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Closed Short Sales coming back to haunt . . . . .
Hello,
I'm new to this forum and was told by another agent about it. Actually I short sold this agents home for him.
Now, I always check and read over the approval letters and if it states anything like “the bank reserves the right to file a deficiency judgment” I go back and negotiate for the 1099C, I do not let my sellers sign. If I can’t negotiate that out I tell the bank “No deal” and we will not close. Then it’s back to remarket the property and begin again.
In the last month, 2 of my closed Short Sales have come back to haunt me and my clients. I got to a successful close with these two different files where they both had seconds, one with Chase and one with Citi. The approval letters, from the seconds, had the sellers paying nothing; the banks requested nothing, and just a line stating that they may have tax liabilities to address. Not one week later both banks called the sellers and asked how they want to pay for the deficiency.
I got involved and both banks stated that according to the way the note was written, no matter what the short sale outcome was they always owe the balance. So, I got my attorney on board and our argument is that everyone should have been made aware of their intention upon the issue of the approval for the short sale.
Has anyone else had this happen and what was your final outcome?
Replies to This Discussion
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Permalink Reply by Andrew Sawyer on -
sign me up, this 5% for all the work is unfair. I wil be the 2nd to sign.
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Permalink Reply by Andrew Sawyer on
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This was just posted on the Wells fargo group. Im not the only one that see's this coming.
Beware of Wells issuing 1099s following the approval of a short sale and then ALSO going after the borrower directly with a collection action. We are seeing this in the legal context and the collection law firms can be unwilling to acknowledge loss mit instructions to the contrary.
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Permalink Reply by Guy Edward Mongillo on -
Paul
I just closed a deal similar.
How could you they come after the seller if CHASE waives the deficiency?
Now Im nervous.
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Permalink Reply by Joseph C. Alfe on -
Three little words: THIRD PARTY COLLECTIONS
Third parties are not bound by the 1099's issued by the servicer/lender.
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Permalink Reply by Guy Edward Mongillo on
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My letter says 0.00 due to the second and there is no mention on the HUD-1 settlement statement of the second on line 505. If the bank or a collector comes after the sellers and the amount is not disclosed on the HUD-1, how could anyone have the right to go after the seller? I don't see Third Party Collectors on my release letter. I am still a bit nervous. Told the seller to take the HUD letters back to his attorney one more time to be sure.
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Permalink Reply by Joseph C. Alfe on
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deficiencies are never disclosed on the HUD
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Permalink Reply by Michelle Melton on -
Truely there are so many dirty little loop holes or fine print the banks don't make anyone aware of. I have (KNOCK ON WOOD) not personally had the banks come back to my sellers YET. But have seen it happen over and over. Even if there was" no future financial obligation" line in the approval letter. They go back to some tiny print in there original loan docs. Insane but, he holds all the cards usually wins.
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