Did You Know? Avoid that Deficiency

Avoid that deficiency

FYI: In today’s market a lender accepts a property via deed-in-lieu (lets you give it back); grants permission for a short sale or sells a home they have acquired through foreclosure there is the possibility of a deficiency. A deficiency simply means that the lender receives less than the full amount which was owed on the property. You should not assume that because they accepted the deed-in-lieu or granted the short sale that they will not come after you legally of the shortage. This is business, more importantly, this is bank business.

What to do? Try to avoid the impact of the deficiency. You should attempt to negotiate with the lender PRIOR to the approval of a short sale or deed-in-lieu to agree wot waive their right to a deficiency judgment. If they agree, it must be written into the final documents that they have agreed to accept either the return of the deed or the funds from the short sale as settlement in full for the indebtedness.

If you do not feel confident to do this yourself or you have tried without success, it is definitely worth the investment to engage an attorney (who has expertise in this area) to help facilitate getting such an agreement. It could save you thousands of dollars.

P. S. Don’t ask me where to find such an attorney.
I’m smart but I am not the Wizard of Oz.

(Please e-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have. We appreciate all feedback, comments, and especially your questions. Don't be shy!)