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Is a bank suppose to issue a forgiveness debt letter to the homeowners on the closing/selling the house as a short sale?

Miami, FL |

My husband and I are short selling our home, but the bank hasnt given us any information on the loan/debt forgiveness. I have read before that we are suppose to sign a letter with them on the debt forgiveness agreement, which letter is that? is it required? We just want to make sure we do things correctly and that they wont go after us after the shortsale. Thanks.

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Attorney answers 3

Best Answer

When the attorney who is negotiating your short sale receives the "short sale approval letter", initially, it will probably not include a waiver of deficiency - meaning that the lender will agree to allow you to sell your property but does not waive the ability to seek to collect the deficiency from you in the future.

If the lender agrees to waive the deficiency, you need to get that express waiver of deficiency in the short sale approval letter. You need to instruct your attorney that he or she is to negotiate for a waiver of deficiency and not just a release of the mortgage and to be sure that the waiver of deficiency is included in the short sale approval letter.

This response does not create an attorney-client relationship. Unless you are already a client of The Edwards Law Firm, PL, pursuant to an executed fee agreement, you should not use, interpret, or rely on this response as legal advice or opinion. Contact Sheryl A. Edwards, Esquire, Florida Board Certified Real Estate Expert, at (941)363-0110 to hire us help you solve your real estate problems. Our underwater mortgage breakeven calculator is at


Banks do not have to forgive the debt after a short sale. They have five years to seek a deficiency judgment after the short sale. Some banks, however, are willing to waive their rights to a deficiency in conjunction with the short sale. There is no uniformity in the way that banks treat short sales. If you are unsure of the impact that the short sale will have on you, you should contact an experienced real estate lawyer in your area.

Disclaimer: This answer is provided for informational purposes only, does not constitute legal advice, and does not create an attorney-client relationship. Actual legal advice can only be provided after completing a comprehensive consultation in which all of the relevant facts are discussed and reviewed.


Your are welcome. It has to be part of the agreement for them to not seek a deficiency judgment. Unless it is in writing, they could come later for a deficiency judgment. If you have a foreclosure defense or real estate attorney have them look into it. If you don't have one you may want to retain/engage an attorney to try and negotiate that for you. They mortgagee to whom you owe debt may go for it, and they may not, but you won't know until you try.