Short Sales, Foreclosures and Deficiency Judgments?

Asked by Lb, Boise, ID Tue Mar 23, 2010

Beginning April 5, 2010 there is supposed to be new government imposed regulations for banks in the short sale process. I hope this expedites the process for everyone.

Has anyone had any experience with Wells Fargo's processing of short sales and/or foreclosures?

What about Wells Fargo's releasing sellers from deficiency judgments. Have they been know to agree to that?

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Keith Manson-…, , Milwaukee, WI
Sun May 9, 2010
It depend on a lot of things. First with foreclosure and your state in depend on what is in the mortgage docuement and if the bank forecloses judicially or non judicially. If a judicial foreclosure is completed then the bank will have the right to a deficiency judgement.

With short sales it will depend on the loan product. If it is a FHA loan the deficiency rights are typically not persued. However, with a convenitional loan they can be persued depending on the banks policy. Currently I have a short sale that has been approved that Wells did not go after the deficiency but it looks like by the form it is a decision process and am sure it is tied to the amount of assets the mortgagor has.

HAFA are not regulation and do not aply to all banks or all mortgagors. The major banks seem to be on the participation list but the mortgagor needs to aply to see if they qualify. Major items are that there needs to be hardship and it needs to be the primary residence. If there is a second mortgage it gets more tricky.

you can find more on the program at

Keith Manson

First Weber Group
Certified Distressed Property Expert

Metro Milwaukee
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Ute Ferdig, Agent, Auburn, CA
Sat May 8, 2010
The name of the new program is Home Affordable Foreclosures Alternatives Program (HAFA). Just Google "HAFA" and you'll find more info than you wanted to know. There is only so much you can learn by reading the guidelines. The rest you have to learn by actually doing short sales with qualifying loans. Below is a NAR resource link. I hope this helps.
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Aaron Catt, Agent, Meridian, ID
Sat May 8, 2010
Anyone have a name for this 'new program'? Maybe a link to some resources would be good!

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David O'Dell, Agent, Boise, ID
Tue Mar 23, 2010
Actually the new regs areFannie Mae written and will be overseen by Freddie Mac. As for Wells, they are known to go after the sellers, but any bank agreeing to the new program (if in first lien position) agrees to not pursue a deficiency as long as the seller follows the guidelines.
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Ute Ferdig, Agent, Auburn, CA
Tue Mar 23, 2010
Hello Lb. The new treasury guidelines are voluntary and from what I understand they don't apply to Fannie Mae and Freddie Mac loans. Those two agencies were supposed to come out with their own regulations, but so far I have not seen anything. At this time, we don't know which banks will adopt the guidelines.

As far as Wells Fargo is concerned. I heard that Wells Fargo now processes short sales the same way that Wachovia has handled them for some time (i.e., local short sale departments as opposed to centralized processing and quicker approval) as far as loans that Wells Fargo still owns. They have a slightly different process for short sales which involve an investor. I received an from our local short sale department manager with a flyer that talks about the process for short sales involving investors. I can e-mail you the flyer I received. Just send me an e-mail and mention Wells Fargo short sale process in the subject line.
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