HOW TO GET THE BANK TO REMOVE THE RIGHT TO PURSUE A DEFICIENCY JUDGEMENT IN A SHORT SALE (In CA)

Under CA Code of Civil Procedure 580(d) the lender may not seek a deficiency after a non-judical foreclosure even if it is a recourse loan. So if the lender does not approve a short sale without the deficiency language, then in most cases, it would be in the best interest of the seller to accept a foreclosure. The lender will then bear the higher cost of disposing an REO and will not have the benefit of enforcing a deficiency on the borrower. This point needs to be raised with the lender's negotiator and if they do not have the authority to remove the deficiency then escalate to higher levels of management. Our firm has enjoyed a good deal of success in having the deficiency language removed from approval letters with many lenders, including BofA, using this argument. You might consider consulting an attorney for legal advice or have an attorney argue the point for you.  (Credit to author Bob Hagan) houseINsandiego.