Deficiency Judgement
I know this has been discussed as it is a possibility. I am dealing with HSBC/Beneficial and they want a form signed and notorized saying that they will/can pursue a deficiency judgement for the remaining balance. My question is how often does this happen? I am doing this for purely commission - $2k or so. That definatly would not be enough to help the homeowner out if they come to me in 6 months because of a $20k deficiency judgement. Anyone know how often it happens and what the consequences usually are?
Thanks
Chase
First - no, i have never had this happen.
Is the HSBC a first or second? I find that seconds are more likely to not agreement to settlement in full.
Will HSBC not negotiate for a settlement in full? What if you upped the offer by 2k, would they then do a settlement in full? I always try to get my offers accepted with settlement in full, but sometimes the lender says no.
But you have not choice. You must present the facts to the homeowner and let me make the choice. If the house went to auction or even became and REO, it is my understanding that HSBC could still come after the home owner with a deficiency judgment. So the deficiency judgement will happen anytime there is a shortfall - shortsell or auction or REO. So it is not the short sell that is creating the DJ.
Excellent point on there being a DJ irregardless. I am just submitting the SS package so I am not sure what they will say yet. Do you include in the offer that it will be settled in full or where do you request that?
Thanks,
Chase
Quote:
On 2004-12-16 17:21, bgrossnickle wrote:
First - no, i have never had this happen.
Is the HSBC a first or second? I find that seconds are more likely to not agreement to settlement in full.
Will HSBC not negotiate for a settlement in full? What if you upped the offer by 2k, would they then do a settlement in full? I always try to get my offers accepted with settlement in full, but sometimes the lender says no.
But you have not choice. You must present the facts to the homeowner and let me make the choice. If the house went to auction or even became and REO, it is my understanding that HSBC could still come after the home owner with a deficiency judgment. So the deficiency judgement will happen anytime there is a shortfall - shortsell or auction or REO. So it is not the short sell that is creating the DJ.
You might want to check this out, but if your property is in IA , according to one web site there are no deficiency judgments allowed for either a judicial or non-judicial foreclosure.
In a nutshell, in Iowa if a lender wants to foreclose and persue a diffeciency judgment, there will be a redemption period after foreclosure. Usually this waiting time is not worth the expected recovery so they will choose to foreclose without redemption.
And Chase--in regards to your question specifically, I have had that happen and I always negotiate away from it. For example I was working with a 34k 2nd...they wanted about $4k to release the lien or $10k to settle. [ Edited by myfrogger on Date 12/18/2004 ]
i was under the assumption that we as investors ask the lender to waive the a deficency judgement. then the lender can issue a 1099 iff they remember. i believe a 1099 is way better than a full deficency judgement. if the homeowners had such a hardship perhaps the taxes on the 1099 can be written off. the homeowners must speak to their accountant.
amynewbie
What is the worst that can happen with a deficiancy judgement? Most likely, these peoples credit is already screwed from all the late payments. I have heard that even if they issue a DJ they rarely pursue it collection wise. So worst case the seller lets it sit there for a few years and then they discount it. Just have them sign an indemnity aggreement that says that they are aware that it "could" happen and that they won't come back after you for it.
Are Deficiency Judgements something a homeowner in foreclosure will have to deal with whether or not a short sale is done?
For ex.-
House goes to auction, someone buys it a few hundred or thousand below market -> D.F. ?
House goes to auction, no one buys it, bank takes it back -> D.F. ?