Home Loans and Support

Chase Short Sale Approval...what next?

Discussion in 'Short Sale Outpost' started by tricia88, May 15, 2010.

  1. tricia88

    tricia88 LoanSafe Member

    I just received a letter from Chase stating that they have approved the request for a short sale. However this was in bold print:

    Please note this amount is for the release of the lien(s) only and that you are responsible for all deficiency balances per the terms of the original loan documents.

    I am uncomfortable with the deficiency clause in the approval letter but my real estate agent said that it is standard verbiage and the bank won't remove it. Do other short sellers usually agree to this? I am tempted to tell my agent that this is a deal breaker and let it go to foreclosure. Seems that the likelihood of getting that clause removed is very slim. I would rather have everything related to this house be settled all right now rather than have a deficiency linger over me.

    We are still waiting for the 2nd lienholder to approve the sale. It was originally with Chase as well but they recently discharged the debt to a collections agency.

    If I contacted a lawyer, would they be able to negotiate to get the terms changed or would they simply advise me not to sign? I don't want to spend money for someone to tell me something I already know.

    By the way, I am in CA and there was a NOD filed on the property in February. I have not received a NOS yet.
  2. starfish515

    starfish515 LoanSafe Member

    I did take my short sale approval letter to an atty. I believe it cost $250 but after I met with him he only charged me $50. Which I was grateful for since I was living off credit cards to keep up with my house payments and my other living expenses.

    I for one don't completely trust real estate agents. Not saying they are bad but in the end they are trying to get paid and they don't get paid unless they sell your home. I was nervous when I got my approval letter because I knew if the letter wasn't worded the way I wanted my agent probably would have pushed me to sign it anyways. Easy for them to say but this is your future not theirs. It's your credit and life that is completely destroyed so you need to do what is best for you. If you don't like the wording of the letter then it might be worth seeing an atty.

    I know you read some of my other posts but I wasn't to keen on missing any payments and I really wanted to make it thru the process without missing any but my negotiator told my agent (not sure if this is true now or not) that I needed to be 30 days past due for them to approve it. I did try and get ahold of my negotiator before missing the payment but conviently she didn't respond to my email or VM so I went a head and went 30 days past pue.

    I have seen where other people were able to get thru the short sale process with Wells without missing any payments so I guess if I wanted to take a chance and drag the process out longer I'm sure I could of fought it.

    Good Luck!
  3. Paulac

    Paulac LoanSafe Member

    Tricia, any update on your short sale status with Chase would be very appreciated, I'm just in the beginnings of negotiations with them as i have submitted an offer.

    any luck? I have an attorney/paralegal working with the banks, they are pit bulls and have had lot's of successes. we shall see!
  4. tricia88

    tricia88 LoanSafe Member

    We decided not to accept the terms of the approval letter. I believe they will pursue the deficiency on the 2nd loan and I'm not going to sign away my protection under CA law. They will not remove the verbiage so I told my agent that we're just going to let it go to foreclosure. A small part of me is hoping that the bank will change their mind at the last minute but if they don't I'm prepared to accept the next step.
  5. Buckus

    Buckus LoanSafe Member

    I wouldn't bet on the bank changing their mind. Letting it go to foreclosure is quite honestly the best path when they try to slip in the deficiency clause. It should in big bold letters read something like "This amount releases the lien on the property and satisfies the original loan documents."

    Sounds like the bank is trying to pull a fast one. A realtor cannot provide legal advice, so for anyone else out there with this kind of situation, best to pay a lawyer to read it up.

    Good catch on your part. The bank is trying to have their cake (collect all the money from the original mortgage) and eat it, too (not hold the property and resell it, pay foreclosure costs, etc.)
  6. lisamd27

    lisamd27 LoanSafe Member

    We are actually in the same situation as you. We have been working with Chase on a short sale on a rental home that we own and have been trying to get a deal done since Oct. of 2009. They took too long in responding and our first buyer walked in Nov. o 2009 and then we tried again with another buyer in Feb. of this year and the deal was actually almost done a few weeks ago. But after changing negotiators on us multiple times and finally receiving an approval letter from them, they would not give us a waiver of deficiency for the amount and so we are probably going to let it go to foreclosure as well.

