Deficiency Judgements and Promissory Notes Explained, and How We Combats Them.

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) May 31, 2010 -- What is a "deficiency judgement?" A deficiency judgement is a judgement that may be levied against the owner of a property any time a bank or lender must accept less that what the bank or lender is owed due to the result of a foreclosure, deed in lieu of foreclosure or short sale. The deficiency judgement amount will include the difference between what is owed and the net amount the bank or lender receives as a payoff of the debt.

As an example: Let's assume a homeowner owes $150,000 on a first mortgage owed to their mortgage lender, "ABC Mortgage". The clients unfortunately end up in foreclosure and allow the home to go to sheriff sale. The day of the auction, the home sells for $97,000. This means that the home has sold for $53,000 less than what was owed. A deficiency judgement is filed that gives ABC Mortgage the right to pursue the homeonwer for the amount of the deficiency.

"What is a promissory note?" A promissory note is an unsecured agreement to repay a debt.

An an example: Let's assume the homeowner in our first example also has a second mortgage owed to "Bank 123" in the amount of $35,000. The homeowner talks to a friend who thinks they know what they're talking about and recommends that the homeowner does a deed in lieu of foreclosure with the 1st mortgage lender and with the second mortgage bank. In this scenario, the lenders must still sell the property to regain what they can of the debt. However, when a home goes to sale, the second mortgage company will only receive money IF the property sells for more than what the 1st mortgage company is owed. This RARELY happens. Now, to approve the deed in lieu of foreclosure, both lenders must agree to the terms. The 1st mortgage company in this example says, ok we'll accept the deed in lieu and we will not pursue a deficiency judgment (see the link above to view the IRS page for further details as to why). Now, the second mortgage company, knowing they aren't going to see a dime if the home goes to sale, agrees to the deed in lieu IF the homeowner agrees to a promissory note for a certain amount. This amount is usually a little less than what is owed to make it seem like a good deal for the homeowner. The payments are generally set to be collected, interest free, over a period of many years.

"HOW DOES ATLAS EQUITY PARTNERS, LTD. COMBAT THESE POSSIBILITIES?" While Atlas is a business, and we are in business to make money, our number one goal is to make sure that our clients walk away from doing a short sale with NO deficiency judgements and NO promissory notes. Everyone employed by Atlas is expected to adhere to the highest code of ethics.

Now, a majority of homeowners we help in this market will not face a deficiency judgement, thanks to the "Mortgage Debt Relief Act" (see link at top of page). Promissory notes are much more common-place right now. To combat these is ALL in the negotiations with the lenders. Atlas's negotiators are extremely well trained and versed in negotiating short sales with lenders. When faced with a lender that wants to pursue a deficiency judgement or file a promissory note, Atlas will actually increase the amount of the purchase offer to the lender! Again, our number one concern is making sure our clients walk away free and clear. If that means Atlas makes a little less money on a case, than so be it!

You have to understand that in the eyes of the lender, they're never really expecting to really regain any of the money they're losing by utilizing a deficiency judgement or promissory note. If a lender is asking for a $30,000 promissory note, in a lot of homeowner's eyes, that might as well be $1,000,000! So, if Atlas can offer them a settlement of $5,000 right now, 99% of lenders will accept with no questions asked

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More information can be found online at http://www.clevelandshortsale.org

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