Find out If You Will Owe a Deficiency after a Lakeville MN Short Sale?
Here is a question our team received recently about a Lakeville MN short sale and a deficiency judgement. We have a first mortgage with Bank of America. We received an approval letter on a Lakeville MN short sale. NO language in the letter says, “Satisfied in full” or words to this effect. It only says “Bank of American's acceptance of this discounted payoff is X.”
Another sentence under page 2 says: “This transaction may have implications on your federal tax liability. You should consult the IRS or your tax accountant for additional information” No other language regarding reporting to the IRS.
This first mortgage was an investor, non owner occupied loan. Are we up a creek? Will they sell the note to a collection company and hound us for years to come? We have assets. If we let it go to foreclosure, due to it being an investor loan, what are the ramifications for placed on us for a deficiency?
Answer: My professional opinion, the ramifications are exactly the same for a foreclosure as a short sale. Either way, depending upon the laws in your state, you might be chased down. However, between 65% and 80% of all loans will not have a deficiency.
Here is how to find out if your loan is a type of loan which will not have a deficiency. Find out who owns your loan because, most loans are not owned by the lender handling the negotiations on your short sale. Bank of America is probably the “servicer” for the actual owner.
The actual owner might be Fannie Mae, Freddie Mac, a Wall Street Trust, a large insurance company or a pension fund. Bank of America acts as a trustee for the actual investor. They collect the payments and handle the “Lender” Functions. They then forward the money to the investor of the loan each month.
If the owner of the loan is Fannie Mae or Freddie Mac, in my opinion, you won’t have to worry about a deficiency. All of the Fannie Mae & Freddie Mac Short Sale Approvals we have gotten released the home seller from future liability.
FHA Short Sale Guidelines also spell out that you will not have any future liability. VA Short Sale Guidelines release the liability as well. However, you will not be eligible for a future VA loan until you reimburse VA for any loss.
Fannie Mae, Freddie Mac, FHA, and VA account for around 60% of all the loans in the US. If you are considering a short sale and are worried about a deficiency judgment give me a call at (952) 223-0999. When you contact me, I will research the type of loan you have. Based on the research I can give you my opinion on the deficiency.
The above is my opinion. It is not legal or accounting advice. Please contact a competent real estate attorney or other professional because the circumstances vary, depending upon your situation.
Thanks for reading this, Tim Murphy.
Tim is a local Eagan Mn real estate agent @ Re/Max Results.
Phone: (952) 223-0999.
P.S. Please feel free to call or e-mail me at anytime for a FREE No Cost, No Obligation Consultation. My goal is to help as many people as I can in 2011.
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Tim Murphy, MN & WI Licensed Realtor
Metropolitan Home Team
RE/MAX RESULTS
Phone: 952.223.0999
Tim Murphy and his team specialize in Lakeville MN loan modification assistance and short sales in Lakeville Minnesota. Lakeville MN Loan Modification Help, Lakeville Minnesota Loan Modification Help, Lakeville MN Loan Modifications, Lakeville MN Loan Mods, Lakeville Minnesota Loan Modifications, Apple Valley MN Loan Modification. Lakeville MN Short Sale, Lakeville MN Short Sales, Lakeville Minnesota Short Sales, Lakeville Short Sale, Apple Valley MN Short Sales.