    The most recent negotiator said he could get us the waiver, but then two days later, this negotiator was reassigned and the new negotiator said that all of a sudden we could not get the waiver. We are in AZ which is a non-recourse state and we are protected against deficiency in a foreclosure, but not in a short sale unless we have the waiver in place, so we really have no choice at this point.

    The whole situation has been ridiculous and a nightmare and I am surprised these large banks are allowed to do this to homeowners left and right without any fines or penalties being levied against them. If anyone has similar stories regarding Chase and short sales, please PM me, thanks.
  7. tricia88

    tricia88 LoanSafe Member

    My realtor wants me to consult with an attorney that one of her colleagues referred and she'll pick up the tab. She doesn't want give up on the sale (which I appreciate her persistence) so we'll see if getting a lawyer involved will get Chase to remove the deficiency language.

    At this point, I really don't have much to lose if it goes to foreclosure. My credit is already in the gutter due to all the missed payments. I checked my report last night and found out that Chase already sold my 2nd loan and charged it off so now I know that they will pursue the deficiency...at least whomever they sold it to will.
  8. tricia88

    tricia88 LoanSafe Member

    Thanks for the encouragement, Buckus :)
  9. babbles

    babbles LoanSafe Member

    Couple of questions about my short sale request through EMC:

    Got an offer back in April after the home was on the market for 7 months.

    According to Zillow, for what it is worth, says the home value has increased. Rental home located in GA. and balance to EMC on 1st is 162k, offer was @ 155K, and zillow says its now worth 174k, up from 170k.

    1. Is that offer of 155k too low?
    2. The file is with a processor. What is the next step, a negotiator?

    My 2nd balance is 49K.
  10. jdsd21

    jdsd21 LoanSafe Member

    Tricia,

    How is it all going with Chase? I just received my approval letter for both the first and second with the same exact language. I caught this right off the bat and contacted my Realtor to tell them it was a no go the way it was. I am currently in a non recourse California loan, 100% purchase money, protected under CPC 580(b), if I was to sign these papers, accepting their deficiency wording, I am understanding that this would change the loans from non-recourse to recourse and lose the 580(b) safety net. Chase wouldn't deal with collecting, they would sell the balance to a collector, who would then move to collect, and now that it would be recourse, could go after me legally. I am not good with this. I also got the same story from my Realtor telling me they tried to get this wording changed and couldn't, and that they hadn't heard of any successful instances of another Realtor doing so. Anyways, there are three things I would like to see on the letter prior to signing:

    Wording stating that upon sale and settlement of the property, Chase will prepare and send to the settlement agent for recording, lien releases in full satisfaction of both mortgages, foregoing all rights to pursue a deficiency judgment.

    Wording stating that Chase agrees to cancel the entire deficiency balance and will provide me with a 1099C stating this for both mortgages, as debt forgiveness.

    I understand that they will need to report to the crediting agencies, but I want to know that they will follow standard industry practice and report that my mortgages were settled and considered closed.

    Let me know if anyone has had any success with getting revised letters, and if so, what routes did you have to take. I appreciate all insight, thank you...

    JD
  11. Moe

    Moe Call 1-800-779-4547 Staff Member Loan Safe Mortgage

    The whole point of getting short sale approval is to avoid the liability. If they don't release you from the liability, there is no reason to do the foreclosure sale for them. Better to do a deed in lieu of foreclosure, but I bet they put the same clause into that as well. These banks are really thinking we are all a bunch of idiots, and I hope there aren't many proving them right. If you agree to the 1099, does that make you liable for the tax on that debt forgiveness?
  12. jdsd21

    jdsd21 LoanSafe Member

    I want the 1099c so I can prove the debt was canceled. With the Federal Mortgage Debt Relief Act and the recently (April 2010) passed California Senate Bill 401, I would be exempt from paying taxes on the forgiven debt (both bills go through 2010). A 1099c would be expected in both a foreclosure and a short sale, only difference, with the language Chase provided me, they are trying to work around that and get me to agree to the deficiency balance...
  13. Moe

    Moe Call 1-800-779-4547 Staff Member Loan Safe Mortgage

    California has finally found a way to not collect taxes?I grew up there, until 1983, and when I sold a home in another state, california sent me a tax bill for california income tax.
  14. NorCalAl

