Friday, October 17, 2008

If you have sold a property in a short sale are other properties you own at risk for the deficiency?

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You should not have a deficiency after a short sale.
Unless you have a previous foreclosure on your record.

That is just what short sale is all about.

Here is and extract out of one of the lenders approval letters:

"Lender or its investors will not pursue a deficiency judgment if the shortsale closes on the referenced loan. If the shortsale does not close, then the referenced loan secured by the Note and Security Instrument shall remain in full force and effect and we will pursue all remedies under the Note and Security Instrument."

It says clearly "no deficiency judgment", so you won't be pursued.

The beauty of the short sale is that it creates a win/win for everybody:
- The seller/borrower gets debt forgiveness and has no deficiency judgment against him. On top of that his credit report will show the debt as settled so that's not bad.
- The Lender does not have to spend $50,000 or more in foreclosure fees.
- The new buyer is getting a steal of a deal.
- The Realtor gets a commission out of the proceeds.

Isn’t that sweet?

So, don't worry, if the short sale is handled by a licensed professional then you should be having no problems afterwards.

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