Posted on: 02nd Feb, 2009 01:52 pm
Location: Littleton Colorado
House has been on market for one year. I have had 5 buyers for the bank but they took their time with the process. I lost all of them over the year. Now i have another new buyer, i was finally approved for a short sale but the sale addedum includes a paragraph making me responsible for the deficit of the sale. I do not understand. I acknowledge that the state passed law to protect me against this. I understand the bank is on a federal level..but what can i do to protect myself from having to pay the difference.??? Also, due to this incredible inexcusable delay in bank process, my credit has been effected. What can i do??
desperate, regards, heike salewski smith
House has been on market for one year. I have had 5 buyers for the bank but they took their time with the process. I lost all of them over the year. Now i have another new buyer, i was finally approved for a short sale but the sale addedum includes a paragraph making me responsible for the deficit of the sale. I do not understand. I acknowledge that the state passed law to protect me against this. I understand the bank is on a federal level..but what can i do to protect myself from having to pay the difference.??? Also, due to this incredible inexcusable delay in bank process, my credit has been effected. What can i do??
desperate, regards, heike salewski smith
Hi heikes,
When you do a short sale, your home sale proceeds aren't enough to cover the mortgage balance you owe. This situation is known as "upside down". The primary reason behind this is the downturn in the housing market and the borrowers' inability to pay off the mortgage.
Now, the difference between your mortgage balance and short sale proceeds is the deficit or deficiency payment. If yours is not a non-recourse loan, then you need to pay the deficiency. The lender may seek a judgement in order to collect it from you. In case you don't pay, he may cancel the unpaid debt. But then you may have to pay taxes on canceled debt.
Will you not be able to afford the deficiency payment or is it that you don't want to pay?
When you do a short sale, your home sale proceeds aren't enough to cover the mortgage balance you owe. This situation is known as "upside down". The primary reason behind this is the downturn in the housing market and the borrowers' inability to pay off the mortgage.
Now, the difference between your mortgage balance and short sale proceeds is the deficit or deficiency payment. If yours is not a non-recourse loan, then you need to pay the deficiency. The lender may seek a judgement in order to collect it from you. In case you don't pay, he may cancel the unpaid debt. But then you may have to pay taxes on canceled debt.
Will you not be able to afford the deficiency payment or is it that you don't want to pay?
what is a non recourse loan??
I thought I was "protected" by colorado state and federal law on paying any deficits?
I thought I was "protected" by colorado state and federal law on paying any deficits?