Short sale done, received letter from attorney

[Brian Osgood]

Hello all,

So I'm looking for some advice here. My house was sold as a short sale, we closed on 11/4/09 and there was a first (Washington Mutual, now Chase) and second (Citimortgage) lienholder involved. I recently received a letter from an attorney in regards to the remaining balance on the Citimortgage note. The letter says I have an outstanding balance and must respond within 30 days of receiving the letter as to the validity of the debt. If I don't respond, they will assume the debt is valid and proceed in accordance with that assumption, etc. Any advice on what I should do? What response exactly are they looking for? Please help! Thanks in advance!

Brian

[Scott Hubbard]

Brian-

Texas Deficiency and Anti-Deficiency Laws
The lender may obtain a deficiency judgment if the property is sold at a public sale for less than the loan amount. The amount is limited to the difference of the fair market value and the loan balance owed.

§ 51.003. DEFICIENCY[0] JUDGMENT. (a) If the price at : which real property is sold at a foreclosure sale under Section : 51.002 is less than the unpaid balance of the indebtedness secured : by the real property, resulting in a deficiency[0], any action brought : to recover the deficiency[0] must be brought within two years of the : foreclosure sale and is governed by this section.: (b) Any person against whom such a recovery is sought by : motion may request that the court in which the action is pending : determine the fair market value of the real property as of the date : of the foreclosure sale. The fair market value shall be determined : by the finder of fact after the introduction by the parties of : competent evidence of the value. Competent evidence of value may : include, but is not limited to, the following: (1) expert opinion : testimony; (2) comparable sales; (3) anticipated marketing time : and holding costs; (4) cost of sale; and (5) the necessity and : amount of any discount to be applied to the future sales price or : the cashflow generated by the property to arrive at a current fair : market value.: (c) If the court determines that the fair market value is : greater than the sale price of the real property at the foreclosure : sale, the persons against whom recovery of the deficiency[0] is sought : are entitled to an offset against the deficiency[0] in the amount by : which the fair market value, less the amount of any claim, : indebtedness, or obligation of any kind that is secured by a lien or : encumbrance on the real property that was not extinguished by the : foreclosure, exceeds the sale price. If no party requests the : determination of fair market value or if such a request is made and : no competent evidence of fair market value is introduced, the sale : price at the foreclosure sale shall be used to compute the : deficiency[0].: (d) Any money received by a lender from a private mortgage : guaranty insurer shall be credited to the account of the borrower : prior to the lender bringing an action at law for any deficiency[0] : owed by the borrower. Notwithstanding the foregoing, the credit : required by this subsection shall not apply to the exercise by a : private mortgage guaranty insurer of its subrogation rights against : a borrower or other person liable for any deficiency[0].

The problem with Texas, they do not address the Short Sale scenario specifically. However, the fact that Texas allows for deficiency judgments is, in my opinion, reason enough for you to assume you could be on the hook for the full deficiency amount.

The statute of limitations is two years, I believe, so time will not be on your side. In my opinion, you should speak to your on attorney before you even contact opposing counsel. Just you verifying the debt could trigger an instant judgment against you. You really need to seek advice from counsel immediately. In my opinion, if your insolvent, you seriously should consider filing bankruptcy. Having a judgment slapped against you can ruin your life.

Good Luck!