Can amortgagee be prohibited from waiving a deficiency on a short sale due to state law?

Get Legal Help Today

 Secured with SHA-256 Encryption

Can amortgagee be prohibited from waiving a deficiency on a short sale due to state law?

My buyer client is involved in a short sale on an investment property. The mortgagee and investor have agreed to all terms of the sale, but the mortgagee says it can’t waive the deficiency on the balance of the seller’s loan due to OR law. I can’t find this law anyplace and no one at the state can find it. The seller will not go through with the sale unless he gets the deficiency waived. Need to know if this is true.

Asked on November 19, 2010 under Real Estate Law, Oregon

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You need to seek help from a foreclosure and bankruptcy attorney in your area.   There is an antideficiency judgement statute in Oregon but it does not necessarily apply on a short sale.  A lender could agree to release or “waive” its security in exchange for partial payment of its note on a short sale. But unless the lender agreed to fully extinguish the debt, it could sue on the note balance and collect any amount that remained unpaid.  I do not think that the lender "can't" waive the deficiency from what I have read.  And I would challenge the lender here to come up with the legal backing for it's statement.  Good luck.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

 Secured with SHA-256 Encryption