What's the normal policy from a bank on a short sale? The remainder balance owed to the bank .

  • August 08 2012 - Saint Petersburg
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Answers (6)

Depends on the bank.  Be sure to use a CDPE (Certified Distressed Property Expert) when short selling and read the approval letter from the bank carefully to be sure there is language in it that specifies that you are being released from the deficiency balance owed.  You may also wish to apply to the HAFA program which guarantees deficiency release, plus $3000 in relocation assistance to you.   [deleted by Zillow moderator. Please see our good Neighbor Policy for posting guidelines]
  • September 28 2012
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You need to carefully read the short sale approval letter to make sure of its terms. The letter should specifically say that you will be released from all further liability.

The majority of approval letters I have seen are not particularly clear on this issue. Some will only say that the mortgage is being released, which does not necessarily mean that you are free from monetary liability. Some letters seem more conditional, saying that you will be released if the investor who owns the mortgage clears some hurdle out of your control. Some letters just talk around the issue. Some lenders will clarify the terms at your request, but many times the homeowner won't get a definitive release and will have to hope for the best.

  • September 12 2012
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Profile picture for Scott Smolen
If you do a short sale, make sure that you read your approval letter from the lender carefully.  If you have a 1st and a 2nd trust, the approvals can be totally different.  Either way a short sale is usually better than a foreclosure, but you should also consider consulting an attorney to weigh your legal options / ramifications as well.
  • August 08 2012
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Not enough information provided and Diane explained it correctly. Also depends on the state.
  • August 08 2012
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While banks do as they choose, up to the end of 2012 a goverment program has made it possible for most sellers to get that deficit forgiven. So if you are in a short sale position, you should move quickly. Get an experienced agent.
  • August 08 2012
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Depending on if the property was an owner occupied./2nd home/investment the banks are all different.  They could ask for a promissory note to close file, or file a defficiency or 1099.  You really dont know until you get a payoff/acceptable offer and the bank will show if a promissory is required.  Best of luck
  • August 08 2012
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