As you can see from the answers below, the answer is; Definitely, Maybe. First of all, when you negotiate a short sale, it is not a foregone conclusion that the deficiency is going to be waived, and in fact you don't really know until the Short Sale approval letter is issued. Even then, sometimes the Lender can be a bit tricky on their verbiage making you think the deficiency is being waived, when in actuality it is not. ....
Now, If it is a HAFA ("Home Affordable Foreclosure Alternatives") approved Short Sale, you hit the Jackpot of benefits. Under HAFA it is mandated that the deficiency MUST be waived by the Lender. For this reason alone, you want to see if you qualify for a HAFA Short Sale. It is easy enough to do. Either you or I can call and find out if you qualify for HAFA. Other benefits include: (depending on the value of the home, and your lender) a relocation incentive between $3,000 and $30,000 (The higher the property value, and if Bank of America the incentive can move up towards the $30,000 mark). Also, you are given a pre-approved sales price, so there isn't any fishing for an acceptable sales price...It is already set by the Bank. Under HAFA, if you have a second, they are supposed to be required to agree to waive the deficiency as well, and are suppose dot accept a prescribed settlement amount. (I have found this to be a bit more loosely followed).
Some lenders may ask you for a small (once in awhile large) contribution. This depends on the size of your assets and the lender in question. Seconds seem most often to be the spoiler here, and often are the most intransigent when it comes to a reasonable settlement.
Bottom line, don't assume, unless you are pre-approved through HAFA that the deficiency will be waived, find someone who will fight hard to see that you are packaged properly, and it is waived, and be prepared (20% of the time) to come up with a few thousand dollars to persuade the bank to waive the deficiency.
If you need help, please do not hesitate to call or email.
Best of luck, and thanks for reading.
Who is your bank? Do you have a 1st and a 2nd? How far behind in payments are you?
If you want some serious, no obligation advice, call me
David Cooper 702-499-7037
You ask a great question.
Typically, this is entirely dependent upon the skill and negotiation power of the person that is working with the banks representing you in a short sale. I am seeing few requests by the bank for a deficiency payment in the short sales. This is due to the programs that exist now that were not available in the past.
I do see requests for terms that are not in the best interest of the Seller and Buyer.
I see most undesirable terms coming from transactions that have 3rd party negotiators. It would seem that these agencies don't care if there is a deficiency or not. They do not have to pay it. Just get the deal closed so they get paid.
Some financial institutions do not forgive the deficiency. They tell you that up front. It is up to your representative to mitigate that issue so you will not have a surprise at a later time.
I suggest you work with an Agent that will take your transaction under their wing and care about the result. Massive volume is not in the best interest of all Sellers. An Agent, that is a skilled negotiator, working for you, is your best bet in avoiding and/or mitigating a deficiency in the future,
The approval letter from the bank tells the complete story about the deficiency issue. You may want to seek an attorney's advice if you have any doubts concerning your future responsibility and liability that the approval letter states. No matter what is said, the approval letter is the agreement between you and the Investor.
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Steven Goldman, CRS
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Realty One Group
10750 W. Charleston #180
Las Vegas, NV 89135
During the short sale process you, your agent and/or attorney are negotiating with your lender for the best possible terms to settle your debt. If a waiver of deficiency cannot be obtained in writing, it may not be in your best interest to complete the short sale.
It's important that you're working with a Realtor who understands and accepts the idea that the sale might not happen if the deficiency is not waived and will not pressure you into completing the sale if it's not in your best interest.
It will all depend on your personal sitiuation, your hardship and your finances. In order to find out whether they Bank will release the defeciency judgement or release of liability of lien, you will have to get your house listed for sale, receive an offer and start the short sale process with your mortgage lender.
From there on out it will depend on the agent you hire to list your home and their negotiation skills. Once you get the Short Sale Approval letter it will state on the Approval letter if they will be releasing you from the defenciency judgement and/or any liability of lien. However you may receive a 1099 from the IRS. So I recommend you talk to a CPA or Tax accountant.
Just as reminder the Mortgage Debt Relief Act of 2007 is set to expire December 31, 2012.
So, If you are considering doing a Short Sale contact me or another agent immediately to do so.
Barrett & Co., Inc.
2885 S. Jones Blvd
Las Vegas, NV 89146
(702) 592-9510 ph
If you are interested in short selling your home, then what you seek is for the lender to settle your debt in full.
If you are inquiring about other deficiencies, such as lien's on the property by an HOA, then the answer is: all lien's must be cleared before the property can convey title, and must be paid prior to Close of Escrow, regardless of who pays for it.
It will depend on your lender and how your short sale is negotiated. I would be glad to discuss the process with you. You can reach me at 702-215-1230, Emma. You need to know what options are best for you. I can send you some information on the short sale process just give me a me a call.