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Short Sale Tip of The Week 6-24-09
Posted on 23. Jun, 2009 by ctlms in Short Sale, foreclosure
What are the consequences of a short sale? Part 3
This week I am going to finish up the discussion on short sale consequences for a homeowner that must sell via a short sale. This weeks topic is the deficiency balance.
I posted on this topic in my tip of the week on 5-13-09 so I will just sum up the topic here.
When a short sale is approved as a release of lien only, the sellers are still open to the possibility of the lender trying to collect the balance in the future. This is NOT an acceptable short sale approval letter. It leaves the sellers open to any and all collection options that are available to the lender at any time in the future, even after they get back on their feet financially.
These approval letters should be rejected and negotiated to a pre-arranged promissory note. We always try to negotiate those notes for much less than the deficiency balance and at very low or no interest. The difference between the promissory note and the deficiency balanced is forgiven and the sellers would receive a 1099-C for that amount. We discussed the promissory notes extensively in tip of the week on 5-13-09.
As I have stated before, a satisfaction of the note is the best approval. However that is not always an achievable outcome and the promissory note is the next best thing. A well negotiated promissory note is by far more favorable to the sellers than an open ended ability by the lender to try to collect on the entire deficiency. The lender would often sell the right to collect that debt to a professional collection agency that will relentlessly pursue the sellers.
That raps up this mini series on short sale consequences. See you all here next week for my next Short Sale Tip of The Week.
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Bio
Sean Wilder started in the pre-foreclosure business in 2007. Previously he enjoyed successbusiness in the transportation industry, real estate investing and as a licensed Realtor. Sean brought the same determination and work ethic that lead to great success in his previous businesses to Loss Mit Services based in East Windsor, CT. His focus, combined with his drive to succeed, have been essential to his success as one of the area's top short sale negotiators.
Known for finding creative ways to overcome hurdles and never ending persistence; Sean, believes in the power of team. Sean and his team are in the trenches everyday, plowing through challenges and objections while negotiating with various lenders, and finding solutions to difficult problems. It is this daily experience that brings Loss Mit Services consistent success and provides them the knowledge to share.
Sean belongs to a number of industry groups and associations that allow him to collaborate, share, learn, teach and stay updated on the latest changes in the pre-foreclosure industry at the federal, state, local and lender specific levels.
Effective Oct 1, 2009 all debt negotiation companies that offer loan modification, short sale, or foreclosure rescue services needed to be licensed by the CT Dept of Banking. Sean and his company Loss Mit Services were the 1st to be awarded the Debt Negotiation License NMLS # 828273 which can be verified at the CT Dept of Banking Website by Clicking Here. In addition, effective Oct 1, 2011 Debt Negotiators were required to also be licensed Mortgage Loan originators and Sean also has received this license, NMLS# LO-831853.
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