short sale approval letter from National City - unclear about deficiency

[windnwaves]

I got a short sale approval from National City Mortgage who holds the first and only loan on a rental property I own in Florida.

I must agree to take a $10k note with the PMI company for the short sale to go through. I am ok with that, but want to know for sure that I'm being released from personal liability for the deficiency, which is $200k+.

The letter from National City states:

"We will prepare and record the Satisfaction of Mortgage/Deed of Trust. We will also report to the Credit Bureau "legally satisfied for less than the full debt."

Does this mean that the lender and the PMI company will not pursue me for the deficiency?

I need to decide quickly on whether to accept and would appreciate guidance on this point. Thanks!

[SillyWorld]

Originally Posted by windnwaves

I got a short sale approval from National City Mortgage who holds the first and only loan on a rental property I own in Florida.

I must agree to take a $10k note with the PMI company for the short sale to go through. I am ok with that, but want to know for sure that I'm being released from personal liability for the deficiency, which is $200k+.

The letter from National City states:

"We will prepare and record the Satisfaction of Mortgage/Deed of Trust. We will also report to the Credit Bureau "legally satisfied for less than the full debt."

Does this mean that the lender and the PMI company will not pursue me for the deficiency?

I need to decide quickly on whether to accept and would appreciate guidance on this point. Thanks!

..We will also report to the Credit Bureau "legally satisfied for less than the full debt."

If reported as Satisfied then there is no further collections that I know of

[scottp999]

Excellent news for you. Please celebrate at the conclustion. Going from a large secured debt to a 10k unsecured note is a load off your back...Congrats!

[faith]

Originally Posted by windnwaves

I got a short sale approval from National City Mortgage who holds the first and only loan on a rental property I own in Florida.

I must agree to take a $10k note with the PMI company for the short sale to go through. I am ok with that, but want to know for sure that I'm being released from personal liability for the deficiency, which is $200k+.

The letter from National City states:

"We will prepare and record the Satisfaction of Mortgage/Deed of Trust. We will also report to the Credit Bureau "legally satisfied for less than the full debt."

Does this mean that the lender and the PMI company will not pursue me for the deficiency?

I need to decide quickly on whether to accept and would appreciate guidance on this point. Thanks!

When they say we will prepare........., check if the letter states, National City, the investor and the insurer will not pursue any deficiency judgment against you and they will report it as legally satisfied for less than the full balance, the balance should show zero balance and therefore you will have no obligations.

When you sign the note for $10k, ask the Negotiator to put it in writing that the PMI will not pursue any deficiency judgment against you and the promissory note to pay $10k also should state legally satisfied for less than the full balance and the balance should show zero balance. You have to have two separate letters one from National City and one from the PMI or one letter that states both of them will say that the Short Sale and the promissory note for 10K is legally satisfied for less than the full balance. Lenders will make you feel that you have to make a decision now or else. But you have to think of you and having everything in writing is your only protection you have in this kind of transactions.

Do not sign anything in a rush, if you don't understand the terminology they use, do not sign it. Keep asking if you don't understand. It's best that you ask a lawyer in your state to check the letter and explains to you what it means. This is for your own protection, especially that Florida is a recourse state..


Thank you and God bless you.


Information given is not a legal advice.

[Enough Already]

I completely agree with Faith. Do not sign anything unless you're totally sure of what it you are signing. Don't let them rush you. I would spend a little money and have a local real estate attorney read it over, and give you the "thumbs up" before signing as well.

Good luck!!

[windnwaves]

Hi everyone,

Thanks for your comments and input. Very much appreciated! The short sale closed yesterday, which is a big relief. Thanks again.

[atc5photos]

congrats on your successful sale!

[Enough Already]

Thanks for the update and congratulations!! I'm sure that's a great relief!

If you don't mind, what were the final terms of your sale?

[windnwaves]

I decided I was comfortable going ahead with the short sale because the approval letter said it would report on the credit report as "LEGALLY SATISFIED for Less than the Full Debt" and the lender said they would issue a 1099 for the debt forgiveness.

The terms were taking a $10k note at 0% interest. The property was under water $230,000. I was ok with taking the 10k note.

[windnwaves]

For those who are interested, the verbiage in the National City approval was this:

"We will prepare and record the Satisfaction of Mortgage/Deed of Trust. We will also report to the Credit Bureau "legally satisifed for less than full debt.

Special Disclosures:

National City Mortgage Co., a subsidiary of National City Bank does not provide legal or tax advice. You are encouraged to seek advice from competent experts regarding the legal and tax consequences associated with any program we may offer."