Do Not Be Hasty In Getting Your Short Sale Closed! Post Short Sale Deficiency
By now, we’ve reached a consensus that a short sale is the best alternative to a foreclosure and that lenders/servicers are giving more approvals than ever before as it is deemed to be, in most cases, the better financial decision for them as well. Short sale approvals are now issued frequently. However, I have been receiving multiple inquiries regarding post short sale deficiency situations. Their stories are similar in that they all are having unexpected negative consequences after short selling their home. Just because you’re granted an approval letter and are able to close the short sale, does not mean you are necessarily off the hook!
As I have stated before in my previous article on approval letters, deficiency release/terms are defined in the approval letters issued by the lender(s). This letter or letters from your 1st position lienholder or any subordinate lienholders must be investigated by YOU as the homeowner. Although your agent may be trustworthy, do not simply rely on your realtor or any other party working on your behalf to tell you that everything will be okay after the short sale. Homeowners who are struggling with deficiency judgments after their short sale have come to me saying their agents (realtors, title company, etc) told them that lenders usually won’t pursue for the full amount after closing the short sale. Now they are unfortunately dealing with a judgment of the full amount with minimal leverage as they already sold their home.
You don’t want to take the risk of being liable for deficiency after your short sale so it is absolutely pivotal that you make sure you acknowledge the deficiency verbiage yourself from the lenders before signing the approval letter. If you sign it, you are responsible for it.
What happens if I sign and close without the proper deficiency terms?
Negotiating the deficiency should be done during the short sale. Without the home to use as leverage, negotiating with lenders is more like a plea than a deal. If you are in a situation where you’ve closed your short sale and are facing a judgment or believe you will be soon, we have certified debt settlement experts available that may be able to obtain a reduction of the remaining amount owed but let me be clear in that all will not qualify for this service. Email me at Peter@seattleshortsaleblog.com and I will connect you to our experts.
It is crucial that the homeowner and agents working on behalf of the homeowner know exactly what the deficiency terms are and the expectations are clear prior to signing and closing the sale. Our negotiators have rejected numerous approval letters because they did not agree with the offer in regards to the deficiency. They are extremely vigilant of what the deficiency terms are in closing. Their first priority is to negotiate aggressively to get a full deficiency release but if the situation doesn’t permit, they make sure they receive a reduced promissory note that is communicated very clearly with the homeowner so there are no unexpected outcomes after the sale. This is why our team of expert negotiators have been extremely successful in closing their deals and homeowner’s are never left anxious of any adverse effects of the short sale.
Lastly, as stated in my previous post regarding approval letters, carefully read all the terms and be sure the deficiency verbiage exists. If it does not exist, that is not a good sign. I highly suggest you do not sign the approval letter until you are fully aware of the terms & agreements written on the letter.
Find a negotiator in your area. Our top team of negotiators are only available for Washington residents but if you do not have a negotiator in your area working on your file, find one as soon as possible. It is much easier for realtors to close short sales these days but if it is not in good terms, you may and probably will find yourself in a position you do not want to be in.
Hope this helps
Peter
