Forum

Mortage Release Language From Central

Posted by Jae Evans on February 24, 2012 at 4:46am in Short Sale Discussions

Hi all,

I've been searching the forum and I think I have the answer to my question but thought I'd throw it out there to double check.

I received an approval letter from central for a short sale here in Washington. Only one lender. No promissory note or cash at closing.

My question is whether the release language is sufficient to prevent pursuit of deficiency a I've been told the bank won't change it.

The letter states: In exchange for the amount of $XXX,XXX.XX (net to bank) we agree to issue a
Release of the Mortgage dated June 18, 2008 in the amount of $XXX.XXX.XX (which is the full amount owed)


I've advised the sellers to run it by an attorney of course. But I don't think they will.

Thanks for any help.

You need to be a member of Short Sale Superstars to add comments!

Join Short Sale Superstars

Email me when people reply –
Follow

Replies

  • Kevin - Greenville, SC February 29, 2012 at 7:03pm

    What law requires a Homeowner or anybody else for that matter to consult an Attorney for anything in life?  You can even represent yourself in court.  I am not saying you should give legal advice, but if the Homeowner is comfortable to proceed as-is without consulting an Attorney, they are within their rights to do so.

  • Patrick Perkins February 26, 2012 at 4:07pm

    As an attorney licensed in California, that language clearly does NOT prevent the lender from pursuing the deficiency. 

    In California, the law was amended last July that prevents all junior liens who accept funds in a short sale from collecting on any deficiency balance.  Up to now, the law has not stopped junior liens from participating in short sales.  Probably because they are getting what they would get in the market in which they sell that junk debt.  That will eventually change as the economy improves.

  • Michael Schneider February 26, 2012 at 3:08pm

    I think, if the question needs to be asked, then the answer is no, this statement does not waive the right to pursue IMHO.

  • Paula Cotton February 26, 2012 at 9:36am

    Jae,

     

    I had the same thing happen with a client. Depending on your potential lost commission, you may want to pay the consultation fee or offer to pay half for your client if they are unwilling to do so. How are anti-deficiency statutes written in your state? Your client's attorney may need to write a demand letter to the lender requesting the change of language. My clients did this but lender was unwilling to change it, until I contacted the Vice President of the Servicer. You may need to take a no holds barred attitude on this one. My suggestion is to not take "NO" for an answer at this point. It is important that this letter come from an attorney to the lender. Good Luck!

  • Tara Samney February 26, 2012 at 4:15am

    Is it an approval letter for non-HAFA Freddie Mac backed short sale? If so they don't include a deficiency waiver.  They also don't change the letter.  .

  • Thom Colby CA Brkr 888-391-5245 February 26, 2012 at 3:31am

    I am not an attorney - but just reading the language it seems to say two things;

    1) In exchange for the amount of $XXX,XXX.XX (net to bank) we agree to issue a
    Release of the Mortgage dated June 18, 2008

    2) the amount of $XXX.XXX.XX (which is the full amount owed)

     

    To me it reads; We'll give you a Release and we're re-affirming how much you actually owe us.........

     

    You are correct to send the seller to an Attorney

     

     

  • Drew Ludlow February 24, 2012 at 2:53pm

    I would hazard a guess that this is not a full satisfaction, but then again, I am not an attorney ;-)

     

    By the way, in NC, the Bar and the Real Estate Commission have expressly made it clear that not only are we not supposed to discuss approval letters and deficiency, but we are not to even negotiate with the banks.  All we can do is negotiate the contract between the Buyer and the Seller.  That is it.  We can not negotiate debt at all! 

    Someone tell me how this is doing any good for our Sellers.  What, am I to explain to the Sellers that I have taken them as far as we can go, and now I can't finish the deal?

  • Smitty February 24, 2012 at 7:40am

    you should see the terms "release lien" and "full satisfaction of debt" -  If you don't see both of those phrases, it's problematic AND I agree with Joseph, they need to run it by an attorney. 

  • Joseph Alfe February 24, 2012 at 6:16am

    This is not a full release and you MUST refer this to an attorney.  Discussing approval letter language and deficiency is the practice of law.

This reply was deleted.
********************************** like buttons ************************