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Will my debt be forgiven with a short sale?

January 28, 2010

Just this week I had a client balk when the I asked for updated paystubs and bank statements. They are in the process of a short sale and it’s been forever since we submitted to the offer to the lender. Once the mitigator was finally assigned to the case, he needed current paystubs – within the last 3 mos – just like when you go for a loan.

Remember, they are lenders. Their process doesn’t really change much. Loan Mods easily shift to short sales and the paperwork the banks use are the same for both.

During the negotiations for the short sale, the bank will let you know whether thegdebt will be forgiven. I’ve had it go either way – lenders that I thought didn’t deserve a right to recover that reserved the right and lenders that clearly had the right to recover that waived their right to recover.

That’s why it’s  so important to work with someone that know the ropes. Otherwise you could end up with a surprise like the guy in the following article.

Lenders Pursue Mortgage Payoffs Long After Homeowners Default « HousingWire

Lenders Pursue Mortgage Payoffs Long After Homeowners Default

Thursday, January 28th, 2010, 12:09 pm

Source: BusinessWeek

When John King stopped making payments on his home in Coral Gables, Florida, two years ago, he assumed the foreclosure ended his mortgage contract, he said. Last month, a Miami-Dade County court gave collectors permission to pursue him for $44,000 stemming from the default.

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