I finally got my 1st short sale offer accepted but with a condition.
ARP - $145k with $25k in actual repairs, payoff is $132k, and accepted offer of $59,000. B-U-T
Yep - homeowners must sign a deficiency letter. BTW, my contract has a contingency to not seek deficiency.
The 1099 and deficiency topics seem to be a killer for many no-brainer SS deals since the homeowner is afraid. WHAT is a good way to ease their concerns. As you might expect, telling them that lenders “usually” don’t seek deficiency/1099 or that it “may not happen” is not an option. I realize that none of this is a matter of fact since all lenders are different in their practices, but what is the best way to approach this?
What should you do or say when the homeowner asks? It seems that seeking deficiency is a policy of lenders that may not be actually enforced or followed up on. I have heard somewhere that the lender may just have the deficiency letter signed only for their own tax write-off purposes. WHAT’S THE DEAL?
I have also heard of the 1099 being invalidated if the homeowner gets a good CPA (not one from H&R Block). Has anyone seen this?
What are the ramifications of the homeowners signing the deficiency letter the lender requests? I mean, the homeowner has already proven the inability to make payments, what will be different this time. How does the deficiency judgment effect the homeowner?
“If you default on a mortgage, the lender can not only sell your property to get their money back, but they can also sue you if the money from the sale isn’t enough to cover the loan. For example, if you owe a lender $100,000, but the lender only gets $90,000 in a foreclosure sale, they can take you to court for the remaining $10,000. If the lender wins, they can attack your assets, income, credit and peace of mind until you pay this amount. If you have Private mortgage insurance, a lender can use this money to offset any losses instead of getting a deficiency judgment. Keep in mind that only some states give the lender the right to a deficiency judgment.”
The worse lender I’ve worked with concerning deficiency judgements is HSBC. They have threatened to garnish wages before.
I’m working with numerous lenders: Mortgage Lending USA, Chase, EMC, Wilshire, US Bank, Ohio Savings Bank, Homecomings…
I guess my main concern is getting the homeowner under contract and explaining the deficiency and 1099 issues IF they come up in the conversation. But since ever lender is different, I just wonder what other investors have experienced during the short sale process.
In WI, if the redemption period is shortened from the normal 12 months (and it almost always is), I believe the right for deficiency is waived. Does anyone know this to be a fact?
How many of you investors out there have experienced problems with deficiency judgments?
I finally got my 1st short sale offer accepted but with a condition.
ARP - $145k with $25k in actual repairs, payoff is $132k, and accepted offer of $59,000. B-U-T
Yep - homeowners must sign a deficiency letter. BTW, my contract has a contingency to not seek deficiency.
Who is the lender you are working with on this particular deal?