Short Sale Acceptance Doesn't Mean Forgiven Balance

[Unsure14]

Talked with a title company rep who specializes in short sales. She said that many short sale sellers are shocked when they get to the closing table and there is a new loan form from their Mtg company that states that they will have to pay back the amount that the buyer was short (deficient). They thougth that because the bank approved the short sale, it was all over.
She said that in order to not have this form show up, they must prove to the bank that they can't ever pay this back... that they are now disabled, mentally ill, etc.. she said job loss, divorce etc.. wasn't good enough, like "why can't they find another job?" Does the x still work?
Does this sound right? Is it that hard to get a bank to forgive the deficiency? Even though they have accepted the short sale.
She said accepting and forgiving are two different things. You must get the debt forgen part in writting before you get to closing.
She did say that the 1099-c was postponed until Feb-09, but will probably be reinstated.
Has anyone else heard this as well. Any first hand experience with this?

[AngelinaCat]

Please go to Clark Howard's site, clarkhoward.com. He had a discussion within the past two weeks about 'short sales'. I did not catch all of the discussion so really cannot advise, but check this link: [his site has ads much like our bk forum does so ignore the first 5 or so, they are ads, then go to the links that are obviously transcripts of the shows.] Good luck to you.

http://clarkhoward.com/query/results.html?cx=014368166379998286206%3A-7q-kycmcak&cof=FORID%3A11&q=short+sale#1425

[uofaguy]

Unsure -in our situation we were told by the bank they would not even consider a deed in lieu of foreclosure or a short sale until we were 3 months late on our mortgage. After providing a ton of documentation and waiting 5 or 6 months, the bank (BoA) finally agreed to a short sale. We were ecstatc - until the paperwork arrived (that I demanded to see before proceeding). Buried in small print was a sentence stating that the bank reserves the right to pursue a deficiency judgment against us.

I followed up with bank management and they refused to remove that clause. We reached an impasse - why should I do a short sale and save the bank foreclosure costs if they still could come after me for a deficiency judgment? In retrospect, I wish I had just filed BK sooner - rather than incurring months of late payments while trying to work with the bank (as the late payments killed my credit scores). My take-away - be very careful and read any documentation pertaining to the short sale thoroughly. That is my experience others, however, may have had better luck with short sale/deed in lieu.