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Question

I would like to buy a bigger house as my primary residence as my current residence is too small and is under water by about $150,000. I intend to short sale the current property after closing on the 2nd house but I am worried that my lender might impose "deficiency judgment".How do I avoid it? Should I be better off just letting my first property go on foreclosure?

Submitted: 33 days ago.
Category: Finance
Value: $28
Status: CLOSED
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By the way, I earn about$ 150,000 a year.

Posted by Dimitry Alexander Kaplun 33 days ago.

Answer

If you end up "short selling" your property, the lender automatically gives up the right to go after you for the deficiency. To make sure that this occurs, when you request a short sale, get a letter from the lender "waiving" all their rights and abilities of pursuing a future action against you.

Sincerely,

XXXXXXX XXXXXXXXX XXXXXX, Esq.

33 days ago.

Reply

What if my lender does not give me the waiver? Do I have another option?

Accepted Answer

Then the short-sale will not be valid. To have an actual valid short sale the lender must agree to remove you from all deficiencies and penalties of the debt. Otherwise it is not a short sale but a private sale at a loss to you. Foreclosure is a worse option since you then lose the equity, credit rating, and home while at the same time remain responsible for the full deficiency of the property once it is sold off at auction.



Sincerely,



Dimitry Alexander Kaplun, Esq.

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Expert: Dimitry Alexander Kaplun
Pos. Feedback: 100.0 %
Accepts: 
Answered: 10/20/2009

Attorney

NASD Licensed Rep, 1997-2001, Business Attorney

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