what was owed was too way off.  Seller owes the Chase FM 1st $375,000 and the Chase 2nd $125,000 (not $155,000 as I previously stated).  The Cash offer is $326,000 and has been on the market since June.  Also, I do know that the 2nd was a charge off.  I am not exactly sure if that is making a difference.  An NOD has not been filed. What would you or anyone suggest.  I would be so ever grateful for your help!!!!

  • Tina Porter December 21, 2010 at 9:57am

    Hi Laura,

    Thank you so much for your reply.  Negotiator stated that seller did not qualify for a HAFA because the difference between the market value and what was owed was too way off.  Seller owes the Chase FM 1st $375,000 and the Chase 2nd $125,000 (not $155,000 as I previously stated).  The Cash offer is $326,000 and has been on the market since June.  Also, I do know that the 2nd was a charge off.  I am not exactly sure if that is making a difference.  An NOD has not been filed. What would you or anyone suggest.  I would be so ever grateful for your help!!!!

  • Laura Marshall December 21, 2010 at 8:19am

    Did you try to do the FHLMC HAFA(type) short sale?  That way if the 2nd approves, they must remove the deficiency language. I used to process foreclosures in California. I have never seen a single one go judicial. It is possible, however, there will be a 12 month redemption period. I can't imagine a bank wanting to do that. Since they are servicing for FHLMC - I would be SHOCKED if the 1st forecloses that way. I suppose the 2nd could file a judicial foreclosure action first, but then they would need to payoff the 1st mortgage. That is a huge risk, as the owner could always file a BK. I would check and see if the 1st has filed a NOD. If they foreclose before the 2nd, I believe the 2nd has no recourse. I would get all of the information and then go back to the 2nd. When you are armed with accurate information, it is amazing what can be negotiated. Good Luck and let us know what happens.

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