This year under the new BOA short sale process, we have really taken a step back. I have recently been waiting on an approval to come in and finally I get one the explicitly calculates the balance and claims they will not waive the deficiency. Typically, the negotiator will offer a compromise prior to and ask for a contribution in exchange for a deficiency waiver, but I got sandbagged on this approval.
Last year, BOA was great to work with...this year they have been the Gestapo that they always used to be.
What motivation does a seller have going the traditional short sale route if they are going to get screwed?
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Hi Tara. Since this is a VA loan it's the VA that is taking the loss. I have never done a VA compromise sale. But this is what they state about the deficiency:
When the VA guarantees a veteran’s home loan and the veteran fails to
make payments on the loan, the VA may seek to recover money from the
veteran. Usually when the veteran defaults on a home loan, the mortgage
lender obtains a foreclosure on the property, the property is sold at a
foreclosure sale, and the lender keeps the money from the sale. If there is
still a balance owed on the loan, the VA will pay the mortgage lender the
balance up to the limit of the VA guaranty on the loan. (If a vet has made
payments on the loan and there is a foreclosure sale, the lender gets only the
amount of the loan minus the portion of the principal that the vet has
paid.) If you default on a VA-guaranteed home loan by failing to make
monthly mortgage payments, the VA may attempt to recover from you any
money it paid as the guarantor of the loan.
The specific wording on the VA official site includes the following;
“…although the veteran’s debt was waived by VA, the Government still suffered a loss on the loan. The law does not permit the used portion of the veteran’s eligibility to be restored until the loss has been repaid in full.”
If a VA loan applicant is notified that a debt to the government exists, or was aware of the debt prior to applying for the loan, it’s a very good idea to contact the VA directly to work out the details of repayment before trying to apply for a new VA mortgage.
Another important fact to remember–you may still be able to take advantage of any unused VA loan eligibility. If a borrower did not use the full entitlement on the previous VA mortgage, any remaining entitlement may be allowed.
A borrower’s debt to the government for a compromise claim could be factored into the debt-to-income ratio unless the lender feels the compromise claim debt is too large compared to other financial factors. Such debt might result in the need for a down payment, or a larger down payment than usual–requirements will differ from lender to lender.
http://www.benefits.va.gov/homeloans/faqelig.asp
here is photo of what I got with personal info removed...how is this comparing to letters asking for deficiency or ones waiving it. I don't see either- seems silent like a Freddie Mac backed one other than stating a payoff is accepted. It is a VA co-op if that matters
Bryant- I just got my first BOA approval. VA co-op short sale. Not sure if this is the deficiency waiver you speak of b/c there is no specific language (just refers to it as a short payoff). Unlike Marty's letter it doesn't state balance or that they will not waive deficiency
. Just silent other than the short payoff. Are you getting ones with more language on a waiver? Thanks
I've done many BofA short sales and have received deficiency waivers on all of them.