Warning - New Policy on Deficiencies Kills Fannie / Freddie short sales

I have three files where BMO Harris is the junior lender.  On December 1, BMO moved their short sale processing to Milwaukee and re-assigned all files.  At the same time they adopted some uniform policies which changed the way they approach these junior lien files.  The most important:

-BMO Harris WILL NOT waive the deficiency where they hold the junior mortgage lien position in exchange for the payment of ($6,000) from proceeds at closing.

This is a serious problem when Fannie Mae, Freddie Mac and Ginnie Mae have the senior loan,  because each of these require that the junior lienholder waive their deficiency rights in exchange for the maximum $6,000 of proceeds at closing ( and promissory notes are not allowed either).

I have pointed this conundrum out to BMO Harris, and their response amounts to "well, then I guess there won't be any short sale".

The irony, of course, is that Fannie and Freddie allow Harris to originate their loans, so BMO Harris is taking profit from them with one hand and slapping them with the other.  This, from a foreign bank.....

I'm currently trying to figure out a way to make these files work, and have lodged a complaint with Fannie Mae and with BMO Harris' executive office, as well as with the U.S. Senate Banking Committee.  

I post this so that anyone else out there who might be coming upon this will be forewarned.

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Replies to This Discussion

This is a very old post Patrick but I am considering taking a short sale with a 1st and 2nd with BMO Harris.  I'm wondering if you have an update here?  Advise discussion on current short sale issues or nonissues with this bank will be greatly appreciated.  

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