Short Sale Hardball

Hi Paul,
 
I am trying to negotiate a short sale with Wachovia.  My loan balance for a lot in Florida that  I financed with the bank is $255,000.  I have a contract on this lot for $95,000.  I have provided Wachovia with a financial statement/hardship letter showing them that I am strapped and have negative cash flow but I live in my house and have a condo in Miami that I can not sell and will loose $100K or more when I do sell it. My realtor that has my lot listed has told Wachovia that we can not afford to pay on this loan, we stopped making payments 9 months ago. Wachovia came back and said they would accept the short sale offer but that we would have to sign a statement stating we were responsible for the deficiency.  When I asked for a copy of what they wanted me to sign Wachovia sent this back:
 
There is no new note. They have already signed a promissory note and the interest rate stated in the note will remain the same.  What they will have to sign now would be a letter in which we state that Wachovia will accept the short sale amount and the borrowers will have to acknowledge by their signature on the  last page of the letter that they will be responsible for any unpaid balance of their loan.  They would have to contact the Recovery Dept. of Wachovia after the closing to set up a payment arrangement and learn what the exact balance would be after the funds have posted to the account.

How do I get a full release of liability?  My agent told me that it is Wachovia’s position that they are not forgiving any debt for anyone that has assets of any kind….That’s lovely but we are not in a position to pay this deficiency.  We are wiped out, we have paid over $287,000 in interest payments over 4 years, taken money out of our 401K.  We had a Private Banker from Wachovia qualify and approve us on two lot loans for over $500,000 on my husband’s base salary of $60,000.  He convinced us that this would be a great investment and he knew we were borrowing money from relatives and taking money from our 401K.  I feel this was predatory lending  and I do not want to give Wachovia one more penny.  They are at the core of this financial crisis that our country will be paying for and our children will be paying for, for years to come.
 
How would you proceed with dealing with Wachovia?
 
Thank you for your help,
 
Valerie

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Hi Valerie,

Mortgage lenders are the new breed of debt collectors; they want to get every dollar they can.  In a sense, I don’t blame them or, better stated, I understand their position. 

Hey, we are where we are and you’ve stated correctly, the U.S. is in a “financial crisis”.  I was watching Treasury Secretary Paulson and Federal Reserve Chairman Bernanke petitioning the Senate for the rights to a $700 billion blank check.  As I listened to Paulson on CNBC make a case for the bazooka bailout funds, I was almost waiting for him to hold up a vial of “toxic” assets to show the cameras.  Ok, seriously now, this is an issue that affects each and every one of us in varying ways.  Which brings me to my next question: did you obtain a stated income loan? 

Read: National City Bank v. Hill and Short Sale & Retirement Accounts

You have to recognize the position that Wachovia is taking – they’re just playing a game of hardball.  In this case, hardball should be a two person game.  Valerie, you need to talk to a bankruptcy attorney to see where you stand.

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.