My wife and I are selling our house through a short sale and have two mortgages, after the short sale the bank is indicating we will still be liable for about 50K on our second mortgage. Because of my job loss (a year ago) we are very close to qualifying for bankruptcy... with recent mortgage law changes is there an steps we can take short of bankruptcy to protect ourselves?
1 Answer from Attorneys
Unfortunately, there is no mortgage law protecting deficiencies currently.
That said, many banks are willing to waive the right to a deficiency if you threaten to simply let the home be foreclosed upon (a process which can take a considerable amount of time).
I would tell the bank that you are not willing to agree to a 50k deficiency, but would rather let the home go to foreclosure and then file a BK. This should get them to either 1) waive the deficiency, or 2) settle for a smaller amount.