I got an approval from Chase however it does not address the deficiency with the borrower. The negotiator told me that on the FHA loans that I would need to talk to HUD or FHA to get a document releasing the borrower. I spoke to both HUD and FHA and both departments told me it is in fact the servicer who releases the deficiency on the approval. I told the negotiator that and she just told me she doesn't handle it and that the seller is automatically protected in Arizona. I told her in Arizona the deficiency release is only clear in a foreclosure situation and not in a short sale situation, thus we need the approval to release the deficiency. At this point the deal is at a stand still. Does anyone have any FHA Chase contacts? I have emalied Arik Moreno as he has always been awesome in helping me, but he has not had anyone contact me..

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Take a look at Mortgagee Letter 2008-43.

The Pre-Foreclosure Sale (PFS) option allows mortgagors in default (resulting from an adverse and unavoidable financial situation) to sell their home at FMV and use the sale proceeds to satisfy the mortgage debt even if the proceeds are less than the amount owed.

Thanks Kevin!!! Looks like my job is done then :) - I had a feeling I was missing something.. :)

There is no deficiency to the lender with an FHA PFS. The lender is made whole.

Thanks Bryant!!! This forum rocks!!

I got this information from an Attorney here in Ca.

There have been court cases which VA and FHA can over turn any state anti-deficiency laws.

Here is info I received from the attorney.

"California has laws that regulate whether a lender would have recourse against a borrower if they were not paid in full.  The most well known of these concern foreclosure. Code of Civil Procedure (CCP) Sec 580b bars recourse on purchase money loans for personal residence and CCP 580d bars recourse after a Trustee Sale foreclosure. On July 15, 2011, California passed SB458 which became CCP 580e and which bars recourse after a short sale of a 1-4 unit dwelling. But the question has come up whether there can still be any recourse despite these laws. The answer is yes although actual use may be rare. See link for more info:  IS THERE STILL SOME RECOURSE AFTER SHORT SALE AFTER SB 458?


Kathy Dyer


Hi There! I just emailed Arik Moreno and the emails bounced back. What email address did you use?



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