Short Sale Sellers and their Agents BEWARE: We have seen some investors recently attempting to change the terms of a loan within the short sale approval letter, specifically changing a non-recourse loan into a recourse loan.
The drill goes like this: the bank approves the short sale on a non recourse loan and then sends out an approval letter stating the short sale is approved etc but adds in the following curious verbiage in the approval: "you are still responsible for the deficiency balance remaining on the loan." The seller signs it, thinking this is just boiler plate bank verbiage that does not apply to them because they have a non recourse loan.
In one case, the seller refused to sign the letter, the bank after bluffing repeatedly that they would not remove the verbiage and would cancel the short sale, did in fact remove the verbiage and the short sale closed escrow with the seller safe from any recourse from the bank.
Lesson Is: Read your short sale approval carefully before you sign it!!