    NorCalAl LoanSafe Member

    Hi, I have done several short sales with Chase and it is standard language. However, depending on where you live, they may change it. I am in CA and since it is a non-recourse state, there is no deficiency IF it is a purchase money loan. I recently completed a short sale where they issued an approval letter with this language but after some back and forth they finally agreed to issue a new letter stating the loan has been "forgiven" However, they did ask for a little bit more of a payoff to issue a letter stating the loan is forgiven.
  15. calgirl67

    calgirl67 LoanSafe Member

    What about if you are discharged Ch 7 bankruptcy and want to do a short sale. I assume they cannot ask you to sign a deficiency statement or ask you for $$ to release the lien. Am I correct?
  16. NorCalAl

    NorCalAl LoanSafe Member

    If you file Ch. 7 BK or any Bk for that matter the short sale cannot continue. If you name the loan as a creditor in the BK they cannot come after you for the deficiency based on my understanding. I have spoken to lawyers about this but I am not one myself so it's best to check with an attorney.
  17. cindymc039

    cindymc039 LoanSafe Member

    You should get the direct number of who sent the approval letter from your realtor and contact them. Let them know that it was "purchase money" and you are protected by the deficiency laws in CA. Ask them to change the terms to payment in full. If you tell them it was purchase money and ask them to check their records or send them proof that it was purchase money, they will change the terms for you. They are just busy and don't have the proof or verification, that's all.
  18. NorCalAl

    NorCalAl LoanSafe Member

    Everyone, if you are in a non recourse state like CA and your loan was purchase money, do not accept a short sale with deficiency language! If you do, you are waiving your protection under CA law. I have attached an approval letter specifically stating they will forgive the remaining balance. Push for this if it in fact a purchase money loan! They should take 10% of the loan balance to FORGIVE the rest. If your loan is purchase money push for it! They may ask for a little more but it is up to your agent to put together a deal that works in combination with buyer contribution and as much as you can get the 1st lien holder to contribute.

    On this particular deal, they did the same thing to me, gave me a letter with deficiency language but I rejected it and I was able to negotiate the attached letter stating the loan was FORGIVEN.
  19. tricia88

    tricia88 LoanSafe Member

    jdsd21 - I haven't heard anything from Chase or my realtor so I guess the foreclosure is moving forward...When we first received the approval letter, I called Chase directly and tried to get them to remove the verbiage but it was no use.

    NorCalAl - What is the benefit of settling for 10% rather than letting it go to foreclosure? The only thing I can think of is the credit report but my credit is already shot since we are so many months late now.
  20. cindymc039

    cindymc039 LoanSafe Member

    Even if your home goes to foreclosure , and you have a second loan that is not "purchase money" loan, although the seconds are "wiped out", the debts are NOT. They can and they will come after you for the debt. They can get a judgement against you or they can send you to collections. realtors don't seem to be able to explain this very well. The law doesnt seem to explain this very well, everything online doesnt explain this very well. I have discussed this with several attorneys and have been told this by each one. This is true in CA at least and it states that are "deficiency" states. Even if its a non-judicial foreclosure. Only the first mortgage cant come after you for the deficiency. The CA protection does not apply to the seconds that arent purchase money loans. Seek an attorney if you don't believe. check out this web site. It only costs $28.00 to talk to a professional attorney. justanswer.com its pretty cool. save yourself about $250 or so. I got better advise from them than from a local attorney that I spend $250 on for 1 hr. Anyway, I suggest the short sale. At least your nightmare is over, unless you want to live in the house longer or something...

Share This Page

COMPANY LINKS

TESTIMONIALS

"Hello Moe, I just wanted to tell you, your website has saved my life (literally), I stumbled on your site in the middle of losing my home, I was able to network with people going through the same thing as I am. I didn't feel alone anymore, I have tried to give back and counsel those that haven't walked in my shoes yet. We hear so much about what is wrong with America, I just wanted you to know, you are whats "right" with America."

Nina Mitchell
Loansafe & MoeSeo Inc. © 2014 | LoanSafe.org is not a bank, lender, mortgage broker, law firm or affiliated with the US Government. Privacy Policy