What is a waiver of deficiency and how can this benefit me?
A “waiver of deficiency” is a contingency clause inserted into a purchase and sales contract requiring a bank to waive their right to pursue a borrower for a mortgage deficiency. This is a preemptive move on the part of the borrower to avoid any additional legal action after a short sale is negotiated.
A smart short sale agent will require the bank waive their deficiency rights as part of a short sale negotiation, which forever eliminates the potential for a lender to take any further legal action for their loss against a borrower.
A homeowner-borrower can get tremendous peace of mind by getting a waiver of deficiency because it means that they will not have to incur potential legal fees from defending against a potential deficiency claim, nor be forced into filing Chapter 7 bankruptcy, which is the most common way for borrowers to expunge a deficiency judgment from debts they owe.
If you have any other questions about Waiver of Deficiency, please contact us.