If the lender accepts a short payoff they cannot pursue a deficiency judgment. They can issue a 1099 for the amount of debt cancellation.
Im pretty sure thast not true. Lenders have their choice to pursue a deficiency by filing a suit , granted your state is a deficiency state (which most are) or issuing a 1099. The only times they cant seek a deficiency is when you tell them that is a condition of the short sale and they agree to it
I think swgprop is right. If in particular, if it’s an FHA loan, then my understanding from HUD regulations is that they cannot pursue a deficiency judgement.
I am refering to second mortgages as the conversation above was talking about. Maybe an FHA loan cant seek a defiency, but those are only for first mortgages. FHA loans also are limited to only accept as low as 82% of the mortgage amount. But second mortages can seek a defiency judgement if the house goes to foreclosure, or if you short sale it and they accept less. For them not to be able to seek if you have to state that in your offer to the bank
BS3488: I see what you’re saying about 2nd mortgages & deficiency judgements.
For FHA loans, the lender is actually limited to 82% of the BPO, regardless of the mortgage amount owed.
EquityHunter may not have the best, ah… bed side manner, and he (IMO) may be a little aggressive in disagreeing with others, but I would never want him to go away. I am sure he has some helpful info to contribute.
With the time frame you had left, you didn’t have much time to work with the second lender.
Normally they need the documents to be in at least two weeks before the sale, if not they won’t really have time.
At that point, you can blindly catch up the back payments on the first.
Or scream loud, NEXT!
I talked to the seller tonight, and he sounded interested and knew what a short sale was actually (the property in question is a rental, so I think he knows some stuff). Then he asked me how many deals I have done and I was honest and said this was my first, and then he said he wasnt interested. Did I do the right thing or could I have fudged a bit there saying maybe I have done a few deals with my “partner” so I wouldnt be totally lying. He kind of cut me off and hung up before I could elaborate and tell him how I can help, so I am going to call him back and tell him he has nothing to lose and everything to gain, I just need the letter of release so I can talk to the bank. and while talking to him he’s like “oh I didnt know the auction was scheduled for the 5th…” I mean come on he knew the foreclosure was coming for a long time…
You could either say - NEXT! and the guy may just get foreclosed on.
Alternatively, you could find another investor that does SS and partner with them on this deal.
Listen, I’m not negative. I’ve been where you are 5 yrs ago. Been there done that. You think this is something new? Do you want to spend 5 yrs learning what I have with nothing to show for it? Go ahead. Be my guest.
EH
Now thats sad.