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Banks May Demand Seller Contributions to Approve Sacramento Short Sales
Among the many twists and turns a short sale can take during its relatively incessant and torturous life is the often anomalous ending. It ain't over until the fat lady sings. Trying to second-guess the bank's investor guidelines is a crap shoot, but I try to prepare my Sacramento short sale sellers for the unexpected that could materialize upon approval.
I'm finding that second lenders are demanding more of the net proceeds. They don't care who pays them -- the seller, the buyer, the agents. I suppose some figure that their position was 20% of the equation in the first place. So, why should they get the short end of the stick (a measly $3,000) upon payoff? Sellers are often called upon to make a seller contribution to the second lender, especially if that loan was hard money.
But in a strange twist lately, some lenders are demanding a seller contribution in purchase-money situations. In California, purchase-money loans are not subject to a deficiency judgment. This means if the bank loses money, whether through foreclosure or a short sale, if the loan was originally given to the sellers to buy the home, the bank can't go after the sellers. These homeowners ... more

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