I recently met a Realtor who sells properties in a beach town. She said that short sales take 9 to 12 months, and the banks are so hard to deal with. She mentioned short selling a customer’s property. The sellers were two doctors that had to take a promissory note. The sale was for $900k, so the loss must have been above average.

In this case, her customer’s were okay with a promissory note. But, what if you want to short sale and walk away from the upside down debt? What can you to do short sell your home without a promissory note. Negotiating short sales on more expensive homes is different than your average short sale. The most common loan types that will give you a complete release are Fannie Mae, Freddie Mac, FHA, and VA. Most of them won’t loan on a mortgage over $417,000.

There are a few exceptions, but that is the general rule. If your mortgage amount is more than $417,000, then your loan is probably owned by the bank you originally got it from or it has been secuitized. Many of these loan owners will not grant a release. You will have to use other methods. First, you can tell them that you are broke. If that true, they may let you off without much ado.

If you have assets, you will need to use different tactics. You can hire someone to do a “Loan Audit.” This is where they go through your loan file and search for any violations of lending laws. Maybe they didn’t give you the proper federally required mortgage disclosures. Maybe the mortgage broker or lending company wasn’t properly licensed. A loan audit will often help your case. But it isn’t an “end all, be all”. I’ve seen people promote it as that. Another thing you can do is hire on a good attorney. You will want to deal with someone who is a consumer advocate.

They will know how to use the law to negotiate from a position of power on your short sale. In my opinion, the best way to hire lawyer in this case is on a contingency. Tell the lawyer, "I will pay you X when you get me what I want." Some people think lawyers drag cases on just to earn more money. Using a payment arrangement like this will help you avoid that. However, the most important thing you can do is to hire on an experienced short sale agent. Ask them if they have negotiated any short sales where the lender asked for a promissory note.

Then, ask them what they did to negotiate away the promissory note. The good short sale agents will usually know a good attorney. They may have experience dealing with your bank. Bottom line: They are the person who can point you in the right direction so you can short sale and walk away with a complete release from the debt. 

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