They say the investors have never attempted to collect after a short sale...

[ORNV3]

Hi everyone,

I am currently trying to do a short sale with my Nevada home. It's been in the works for about 6 weeks now and we finally have been assigned negotiators for both loans.

I owe about $215000 on the first and $95000 on the second. The offer we presented was for $145000.

The first just requested some additional info so I'm at a stand still there.

However, my second said that they will agree to the short sale as long as they get 10% of the total amount owed at closing. This would be a little under $10000. My main concern is that they might come after me in the future for the remaining balance.

The negotiator for the second said that she has never seen any of their investors go after anyone.... they will just get the 10% and issue the 1099.

I'm super apprehensive about it because I want it in WRITING that they WILL NOT come after me. Any suggestions about how to get them to do this? My realtor seemed to feel comfortable taking the negotiators word for it... but I'm not.

I have not actually seen anything in writing yet because everything depends on the first approving the the sale. I just don't want to leave any loose ends.

Any advice would be great! Thanks!

[markmc2000]

I'm in the same boat. I'm trying to do a short sale and ocwen comes back with a letter releasing them from all liability while saying they still want to collect the balance. Kind of defeats the purpose. Common sense would leave one to bleave it shouldn't happen, but it is a contract. any more clarity on this one?

[giacona]

I am going through a short sale as well, and have been told lenders use certain language in short sale approval letters to protect investers in the event the feel they can collect against you.

However I have been told that this is a rare situation and they almost never pursue collections against a homeowner.

One thing to remeber is you will most likely get a 1099 at the end of the year. This means the bank wrote off the loss. They cannot send you a 1099 and sue you for the difference. It's one or the other and that is the law. If they do both it is illegal.

The reason they send a 1099 is b/c they get a guarantted write off b/c there is no gurantee they can collect the deficiancy against you.

Now I have also been told you can negoitate an approval letter with full release and no further obligation by you, but that may be tough.

[markmc2000]

Giacona,

Good info. My deal closes next week hopefully. My house was an investment property so I hope they don't come after me. However, my loan balance is really small and it may not be worth the headache for them for an extra $13k. I would go to court though if they called me down because after all the headaches of a short sale, you would think the judge would have some sympathy for doing the "right thing" by getting house sold!

Mark

[Enough Already]

Hi all,
Just my $.02 on this topic (I'm working on a short sale too), for me the fact that the banks "rarely" pursue the deficiency isn't enough. My realtor will play hard ball with the bank and if they do not agree, in writing, to release me from all liability for the loan balance, and underlying note I will not sign off on the sale.

Remember, you save the bank $40K - $50K by short selling (rather then forcing them for foreclose). IMHO, they should work with the home owner, and let you off the hook.

My loans are recourse, so if they don't completely let me off the hook there is no reason for me to go through with the sale. If that's the case I'll just stay in the house until the foreclosure happens.

ORNV3, It sounds like your 2nd should get their 10% and agree to release you from the debt.

EA