Had a borrower who was in foreclosure for 5 years..attempted loan mod years ago.  We started a short sale 3 months ago, received approval letter last week, ready to close next week, seller receives a letter from BOA offering him a $250,000.00 principal reduction with a 2% loan.  All he has to do is complete 3 month trial period ( reduced payment) and loan will be modified, debt forgiven.  Unbelievable...why didn't they offer him this months ago.  Great for my seller, not to great for the buyer and everyone else who worked on the short sale for months.  Can BOA work both ends, even after approval letter issued.  Any liability from BOA or responsibility for cost involved for buyer and R/E commissions. 

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your seller may want to check with an attorney. they still may have to sell or face a possible suit from the buyer.

I think this could bee a trap.  BofA has a very bad habit of offering trial modifications and then pulling the plug after and finding a reason to decline the permanent modification.  Working with a seller for 3 years now who keeps getting offereed loan mods and then never getting a permanent mod.  He is in foreclosure now (again) and it may be to late to save him because a sale is scheduled.

First, I would probably try to verify this for the seller by calling both the short sale negotiator and the individual who is offering the loan modification. I don't see B of A being responsible for any fees but Kevin is correct, the seller might be liable. I am also wary of loan modification promises that sound too good to be true at the last minute, especially with a trial set up, because I've seen too many sellers not get the loan mods they were promised. Yet, you can't blame the seller, I suppose, if handed a sweet-heart deal.

A client of ours just received a modification with a large principle forgiveness as well. Their property has been in foreclosure for years and tied up through a ch 13 Bankruptcy.

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Didn't B of A enter into a settlement agreement for offer trial mods and then after the trial not making them permanent. Essentially the settlement agreement said after the trial they were obligated to make the mod permanent as the evaluation for qualification was done before offering the trial and therefore B of A is obligated to make permanent.

Why are they called Trial Mods then?  All BofA has to do is complete their file and document that they tried, whether they did or did not.  Something as simple as saying that the Borrower did not return the signed permanent mod docs, for example....

Has anyone seen any of these many, many legal settlements actually change what the banks do versus just how they do it?  Nope.  The banks will keep doing what they do, but just do it differently.

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