Replies to This Discussion

Permalink Reply by Nancy Campbell on December 2, 2010 at 5:43am

Brian,
I have the same situation ... first lien is being paid in full ... second lien is with B of A HELOC and the difference after closing costs are being paid. They owe $175K ...the balance paid is $66K. When I listed this property, I told them that they may be liable for the second as a charge off. Having it explained up front, made this transaction a little easier on me.
The seller is going through a divorce, once the sale closes, his attorney told him to worry about the charge off after and he may claim bankruptcy on the other bills, including the B of A charge off. He (and she) are just happy the first lien was paid in full and will show that on their credit, instead of a foreclosure. B of A were very easy to work with for the HELOC ...much better than any of my other short sales with one lien only. I hate the equator system and their online email system. It just adds a lot of aggravation to the already stessed situation!

Permalink Reply by Janice Whit on December 2, 2010 at 6:02am

I can tell you that I am the buyer of a short sale that was approved but the approval letter has the same language as yours and our sellers won't accept.

They went back to BofA to see if they will waive the deficiency on November 26 and we are still waiting for an answer.

I am keeping my fingers crossed that they will waive it so we can close, but you never know with BofA. Sometimes they want money to waive it and my sellers do not have any money to give them. So we wait.....

Permalink Reply by Joan Psarros, CDPE, CRS, SFR on December 2, 2010 at 6:57am

First you should cross out your seller's personal loan number and name when putting their information on the internet for all to read.
Second, I have had several BOA shortsales where the sellers have just chosen to go to do the big B. It is somewhat upsetting as they received money from the federal government (us) and they choose to make life so difficult when people are at their lowest point. I wish you and your sellers the best but I haven't had any luck with them.

Permalink Reply by Brian Wood on December 2, 2010 at 7:10am

Thanks, I did delete the letter. My clients attorney said she would be better off with a foreclosure unless they change the terms.



Joan Psarros, CDPE, CRS, SFR said:

First you should cross out your seller's personal loan number and name when putting their information on the internet for all to read.
Second, I have had several BOA shortsales where the sellers have just chosen to go to do the big B. It is somewhat upsetting as they received money from the federal government (us) and they choose to make life so difficult when people are at their lowest point. I wish you and your sellers the best but I haven't had any luck with them.

Permalink Reply by Joan Psarros, CDPE, CRS, SFR on December 2, 2010 at 7:42am

When I was younger there were marches but I was in college and working three part time jobs to pay for it. So, I couldn't become one of the protestors . I believed in their causes but I just didn't have the time. However, after doing everything right all of these years raising our children, paying for their school (no school debt for them), not taking time to vacation and find the mess that things are in . I now will find the time . So, if anyone is going to have a march in my area let me know? I would participate in a march to let everyone know that the problems we have will continue unless someone steps in and stops it. An example of that is an agent in my office had a buyer for a shortsale with an offer of $99,500 in on it. The property went to foreclosure on the court house steps because that department in the same bank didn't know that the sellers were in negotiations on a shortsale. I can't travel too far as I no longer can afford much due to these banks making stupid requests, forcing people against the wall with no other option but to file bankrupcey. I just wanted to vent I know that things won't change.

Permalink Reply by Michael J Wollen on December 2, 2010 at 8:22am

Client may also qualify to file "Insolvency" which can also strip the deficiency as I understand it.

Permalink Reply by Gerald Demers on December 4, 2010 at 7:55pm

You deleted the letter so I have no idea on the terms specified. My latest approval letter from BofA states:

Upon receipt of the agreed amount, SAC Home Loans Serv icing, LP, and/or its investors will waive the remaining balance due on the above referenced loan and release the borrower from further obligation therein, and waive all rights to pursue further judgment or deficiency. SAC Home Loans Servicing, LP will report the debt as "settled for less than the amount owed" and issue a 1099 for the remaining balance. The seller is encouraged to seek guidance from an independent tax advisor, and/or an attorney, before proceeding with the short sale.

- What does your approval letter state?
- Do they want them to sign a promissory note? If yes, for how much?
- We are investors doing short sales so many times we satisfy the note by increasing our offer - to date, we have never gone to the seller for money. In a previous SS, the bank wanted the seller to sign a 20K note over 15 years @ 2%. We told them we doubted the seller would agree to such terms. We then asked them how much they would accept TODAY for their demand for a FUTURE 20K unsecured note that they most likely would not be able to collect. They said 5K, we offered 2K and we settled on 3K. There was enough room in the deal so we increased our offer by 3K and asked for a new approval letter stating the basic verbiage shown above. We closed and the seller and bank are happy.

I am not sure if this is a solution for you and your seller. If the buyer is getting a strong discount on the property, see if you can negotiate an immediate payoff. If you can, consider going back to the buyer and telling them the seller and the bank cannot agree on the current terms; however, their negotiated solution includes the lender asking for x more thousand. If they say yes, rewrite their offer (or counter with additional K requested). If they say no, then the seller either agrees or says no. One challenge with saying no is that if they foreclose, they will most certainly be coming back for more in the future. They have 5 years.

If everyone still says no, most likely your buyer will leave and you will have to find another one.

Good luck, gerald

Permalink Reply by rhonda Young on December 6, 2010 at 4:47pm

I think that everything and I mean everything that BOA writes has a hidden meaning! Gone are the days of trusting the Banks.
BOA is Mr.Potter! George Bailey is Dead!!! I am talking about "It's a wonderful Life"

Permalink Reply by Jim Hale on December 8, 2010 at 8:11am

Gerald -
Was the approval language you cite on a home in HAFA or not? Was there a second lien? Are you in a no-deficiency state?

Permalink Reply by Elva Branson-Lee on February 17, 2011 at 2:58pm

Janice, do you know exactly who they sellers "went back" to to further negotiate the deficiency?  Did they get an answer yet? I have a similar situation and could use some direction. Thanks.

Janice Whit said:

I can tell you that I am the buyer of a short sale that was approved but the approval letter has the same language as yours and our sellers won't accept.

They went back to BofA to see if they will waive the deficiency on November 26 and we are still waiting for an answer.

I am keeping my fingers crossed that they will waive it so we can close, but you never know with BofA. Sometimes they want money to waive it and my sellers do not have any money to give them. So we wait.....

Permalink Reply by Elva Branson-Lee on February 17, 2011 at 3:21pm

My sellers' letter gives them two options: (1) BofA will accept the short sale on the HELOC as presented with the current offer HUD-1, in which the 1st lien is paid off in full, and $182K is accepted by BofA as "payment towards the above referenced debt." It further states that "the bank will release the lien and charge off the remaining debt as a COLLECTABLE balance. Our recovery department will contact you to make arrangements on this balance."

Option (2) is basically bring another $70K to the closing table and "the bank will release the lien and charge off the remaining debt as an UNCOLLECTABLE balance. Any deficiency balance will be waived and the appropriate 1099 form will be sent."

I should mention that the property appraised at only $25K more than the offer we presented, which was the highest and best received after several months of marketing. Yet BofA is seeking $70K more in certified funds. We'll never get that from any buyer in this market, and if the sellers had it, they would not be in hardship in the first place!

 

Any advice?