subject: Orlando Short Sales: How To Get A Short Sale Lender To Waive Deficiency Clause [print this page] Orlando, FL - The Stop Foreclosure Institute recently received a question from John. Here is John's Question.
"I just received a full price offer on my house. My main concern is that I don't get stuck having to pay off the deficiency. I have a first and 2nd with Chase and owe 270K on the home. The buyer's loan is also with Chase. How can I work this out so that I can walk away from this without owing any money? Is it even possible with such a large difference between what the house is worth and what is owed?" John.
Here is the answer to John's Question: John, you need to read through the short sale approval letter. See if is contains any language like "Payoff", "Forgiven", or "agrees to release the debt." Have an attorney read it over to make sure that it says the debt will be released.
If it doesn't say the debt will be released, then here is how you can re-negotiate for them to issue a complete release.
1. Request that the deficiency be waived. Tell the lender you will not short sale the property unless they give you a complete release.
2. Show proof that you cannot afford the deficiency payment. A debt from an absolutely broke person is worthless.
3. Show proof that the lender will net more money from the short sale compared to a foreclosure. This is your agent's job to do. They will put together a calculation showing how much the lender is netting from the short sale, and project what they would net from a foreclosure.
If you cannot prove that you income doesn't cover your bills, then you may need to look into other avenues. You can look into getting a forensic loan audit to see if the lender broke any lending laws on the loan.
What is an Orlando Short Sale? A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.
