[quote=SD Realtor]Actually we are starting to see cases of what were originally classified as recourse loans indeed not going against the borrower. Some courts have found negligience (perhaps rightfully so) with the lending institutions. Furthermore don’t think for a moment that policy cannot change. If you think that these policies are indeed static you are sadly mistaken. Finally most all short sales now involve more then one mortgage. In these cases the second lien holder is usually out of luck and they know it and they release the lien without a formal note from the seller. [/quote]
On this specific topic, I just had a conversation with a short sale negotiator who kept insisting that the loan is full recourse. As long as the seller does not sign paper converting the deficiency balance can be turned into an unsecured note, the seller should be able to claim that the short sale is the conclusion of the debt and that the remaining debt is discharged. This advice is from counsel.
