I represent a seller who has a first and a second with B of A. The second is a HELOC. The file is hardly short but just short enough that we needed to request a debt relief on the HELOC.

This file went very smoothly through Equator since we started it on January 19^th. By March 18^th we had a counter offer and on March 23^rd we had an approval letter for escrow to begin closing the file. Very cool!

The buyers completed all of their inspections, new loan contingencies are completed, seller vacates the home for possession by April 1^st, buyer signs his loan documents in escrow and the file funded! HALT!~ Step away from the transaction……..there has been a development.

Equator or Bank of America is requesting a strange payoff for each loan. Remember that the first is not short and is scheduled to be paid in full. The second or HELOC is the short one. Well, Bank of America is requesting that escrow pay the first trust deed $244,000 on a $190,000 balance and $12,000 towards the second on a $115,000 balance.

Is this feasible? I suppose, maybe. How will escrow explain this to title? What most concerned me is the amount of the forgiven debt on the recourse loan which could lead the seller into some serious state income tax issues.

We have been trying to get an explanation from our negotiator through the Equator system and have had zero response. Three calls a day to all departments with no answers either. The buyer’s loan has now been refunded and all parties are very discouraged as you can imagine. Any idea on how to proceed? The file is still showing as approved until May 3^rd.