What Happens With the Short Sale Deficiency Balance? Part 2
June 22, 2008
A short sale on your home will result in a deficiency balance and is often handled in one of three ways as outlined in the previous episode of this show.
While your lender can, and often will, put in writing that upon completion of the short sale and them receiving the indicated payoff that the case will be closed and that they will not pursue for any additional funds in the form of a judgment for this deficiency balance, it is often overlooked that there is an additional party involved if you have mortgage insurance on your mortgage.
Just because the mortgage company says they will not go after you for any negative amount, that does not mean that the Mortgage Insurance company, who’s the one that will ultimately be taking the hit, will do so as well.
Often I find that this point is overlooked or misrepresented. I came across a GREAT Businessweek blog post the other day (Click here to read the Hot Property post as it’s full of good tips ) that I felt did a great job answering a lot of questions sellers have but on this issue there seemed to be a haze of confusion.
I made the point that mortgage insurance is similar to title insurance in that you are making a promise that…well…you should watch the video above. I can explain it there far better than I can type it out.
Feel free to leave a comment below if you think I’m missing the boat on this one, if you know someone that ran into a similar situation, or if you have questions in general.
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