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Short Sales and Deficiency Judgments
Although the economy is still relatively strong, we are all uncertain about the future. With the pandemic continuing into 2021, there are many industries that have been extremely hard hit—such as the restaurant industry, the entertainment industry, and the fitness industry among others. Because of this, there may be many folks who need to sell their homes because they may have had a pay cut or lost their jobs, and thus cannot afford their mortgage payments any longer.
Short Sales vs. Equity SalesSome people will be able to sell their homes with no problem and perhaps even walk away with a good chunk of cash; this is known as an equity sale since the seller has equity in the home. Others, however, may not be that lucky because they do not have equity. Those folks may owe more on their mortgage(s) than the property is currently worth. In this case, the owners would need to participate in a transaction called a short sale. In a short sale transaction, the mortgage lender agrees to accept less than the amount owed on the loan. It is a lengthy process that involves a lot of negotiation; that’s where Short Sale Expeditor can help. Upon completion of the negotiation, the short sale lender will provide a short sale approval letter. And, depending upon the state in which you live, your short sale approval letter may give the lender the right to collect the difference subsequently through any legal remedy possibly—including a deficiency judgment.
Short Sale Approval LettersIf you are a seller looking to participate in a short sale, or if you are a seller participating in a short sale, or if you are an agent representing a short sale seller, it is important to read the short sale approval letter carefully and be certain that you understand whether or not the remaining debt will be forgiven or whether the lender can go after the borrower for the deficiency. You may also want to have an attorney review your approval letter prior to closing on your home sale. If you or anyone you know needs help negotiating a short sale, please feel free to contact the team at Short Sale Expeditor.
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