What Is A Deficiency Judgement Waiver In A Short Sale?

Yesterday I wrote what a deficiency judgment is and how it can be detrimental to a home seller. But you do have options available. One is to ask the lienholder for a deficiency judgment waiver. I always ask for this from the first day of negotiations. You have to; in order to ensure you are negotiating in good faith and that the bank will grant you one when you finalize the transaction. Basically, a deficiency judgment waiver states that the bank has accepted less than you owe them on the house. There remains a balance due to them and because of the sale of the house they are willing to waive the balance owed and forgive you for that amount of money. For example, I owe $200,000 on my house and the bank has agreed to accept $150,000 based on the market conditions right now. The bank then sends the approval letter over stating they will release the lien on the house as long as the sale price is $150,000. In that same letter they will state that the deficiency balance of $50,000 will be waived. Meaning you are forgiven form that debt. i talk to a lot of people about short sales and most sellers are unaware of the fact that banks can ask for that money and place a judgement against you for it.... That is why it is important to negotiate it with the bank up front and with an experienced short sale Realtor. If you do not and try to at the end of the negotiating period the banks will not be as receptive. Dave diCecco Realtor/Broker www.davedicecco.com