Cont'd... BOA Short Sale Approval letter waiving rights to pursue further judgement or deficiency - more details!
Again, we were shocked but excited by the Short Sale Approval letter language waiving Bank of America’s and its investor’s right to pursue further judgment or deficiency after the short sale. In the interest of educating and of determining what type of Bank of America short sale may result in a deficiency waiver, let’s take a look at the details that lead to the approval.
The original loan amount was $220,562.00 and was taken by two sisters in order to purchase a Fort Myers home. Early in 2010, one sister lost substantial income and was not able to contribute her share of the payment. The other sister could not afford the entire payment on her own. Because of the hardship, the sisters listed the property for sale in early June. The received an offer on June 7, 2010 and the file was initiated through the Equator system on June 11. Incredibly, the file was approved in just 29 business days from the date of the Equator initiation!
A copy of the approval letter has been made available. In it you will find that the approved offer price was $60,000.00. Total closing costs were not to exceed $7,003.17, including realtor commissions capped at 6% or $3,600. Bank of America’s investor’s approved net was $52,996.83, or roughly 24% of its original loan. The approval letter contained sections dedicated to Promissory Notes and Cash Contributions; but neither were applicable in this situation and the sellers were not required to sign a Promissory Note or make a cash contribution at closing.
We have also made available the only Deficiency Evaluation Tool (DET) we have ever seen. In fact, we just Googled “Deficiency Evaluation Tool” and got only one unrelated hit. We are working with Bank of America to find out more about the DET, but on its face its title seems to do a fine job of describing the DET’s use. It seems that Fannie Mae (FNMA) and/or Bank of America will use this tool and its questions to determine whether it should waive the approval’s deficiency language or not. Here are the questions along with the answers related to our transaction:
- Select state in which property is located (ok…not really a question, but it’s there!) [Florida]
- Owner Occupancy: Was the home owner occupied at the time of the origination? [Yes]
- Purchase money: Did the first lien finance the home purchase? [Yes]
- Is the first-lien investor non-delegated? [No] (we do not understand what this means and are working on an answer)
- Is there a BAC second lien? [No Second Lien]
- Is there a mortgage insurer (MI)? [No MI]
- Is FNMA (Fannie Mae) the investor? [Yes]
- Have we received an appropriate contribution, or has FNMA agreed to close without a contribution? [Yes]
Based on the DET we received and the answers provided, it may be safe to create a checklist for determining the likelihood of deficiency waivers for Bank of America-servicedFNMA loans.
If you have any questions, please feel free to call me at (230) 985-4142.
- Chris
Comment
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Comment by Matt Davis on August 18, 2010 at 11:44am
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Hi All.. New to the post.. I have a mod that I have been assisting a friend with. We have postponed two foreclosure sale dates and was just told today, that he is declined for his postponement as his mod is declined. They said because the investor is not delegated... My main issue is taht they have been working towards a modifcation and NOW, AFTER TWO YEARS, say tehy could have never have done it.. Does any of this sound correct and short of filing BK, what can he do..?
email me with any suggestions @ [email protected]
Best,
Matt
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Comment by Cathy Nagy on August 17, 2010 at 4:27pm
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David, What did you do to get the waiver?
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Comment by David Patterson on August 14, 2010 at 9:27am
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Thanks for the post, good information to have. I know I just closed one and did receive the waiver. Can you forward the tool?
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Comment by Karen Roberts on August 11, 2010 at 8:39am
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Karen, Can you post the Deficiency tool to this website. I would like a copy too. [email protected], thank you.
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Comment by Janie Booth on August 11, 2010 at 12:02am
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Karen, I'd like a copy of the DET thank you! Have one today that I'm escalating to have the deficiency language removed.
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Karen, Would you lease send me a copy of the deficiency tool, too. [email protected]. Thanks so much.
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Comment by Elise Fay on August 7, 2010 at 6:37pm
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Karen I would love a copy of the deficiency tool...please send it on. Thank you!!
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Comment by Marcy Moyer on August 7, 2010 at 2:41pm
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The presenter at the B of A seminar who is in charge of west coast short sales and reos said that you can ask the negotiator if the loan is delegated or non delegated. If they say they can not say it means it is non delegated and they are not the final decision maker. If they say delegated then they are the decision maker. If it is non delegated the investor probably makes the decision about the deficiency.
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Comment by Karen Mathers on August 7, 2010 at 1:24pm
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Oops! I see someone answered my question about delegated and non-delegated. I am not sure if that will help me predict what they will say but if someone wants a copy of the working deficiency tool I will send it.
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I have a working copy of the deficiency tool! One of the closers sent it to me when I questioned why one of my customers was sent a deficiency letter. It is an excel file and you answer yes or no and hit a button that says evaluate and an answer appears at the bottom. It actually seems to work . . . I tried different answers and I got different results. I will email it to anyone that wants a copy. The only think it asks that I am not sure what they mean is "is the first lien investor non-delegated?" I don't know what that means? It sure would be nice to know so we could predict what BOA is going to say!
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