Everyone knows the rule that, “if it looks too good to be true, it probably is.” And everyone also knows that there is an exception to every rule.
One of my clients asked me to review a letter
he had received from GMAC who held the second mortgage on his primary residence. The letter arrived unexpectedly and without being prodded by any action by my client. The GMAC letter states that the recipient is eligible to have his second mortgage wiped out and all personal liability waived. No payment is required; there are no actions to be take; there are apparently no conditions. The client called GMAC and they confirmed the letter.
The client wanted me to review the letter to see what traps were hidden in the so-called small print. Clearly, the client thought, an unsolicited and unconditional offer to wipe out all liability on a second mortgage was way too good to be true.
I reviewed the letter and accompanying papers. I cannot find any omissions, hidden liabilities or conditions. I advised the client to proceed and hope that no problems arise during the process.
The letter does not indicate why GMAC benefits from forgiving second mortgages. I have not read any stories in the media about such a program or why it is in GMAC’s interest.
Mortgage lenders are now much more liberal and willing to work with homeowners than they were at the beginning of the financial crises. Lenders are more likely than before to waive personal liability and deficiency judgments
. Some lenders now provide homeowners cash incentives for expedited transfers of ownership. This letter is another indication of this changed policy.