Washington State Law dictates the circumstances in which a lender has the right to pursue a borrower for a deficiency after a foreclosure. These laws do not directly apply to a short sale so you are advised to consult an attorney to discuss what remedies a lender may have under each of your alternatives: Foreclosure/Trustee Sale, Short Sale, Deed- in- Lieu, Loan Modification.

The short sale approval letter sometimes states how the lender will be treating the shortage and will contain language like, “forgiving the balance” or “acceptance as payment in full”. It is recommended that you consult with an attorney before electing to pursue a short sale so you understand the risk and benefits of each of your options. If you decide to complete a short sale, you should ALWAYS have an attorney review the Short Sale Approval Letter before signing it.

Here is a good website to review regarding the topic of Deficiency.

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