How canI get my lender to waive their right to pursue a deficiency?

UPDATED: Sep 18, 2010

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How canI get my lender to waive their right to pursue a deficiency?

I’m in the final stages of completing a short sale of my home in WA state. The deficiency is $50,100 and I have been asked to contribute $3500 to assist with closing costs. I asked that my lender waive their rights to pursue a deficiency and their response was no due to my having a credit score higher than 750. They will however waive their rights for a fee of $6000. Should I pay them?

Asked on September 18, 2010 under Real Estate Law, Washington


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

Answered 12 years ago | Contributor

You may want to get legal advice from an attorney in your area.  You really have to convince the lender that you are in financial hardship or that you have been  barely keeping your head above water (that is why your credit score remains good) but that the deficiency will surely put you there.  Threaten bankruptcy as well.  No lender wants to hear that you are going to file same and list the debt.  It may be more advantageous to them to release the debt as a tax write off, although you may still owe taxes on the deficiency. Is your state a judicial or non-judicial foreclosure state?  If it is a non-judicial foreclosure state you may have a better time at convincing them because they would lose the right to deficiency should the property sell in foreclosure for 60 cents on the dollar.  Good luck. 

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