Well it has been a common scenario that the banks will forgive a deficiency...until now. I recently got an approval for a short sale from Bank Of America and the Short Sale Approval Letter which said: " XXXX and or it's investors may pursue a deficiency judgement for the difference in the payment recieved and the total balance due, unless agreed otherwise or prohibited by law, if the short sale closes on the loan referenced above. In addition, if this loan is covered by mortgage insurance, the mortgage insurance company may reserve the right to pursue the seller for the deficiency based on the terms of the mortgage insurance policy."
Another Realtor who does a lot of short sales in my office said this was the first he has heard of this happening. After reading this approval letter, my sellers decided to withdraw their offer to short sale and I took their house off the market. Their options were short sale and have the possibility of a deficiency judgement or foreclose and have one as well. They did not qualify for a loan mod. I counseled them to seek the advice of an a good short sale and bankruptcy attorney.
With everything tightening up, it's getting harder and harder to close on short sales. Can I get an AMEN ?