Short Sale Letter From Attorney
Hi...I am negotiating with two banks (first and second lein) on a property. The second lein is represented by an attorney. I have the letter in my hand accepting a short sale for their lein. I have a question on one of the paragraphs, and I want to make sure I'm clear. Here is how the paragraph reads:
"The bank has agreed to accept the sum of $1,000 in exchange for a discharge of mortgage on the above property. However, this amount will be applied on account only and does not discharge your entire loan balance. Upon receipt of the funds on or before September 30,2004, we will forward a discharge of mortgage to you or the title company for recording with the register of deeds."
I am guessing this is basically saying they will accept $1,000 to allow the sale of the house, but the remaining amount will still be owed - which I would guess would be how they would do a deficiency judgement.
Am I correct in assuming this? I am going to clarify with the attorney, but I don't want to sound stupid =)
Thanks for any help,
Chris
It seems that the mortgagee will release it's security interest for $1,000... but may enforce the borrower's personal promise to repay.
It's not a deficiency judgment - rather the second lient is simply releasing the MORTGAGE part of the loan, thereby removing the LIEN on the property and allowing the sale to proceed. However, release of the lien on the property does not equate to the release of the obligation under the NOTE that was signed, and it looks like the second is going to attempt to collect that balance in the future.