Recently I had the express pleasure of working out a rather large and complicated deficiency with TWO lien holders on TWO properties, same seller, same bank, and .. same buyer. Orginally my seller (whom the bank refers to in thier approval letters as the Borrower) was repsonsible for over 780 THOUSAND dollars as per the original note agreement. At frist the first lien holder wanted him to sign off on a letter that indicated that the agreement was for the release of lien ONLY and that the seller would remain liable for the balance of the ORIGINAL loan as per the note agreement.
NOT so wonderful! and NO my seller was NOT happy with it. He told me he would NOT sign it and quite frankly I didnt blame him. I was willing to go to the mat for him and thats exactly what I did.
This is NOT why I develop rapport ( or at least try to) with the negotiators at my sellers lenders, but it just might have helped. I called the negotiator and asked if there was any way we could have an approval letter that would put my seller in the clear from having to worry about a defiency judgement in the future. The response was of course the repsonse he is trained to give...that "they only have two letters, one for recourse states like Florida and one for non recourse states like California" Without getting into the specifics of what I did or did not say, lets say I asked the negotiator to go back to his superiors (whom I had also spoken with and had GREAT conversations with) and see if they could, maybe, perhaps, just by chance, make a third letter. Even if it was just for me and my seller only and only just this once.
Well a week later I got my sellers new approval letters. Of course I sent them to my attorney to review and his opinon seemed to be the same of the sellers attorney ( in this case my seller had his own attorney and chose not to retain any of the ones in Lee county FL who I normally reccomend to folks. ( SIDE NOTE - I do have ONE who I think is the smartest and most experienced whom I reccomend most highly, just to be fair I will give my customers a few names and numbers of attorneys to talk to and to choose from but this one fella is practicing longer than I've been alive and he's the one in my book, he's who I have work on my things and address "specalized issues")
Legally I cant give legal advice and I cant give interpretations or projections of the implications of what is contained in an approval letter. This is what I have my team in place for. When I do a short sale, my sellers have access to an attorney for at the very least reviewing these approval letters and explaining the potential ups and downs of them.
We just got another one done that leaves nothing to the imagination. Different seller, different scenario. This one was a homeowner who was facing foreclosure. The second lien holder FLATLY refused to accept anything less than XYZ dollars. This amount was OVER the maximum allowable for the first lien holder to approve the short sale under their HAFA guidelines. Rather than play chicken, what we did was drop the HAFA, sweep the moving allowance to the the frist liens proceeds of sale and wait for thier approval letter. AGAIN we had to ask for a modification to it.. and this is an exact copy paste of one of the paragraphs in the letter we recieved today.
Sometimes you dont need a lawyer to tell you what something means...and isn't that wonderful?? Nonetheless I have my sellers review these letters with an attorney, just to be on the safe side!
"Further, upon receipt and clearance of the Lien Release Amount, borrower shall be deemed released and forever discharged from any and all liability of any kind whatsoever, arising out of, associated with, or related to, any obligations of the underlying debt agreement or promissory note, related to the above reference including loan, but not limited to, pursuit of any deficiency amount thereunder."
This was FANSTASTIC, my seller (the banks borrower) was THRILLED!!! I welcome the chance to speak with anyone in need of a guideance in these senarios and as always my team stands by ready to advise and assist you in matters of legal and tax advice.
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