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BofA Introduces “Negotiation Agreement” for Loan Modifications

Recently, I was forwarded a recent loan modification agreement packet sent to a Bank of America borrower.  It included a document I hadn’t seen before.  It is entitled a “negotiation agreement.”  I’m not sure if they are using this agreement throughout the country or just California.  Definitely this was a document that has been needed for at least 4 years.

The following is a quick summary and is by no means complete.  It does not substitute for legal advice, and each borrower should definitely obtain legal advice before signing any written loan modification agreement with Bank of America or any other lender.  The new BofA “negotiation agreement” attempts to make clear that:

• Bank of America is working for the investor’s best interest not the borrower applying for a loan modification.
• Unless you have something in writing from them and signed by both parties — it is not an agreement.  (And of course, there is only one signature block on the document — for the borrower!  So, are they going to sign and return this document?  You gotta love BofA!)
• Until there is a new signed agreement they have the ability and right to enforce the existing loan documents.
• If your circumstance materially changes during the loan modification process you have an obligation to inform BofA.

This is important.  It’s been a long time coming for BofA to make clear that basically what people are told verbally on the customer service line is not meant to bind BofA.  How many stories have I heard on short sales, where borrowers were given bad information verbally and they relied on it to their detriment.  Situations where borrowers were told after a loan modification denial that they would be given 45 days for a short sale only to be foreclosed on by the bank in a couple weeks.  It is also important to point out that throughout the process the bank is working for the investor, not the borrower.  The bank is not truly there to “help” the borrower, they are there to protect the investor who owns the loan.

Before deciding whether to short sell your home, it is essential that you obtain legal and tax advice, and consult with an experienced local short sale agent. If you are considering a short sale of yourSanta Maria, Orcutt, or Lompoc  home and would like a complimentary short sale consultation, please call my office to schedule an in person meeting or a telephone consultation at (805) 938-9950.

Tni LeBlanc is an independent Real Estate Broker, Attorney, and Short Sale Agent. She is a Certified Distressed Property Expert (CDPE), Short Sale and Foreclosure Resource (SFR) and Certified HAFA Specialist (CHS) serving California’s Santa Barbara and San Luis Obispo Counties.

* Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement.

Copyright© 2012 Tni LeBlanc *BofA Introduces “Negotiation Agreement” for Loan Modifications*