Foreclosure in 90670>Question Details

Cp, Other/Just Looking in 90670

my sister is doing a short sale. Escrow is now ready to close however the bank has now requested that she pay $19k before escrow closes.My sister

Asked by Cp, 90670 Wed Mar 3, 2010

doesnt have that kind of $$ and her agent says she made a deal with the bank to pay $100 month (doesnt sound right) She told my sister to sign for the $19k and then just file bankruptcy right away so she wont have to pay. This sounds crazy. My sister moved out over the weekend and the new buyers are anxious to move in. She doesnt want to sign for the $19k cuz she cant pay it - can they come after her if she signs. She is ready to just walk away. Thanks, cp

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Emily Knell’s answer
Normally when a bank asks for a Promissory note it's an interest free note payable over 10yrs., at $100 / mo for 10yrs, would only cover $12,000.

The listing agent needs to fight back to the bank, resend in the state of your sisters' financial information. Prove she doesn't have the money to pay this amount back. OR talk to the buyer & have them offer a CASH contribution now of 10% of the $19K to see if they'll settle & release now.

Stand firm that promissory note is out of the question & try to see what their number is to settle now in cash, which will have to be paid for by the buyer, if this is a 2nd lien, that cash contribution will have to be known to the 1st lien holder as well. The listing agent must show the 1st lien holder that it is still in their best interests to allow this and the NET to them is still better closing through the short sale than them taking the property to auction or it reverting back to them for future REO asset.
562-430-3053 cell
0 votes Thank Flag Link Wed Mar 3, 2010
Hello Cp,

You might want to check with your sister. It sounds like a Promissary note and usually with a Prom note you don't have to come up with the money upfront. Your sister can always say no to signing it and see if the buyer will pay for it. Just because the agent made a ddeal with the bank doesn't mean she has to do it.


Monique Carrabba
The Carrabba Group
Keller Williams Hollywood Hills
(323) 899-2900
0 votes Thank Flag Link Wed Mar 3, 2010
On every deal I have seen when the lender approves the deal, they send a letter of approval outlining the agreement and if there is ability for the bank to collect on deficency. You need to check to see what was signed when agreed to deal. However, before considering filing bankruptcy make sure you understand the implications by talking to a good bankruptcy attorney.

You also need to understand if the loan is recourse or non recourse and if it is a first loan or second loan. This debt might be collectable, even if the deal is not completed, if the lender has rights to a deficency. If fact the deficency rights could be more than agreement. Check facts before you make a decision so you can make the right decesion.

Keith Manson
First Weber Group
Certifed Distressed Property Expert
Metro Milwaukee
0 votes Thank Flag Link Wed Mar 3, 2010
Hi CP,

Your sister cannot by law take on "new debt" such as a promissory note and then shake the debt with a bk. This is a federal offense. Her agent is asking her to sign the promissory note so that the agent can get the "commission" from the sale!

What type of mortgage does your sister have, a recourse loan or a non-recourse loan. How many loans.
Is the property located in California?

Here is a link with some helpful information. Good luck!

Hannah Fliegel
The Credit Repair Expert
0 votes Thank Flag Link Wed Mar 3, 2010
Your sister is at least going to want to take advantage of a free consultation from an attorney. If she signs she is on the hook for it. The key is who negotiated this short sale? This should have been negotiated from the beginning that the seller does not have any mony and can not sign any sign of promissary note. The negotiator needs to go back to the mortgage company and seek to get the 19k waived. Anyone advising her to sign and then file bankruptcy is not doing her any favors with the new bankruptcy laws. She may also want to consult a bankruptcy attorney. Now that she has move dout though, all her negotiating power is diminsished as the bank could say it is abandonened now and continue with foreclosure. good luck working things out
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0 votes Thank Flag Link Wed Mar 3, 2010
Read the agreement that the bank wants her to sign. The agreement is negotiable. If they are willing to keep her credit clean - for $100 a month - she should pay the money. This will give her the opportunity to buy in the future and keep her credit in good standing.

Bankruptcy should always be a last resort option.
0 votes Thank Flag Link Wed Mar 3, 2010
I have heard of this in short sales where the lender makes this request. As a realtor, my advise...consult an attorney and/or the local Fair Housing office.
0 votes Thank Flag Link Wed Mar 3, 2010
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