We are working with Wells Fargo on a short sale of our home in Washington State. They buyer's offer is $17K short of what we owe on the house, so the bank is asking that we sign a Promissary Note for $17K at closing. Wells Fargo says this is the condition of the Mortgage Insurance company, who must sign off on the short-sale. Although the conditions are interes-free, it is a 10 year term to pay them off. Our credit is already toast from the late mortgage payments and the default on the loan. Are we better off just letting them foreclose and backing out on the short sale?
Landlord / Tenant Lawyer
Before you agree to this, have you considered discussing your situation with a bankruptcy attorney, or advising Wells Fargo that if they don't modify the terms they are offering you that a Ch 13 or 7 may be your only option?
I can't tell from the facts you provide whether this is an option for you, but it is worth a consult with bankruptcy counsel before you pay $17K for a house you no longer own.
Hope this helps. Elizabeth Powell
Real Estate Attorney
I am not licensed to practice in your state but I handle many cases likey yours in Florida. I do not recommend signing the promissory note. Notify the lender that you will not be signing it. The foreclosure would be better than the unsecured debt as you state your credit is already "toast".
If you think you might need a bankruptcy I suggest you seek a free or low cost consult. Most county bar associations have a low cost referral panel for this purpose.
Chapter 7 Bankruptcy Attorney
My best advise to you is to seek the advise of a competent bankruptcy lawyer. Most bankruptcy lawyers offer a first visit free consultation. Make sure that you select an attorney that has been practicing law for a considerable period of time and who's emphasis is on bankruptcy law. When you call to make an appointment I would careful quizz the person that makes the appointment as to what documents you should bring to your meeting in order to get the maximum benefit from your free consultation. 17k is alot to pay. I have never had a client pay money on a short sale. The bank is getting a better deal than if it has to foreclosure and sell the property on its own. If it does that you would not have to pay the 17k and would get to live in the house during the foreclosure period which is at least 4 months. Hope this helps.
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