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Forums » Short Sales » can the bank come after homeowner afterwards

can the bank come after homeowner afterwards Subscribe to can the bank come after homeowner afterwards

6 posts by 6 users

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John Bart

Real Estate Investor


Forum_avatar_avatar-55reinvest

Icon_minipost Feb 26 '09, 08:28 PM

Can the bank come back after a seller for the money that was shorted?

Would the seller still be liable for the rest of the money the bank didn't recover?

How can you eliminate that in the paperwork?

thanks

Edited: 06/26/2010 at 07:24AM


Tracy Venezia-Royce

Real Estate Investor · Phoenix, Arizona


Forum_avatar_avatar-invest_to_grow

Icon_minipost Mar 02 '09, 07:30 AM

John you're opening a very broad question. What state is the seller in? Is it a primary residence with the purchase liens still attached? It all depends....the more specific you are, we can probably point you in the right direction. In some cases yes the bank can come back for the difference, but you can't simply "eliminate" this paperwork. Please specify so we can help!

Tracy Royce
[REMOVED]

Edited: 06/26/2010 at 07:26AM by Moderator : link removed, use signature


Bri J

Real Estate Investor · Florida


Forum_avatar_avatar-bridget

Icon_minipost Mar 02 '09, 10:06 PM

John,
When negotiating the short sale you have to ask the bank to release the homeowner of all further obligations so they don't get 1099. Sometimes you have to offer the bank more $$ so they do this. Its all negotiations. However like it was stated above, it does depend on if the house was owner occupied, purchase money mtg. etc. Look up the Mortgage Forgiveness Act. I can send email it to you if you'd like

Edited: 06/26/2010 at 07:26AM


Mitsu O'Riley

Real Estate Consultant · Savannah, Georgia


Forum_avatar_avatar-mitmitsu

Icon_minipost Mar 03 '09, 02:18 PM

Originally posted by John Bart
Can the bank come back after a seller for the money that was shorted?

Would the seller still be liable for the rest of the money the bank didn't recover?

How can you eliminate that in the paperwork?

thanks


John,
I think you are asking about the deficiency, and if the bank can come after that through filing for a judgment.
Yes, even on a short sale. The bank is sneaky on this sometimes. They are agreeing to sell the property short of what they owe. If they don't state they are releasing the lien paid in full, or they will not pursue a deficiency judgment, then they can come after the shorted funds.
The approval letter should tell you this information. Your closing/title company can help you, if you have a good one that understands short sales. (Most don't, and they don't take the time to learn).
The tax part is a whole different thing.

Edited: 06/26/2010 at 07:27AM


Stephen Sarocky

Real Estate Investor · pittsburgh, Pennsylvania


Forum_avatar_avatar-skybyrd

Icon_minipost Mar 03 '09, 10:18 PM

I recently worked a short sale and I specifically added a statement on the option contract that the lender agrees not to pursue the balance of the loan or the contract would be invalid. The bank was OK with this and approved the short sale.

Edited: 06/26/2010 at 07:27AM


Scott Hubbard

Rehabber · Tucson, Arizona


Forum_avatar_avatar-bokman

Icon_minipost Mar 10 '09, 03:06 PM

As stated already, you should use an addendum in your purchase contract that the lender must agree in writing to waive their right to file for a deficiency judgment.

This protects not only your homeowner but you as well.

Edited: 06/26/2010 at 07:32AM


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