CNNMoney had a very thought provoking article today that should be a must read for any home owner, particularly those pursuing a short-sale or deed-in-lieu end to their troubles:
“Former homeowners may still be on the hook if there’s a difference between what they owed on their mortgage and what the bank could sell it for at auction. And these “deficiency judgments” are ticking time bombs that can explode years after borrowers lose their homes.
Lenders may release property liens in order to facilitate short sales without releasing borrowers from their obligations to pay under the promissory notes. The secured debt can convert to an unsecured one after the sale.
Zaretsky had one client who was so relieved to have arranged a short sale that he signed every paper his real estate agent shoved at him, even a confession that clearly stated he still owed the debt.
“He had no idea what he was doing,” said Zaretsky. “All the lender had to do was go to court to convert the confession into a deficiency judgment.”
Those facing foreclosure, including homeowners considering a short- sale or deed-in-lieu solution to their problems would be very wise to seek the services of an independent, competent real estate attorney during this process.
The full article –
http://money.cnn.com/2010/02/03/real_estate/foreclosure_deficiency_judgement/
