“Holder hereby certifies as to the satisfaction of said mortgage, without satisfaction of the indebtedness secured by said mortgage, and hereby directs that the same be canceled of record.”

basically means that they released the lien but not necessarily the debt. If they fully wrote off the loan (forgave the entire debt) you should have gotten an IRS 1099 for the difference between the lender’s net at the sale and what you owed them.

If they didn’t write off the debt, they may reserve the right to purse collection of that deficiency. Not saying they will, as many times they don’t.

Check your credit report. If it is a collectible debt, it may show up there.

“Holder hereby certifies as to the satisfaction of said mortgage, without satisfaction of the indebtedness secured by said mortgage, and hereby directs that the same be canceled of record.”

Does “without satisfaction of the indebtedness” mean I still owe the debt?

Miko

Unfortunately, yes they can although we seldom see this – if the bonus is on the buyer’s side! I assume it is. If not, put it on the buyer’s side of the HUD1. If that doesn’t work, escalate the file to a supervisor or manager.

Also, are you sure it was the short sale lender and not the buyer’s lender that refused this? It’s the buyer’s lender we run into trouble sometimes.

We always get our fee from the buyer so we don’t charge the seller or agents for our negotiations. Our fee goes on the buyers side of the HUD1 and has been our business model for 8 years without a problem. So, I am not sure why they would object.

Now, as a direct answer to your question regarding short sales and fraud. Fraud is a legal issue and you should check with an attorney if you suspect something might be fraud. Just note, most lenders will not allow a short sale to a related party and/or will not allow the seller to remain in the home after the short sale process. These lenders will require that both the buyer and the seller sign affidavits of arms length transaction. Here is the wording from a recent document that my sellers and the buyers had to sign on an approved short sale:

“[Buyer and Seller] Hereby affirm that this is an “Arm’s Length Transaction”,

No party to this contract is a family member, business associate, or shares a business interest with the mortgagee. Further, there are no hidden terms or special understandings between the seller or buyer or their agents or Mortgagee.

The Buyers and Sellers nor their Agents have any agreements written or implied that will allow the Seller to remain in the property as renters or regain ownership of said property at anytime after the execution of this short sale transaction. None of the parties shall receive any proceeds from this transaction except the sales commission.”

I would definitely advise that YOU check with an attorney if the short sale lender requires such an affidavit, before you sign such a document under the circumstances.

I am not an attorney but I am a land lord and we do many short sales for investors that have rental properties.

First, the tenant has a contractual obligation to pay rent. They are in fact living in the property regardless whether or not the owner is paying theior mortgage. That does not give them the right to live free of rent. It sucks for the tenant to get sometimes a short notice.

Most contracts have a 30 day notification sale clause. They should be notified regarding the pending foreclosure and short sale as quickly as possible.

I am not aware in Texas of any legal rights the tenant has if the home is sold per the rental agreement. If the home becomes bank owned, and it is a government backed property, there may be some extended rental privliges and a possible “Cash for Keys” moving credit.