Foreclosure in 03062>Question Details

Pending Shor…, Home Owner in 03062

short sale promissary note

Asked by Pending Shortsale, 03062 Mon Apr 30, 2012

any one have a short sale where the bank wanted a promissary note from the seller to approve the short sale? What can be done to avoid it or not pay it and still get the short sale approve?

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Offer cash at closing. Most prom notes are double the amount that a lender will take if it's cash at closing. There could be many reasons why they are asking you for a promissory note. 1) do you have MI on the loan. If so, the MI company needs to cover it's deductible. Most NH housing loans have MI, so many times a NH housing loan will seek cash or a prom note at closing. 2) is the lender seeing some amount of money on hand?? If so, they will look for a prom note at closing 3) do you have a considerable hardship?? If the lender feels you don't have a strong enough hardship, they'll ask for a prom note at closing.

Keep in mind prom notes are UNSECURED notes, and usually don't have interest. My suggestion would be to start with a cash offer at closing. Even $500 is an attempt. We've had luck offering even less than half of what they wanted in the form of a promissory note.

Good luck.
Maryann Little, VP Mitigation
0 votes Thank Flag Link Mon Apr 30, 2012
Typically, the lender is going to require a promissary note if they feel that the seller has the ability to pay the remaining debt. The lender will allow the homeowner to sell their home "short" but will put together a re-payment plan for the outstanding balance.

Many people are not aware that even if a lender approves a short sale (with no promissary note required) there is typically language in the Short Sale Approval Document that allows the lender to seek the deficiency amount at any given time in the future. As such, when your finances improve at some future date, they may seek re-payment of the monies due.

It's unclear whether you are the seller or the buyer. If you are the seller, I would suggest that you utilize the services of a knowledgeable real estate attorney so that you are fully aware of the positive and negative impacts on a short sale.
0 votes Thank Flag Link Mon Apr 30, 2012
The bank will assess if the home owner has the ability pay on the deficiency. if so, they certainly can ask teh home owner to sign that note. the key is in the negotiations, the home owner hopfully hired an agent who is well expoereince din short sales and who uses a professional negotiator to negiotiate on the owners behalf to waive the prom. note.
Web Reference:
0 votes Thank Flag Link Mon Apr 30, 2012
New Hampshire is a RECOURSE state, meaning that the Bank can come after the Homeowner for the difference between the outstanding loan balance and the amount of the sale.
It is called a Deficiency Judgement.
If there is a 2nd Lien, the problem gets even worse.
If the Bank is asking for a promissory note; it sounds like they are allowing the homeowner to pay the difference over time, instead of filing suit.
This is between the Bank and the Seller, and the Buyer should not be involved, unless they wanted to be, (to hold the deal together.)
0 votes Thank Flag Link Mon Apr 30, 2012
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