The Govt. requires the secondary lender to provide a waiver to pursue a deficiency judgment against the borrower. The secondary lender, Citi Mortgage, refuses to agree. Any one find a way around this impasse? Why does FNMA care? 1st mtgee. is PHH.

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It's a Fannie Mae guideline and I've never seen them sway on that guideline. You need to get the 2nd to agree to a waiver of deficiency. The question is whether something can be structured to get Citi Mortgage to agree to this.

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Just remember that's only if the 2nd takes money from the 1st. It can go on the buyer side with no issues at all. I've done this several times.

Are you saying the buyer provide the money necessary to make the 2nd relinquish its collateral?

if they can. I've had buyers pay $3,000 to the 2nd for a lien release only. FNMA only cares if the money is coming from the proceeds.

I believe the seller can do the same thing. They would just have to bring the funds  to closing. Having the buyer pay is the simplest way. And remember of deals are financed the short sale lender will normally agree to 3% in buyer's closing costs assistance. That assistance can be used to pay the 2nd on the buyer side in most cases.

CITI is a or WAS a FNMA servicer at one point.  I would get FNMA directly involved and let them know CITI won't offer a deficiency release.  I've had luck with this one one sale.  I've also faxed secondary servicers the guidelines so they understood if they were going to get any $$$ from the first lien holder they must release.

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