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Permalink Reply by Bryant Tutas on February 19, 2012 at 6:52pm

Much depends on the laws of the State the property is located in. I work in Florida and it is a deficiency Sate. So in Florida they can definitely come after the borrower for the deficiency. And they have 5 years to do so. It also depends on the type of short sale. So.....unless you are absolutely certain I would not recommend ever telling a seller not to worry about. You need to negotiate a written waiver of deficiency as part of the short sale approval. And the seller should seek legal advice.

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Permalink Reply by Kimberley Kelly on February 20, 2012 at 4:40am

In California, the first and second PML's are protected through 12/31/12..and hopefully it will be extended.  I STILL want it in writing in all approval letters.  We can NEVER assume the banks will do anything they are supposed to do..get it in writing!

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Permalink Reply by Joseph Alfe on February 20, 2012 at 5:12am

Unless your state specifically prohibits deficiency...Lenders can and will seek deficiency.

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Permalink Reply by Michael Schneider on February 20, 2012 at 5:34am

In my view, the only assurance that all rights to pursue the deficiency were waive is when the demand letter states this explicitly.   Not stated, not necessarily waived.  Although state laws may govern or the 1009C may provide an equitable defense, I would still want it stated in the demand letter.

IMHO If the demand states full-satisfaction of the obligation, waiving all right rights to pursue, the debt is gone.  If not, then there are too many avenues to consider, and I don't have the document in my hand when I get a collections call.  If I'm dragged into court, I want my document in hand, not some reasoning for which I need two attorneys with me in court, costing me much more than the settlement.

Be practical here, not theoretical.  Collector: "Can you fax me that demand letter?  Me:  "Sure, got it right here".  Not: "Well, if you sue me, I'll counter sue you, and my attorneys can fight with your attorneys over why you think that state law is preempted by XYZ law.

It's not about who is right, it's about having a sound position that can be defended economically against professionals with greater knowledge and resources.

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