Short sales are a great option for alleviating liability on a property where you owe more to the bank on the mortgage than the property is worth; and where foreclosure is eminent. However, an approval on a short sale by your bank does not necessarily fully extinguish your liability. It is important for clients to understand that an approval by their bank to allow the short sale and release the mortgage lien on property does not extinguish the promissory note as well. It merely allows the transaction to occur.
In order to extinguish all of the clients liability, a written deficiency waiver is required. This is where our team comes in. A written deficiency waiver is an agreement by the bank not to come after the client for rest of the amounts due by virtue of the short sale. A bank is protected not only by the mortgage lien on the client’s property, but also by the original promissory note that the client signed. A written deficiency waiver will release the client from the original promissory note. Contact our office to ensure you short sale is conducted properly.