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.
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.
The Carrabba Group
Keller Williams Hollywood Hills
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.
First Weber Group
Certifed Distressed Property Expert
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!
The Credit Repair Expert
Bankruptcy should always be a last resort option.