Bank of America just issued us a decline letter for a California short sale with Freddie Mac, unless our seller signs a deficiency note with Freddie Mac. I thought California has a one action rule where the bank can either take the house or come after the seller? In 2 1/2 years I have never seen this demand, someone please HELP!!!!!! The foreclosure sale is tomorrow at 10:35am.
SB 458 prevents a bank from demanding a seller contribution in California. This must be some mistake on Bank of America's part. What eventually happened?
Elizabeth, this the strangest sale we have had in 2 years as it was 60 days of watching B of A negotiate with B of A and no agreement ever made. I am sure you can relate?
So after 68 days of stalled negotiations between B of A (Freddie) and B of A (UGI Corp) we escalated to SVP Jennifer H., who asked Team lead Adam L. to get us an answer quickly. He did nothing except stall it a little longer, so we escalated to UGI Corp SVP of Recovery, Brad H. and his answer was that a demand was already sent to B of A weeks ago. Turns out that UGI wants $8500 and Freddie will give them $3400. So we get desperate and write in Equator that since there is a massive difference on those numbers, that our buyer, seller and both agents will contribute the difference to B of A to get this closed and avoid foreclosure. Team lead Adam L responded late that night and said that Freddie Mac requires any contributions from the seller, buyer or agents to go directly to them. Before we could even respond to that, the following morning at 6am the file was closed in Equator. Even weirder yet, when we called customer service to figure out what happened, they said it was declined by Freddie Mac, but the FC postponement was granted. Weird! Luckily, the night before, I copied the 10 pages of Equator notes thinking that we could get an attorney and leverage them against B of A and Freddie Mac, however a Sacramento RE Attorney told us it would do us no good because it would be time consuming and expensive for our seller and will still end up as a foreclosure for them.
So that morning we escalated a complaint to Freddie Mac, saying that B of A was not acting in their best interest and going to cost them a lot of money if they take this home back. We then called the UGI executive and explained that if they do not settle, Freddie will foreclose, you will pay B of A the insurance policy and you will get $0. He said he knew that, but there was nothing he could do. I said again, you can get $3400 or $0, please help us and he said his hands were tied. I have only heard this twice in two years, once from USAA and once from Golden 1, both credit unions.
Bottom line, we are stumped and have a very, very, very angry seller to deal with now.
SB 458 was signed on 7-15-11 which does not allow for seller contributions. It is also cleary stated in the CAR Short Sale Addendum. I had Chase try and sent them a copy of the bill. Short Sale was approved no contributions. Read up and submit to your negotiator. Keep pushing the issue of the law. They do not have to accept the short sale BUT they can not ask for seller contributions.
Bulletin 2012-5 from Freddie Mac now instructs Servicers that they must waive deficiency when doing a short sale. Google that Bulletin and it will pop up. New guideline effective Feb 15th 2012.