I have been working on a short sale with wells for the last 7 months. At first the BPO came in for almost 500k and our contract is for 455k. I successfully challenged the BPO based on realistic values and the property being in a distressed market area, the east new york section of brooklyn which has the highest foreclosure rate in nyc. However, wells is insisting that freddie mac is requesting either 50k at closing or a 100k note from borrower. The borrower lost everything, this is a 3 unit property and from day one he had problem tenants and several evictions already which in nyc can take up to 6 months to remove a tenant. This was a new development of 6 houses and wells has the mortgages on all the properties and each one of them is in foreclosure.

The borrower went from making over 100k when he bought the home to making 16k a year which is basically the poverty level. Despite this fact they are insisting on the borrower participating in the loss. I went as far as contacting freddie mac directly only to be told that wells is delegated in this matter, however wells is insisting its the investor requiring this.

Has anyone had success eliminating the request for a note? This is truly a hardship case and they dont seem willing to work this out. We even offered them a 10k cash contribution at closing which the seller would have borrowed from family members but that was rejected as well. The seller cant afford to pay over 800 a month, he barely makes that and doesnt want to just sign a note that he will never be able to make good on. Any advice is well appreciated.

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Every time they request a note from one of my short sales I just write a letter stating we are non deficiency non recourse state and so the borrower would be better off having it go to foreclosure.  The short sale is being done as a "favor" to the bank....they always let it go.  I am thinking New York is different in the consequences of a foreclosure though?

Which states are non-deficiency, non-recouse? I was trying to short sell my home through Chase(like dealing with terrorists). They are the servicer. BofA was supposedly the investor who sent me an illegal foreclosure notice in Dec 2009. I tried a modification, they decided no after 6 mos. I then asked my brother-in-law, a realtor, to do the short sale. We finally had a buyer but trying to get a negotiator with Chase was insane. When I got one, I was told I would need to sign a no-interest note to the investor for $40,000. I said no way(I was also recording phone calls). I then did QWRs to BofA, their attorneys, and all addresses I had correspondence sent from Chase. The only reply was from BofA saying they didn't have my mortgage. I then received a document from US Bank which was a court document stating the plaintiff was now US Bank, not BofA. After a few months, the MERS had US Bank listed as the investor instead of BofA. However, now all my accounts are inactive. I called US bank(recorded) and they have no record of my property. My brother-in-law and realtor died of a heart attack last month at 64. I blame the stress of dealing with these banks. I haven't paid anything to Chase in 2.5 years and still live in the property. Any suggestions would be greatly appreciated. Thanks, Mary Miller..Palos Hills, Il.

Mary, you must decide whether you want to stay in your home or sell it.  If you want to stay, your only course of action at this point is to retain a foreclosure defense attorney to stall the foreclosure while they re apply for the loan modification.

If you want to sell, An experienced short sale agent and negotiator is your best bet. Since you are in IL where I am based, please message me and I can give you referances for all choices.  Good luck!


Thank you for your reply. I have spoken with a few attorneys-one of which said I could try for adverse possession since I have been here 10 years. At this point, I think I need an attorney who really understands Chase's tatics. If they suggest trying another short sale or modification, I might. Chase has sent me more packets with more paperwork to complete(one more time) but I feel I would have to get something legal in writing from them beforehand so they don't pull another fast one once an offer has been made. Thanks again, Mary Miller Palos Hills, Il.

Have the sellers attorney write a letter refusing the note and threatening chapter 7 protection.

Tried that already, they seem so hard headed about this one. Looks like it might be a dead end at this point. Only last resort is to try and reach out to wells fargo executive offices but I feel they think he has money stashed away somewhere which he doesn't but no matter who I escalated this to so far keep getting the same answer.




i do that when lining up posts for the newsletter :)

Joseph is right - Did the seller's attorney actually write a letter to Wells or did you just tell them the seller might file BK?


I had a file about 5 years ago before the no-deficiency on short sales law came to be in CA.  That 2nd lender wanted a $300,000 Note payable over 7 years at 0% interest.  The seller couldn't afford to eat let alone pay the lender.  The seller wrote a letter to the lender that said; "I will gladly sign the Promissory Note as requested and, be forewarned, I will file BK within 24 hours afterwards".

We closed 2 weeks later with no Note.



Why not accept it, and close? What's the risk to the seller of an unsecured note? Consult CPA about tax consequences.
You cannot avoid Federal Tax in a BK. Consult
a BK attorney of the downside risk.


I don't mean to be offensive but you could not be more wrong. This seller needs to be getting this advice from legal counsel. NO Real Estate Agent or third party negotiator should be advising a distressed homeowner to take on a debt obligation without an analysis of their current liabilities. This person makes $15K a year and you want them to take on a $100K debt?!?!?

Next, if it is your CPA that is telling you that you cannot discharge Federal Tax in a BK, stop using that CPA. Cancellation of Debt tax liability IS dischargeable in BK, that is why you MUST be in front of proper legal counsel on this issue prior to and during negotiation of the Short Sale.

If an Agent recommends a seller to accept a prom note or cash contribution just to close a transaction and earn a commission, they are looking for a lawsuit later. If that client came into our office and demonstrated that they would have been better off letting the home go to foreclosure and was induced to accept the short sale by the Agent, WE are going to own that agents license by the time it is over.

I am tired of seeing clients in our office, now seeking BK etc, because an agent talked a seller into closing a Short Sale just to get paid.



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