I have been doing short sales for over 4 and a half years now. Throughout that time I have handled my share of Countrywide files, with success of getting them approved and closed. To date I have now closed close to 200 short sale properties, with over half of those having second liens, that is about 300 approvals closed. Of those I would predict that about 35-40% of those have been Countrywide (Bank of America) files, so I have a fair amount of experience with them.
To give some brief background here, Countrywide used to be a stand alone loan provider which was started by Angelo R. Mozilo and David Loeb in , before being taken over by Bank of America, BAC in July of 2008. So when I talk about working with Countrywide (B of A), I am talking about the original Countrywide company. That being said when I starting doing short sales in 2005, Countrywide would issue excellent short sale approval letters on that specifically stated that “Countrywide and its investors will not pursue a deficiency judgment if the short sale closes…”. This statement was on every approval letter, whether is was a first lien, second lien, purchase money or non purchase money (recourse in the state of CA). It was a always given (in my experience) with out any request of any cash contribution or promissory note required by the seller. Even after Bank of America had acquired Countrywide in July of 2008, I had consistently received these same approvals on short sales, with the Countrywide letterhead at the top with the same statements of not pursuing the seller for any money. I continued on working with the main offices I had always worked with in Simi Valley Ca, Chandler and Tempe AZ, and Plano and Richardson TX. I even communicated with all of my top level contacts I had made over the years using the same @countrywide.com emails
During the spring of 2009 while I had about 30-40 short sale files open with Countrywide, now fully aquired by Bank of America, BAC. I started to see some drastic changes. The first came in late April of 2009, when I got an approval letter on a short sale while working on a Countrywide file, with a Bank of America, BAC letterhead at the top. Along with that was a statement that in it that read “BAC Home Loan Servicing, LP and/or its investors may pursue a deficiency judgment for the difference in the payment received and the total balance due…” To the inexperiencedreal estate broker this may have been missed, but not me. I was an experienced short sale agent. I was a bit shocked at first especially since I had received the old approval letter on another file the day before, with the old verbiage. A long story short, after trying to “negotiate” with my negotiator at the bank, and bringing this to the attention of every supervisor and VP I knew over at Countrywide, there was nothing anyone was willing nor could do. I was told this is the new policy set in place by Bank Of America and it came from very high up, and it could not and would not be changed. Shortly after, every office I was working with over at Countrywide, now Bank of America “officially” told me that this was a boiler plate short sale approval letter and I was receiving them all over the place on every short sale file.
For the past 5 months, I have conferred with numerous attorneys as to how to get this removed. I spoke with short sale agents all over the country, at seminars, classes, and read every blog and website I could to find out if anyone anywhere was able to get this removed. I even personally contacted all of my state and federal senators, congressmen and governor, but without any help. My search was unsuccessful, and although many people had employed many tactics, none I had been able to find were successful, or if they stated they were, were not able to show any proof. The attorneys I spoke with all concurred that something was up Bank of America’s sleeve in regards to these short sales, especially here in CA. Some guessed that they plan on coming after all of these short sale home sellers, some thought they were just protecting the rights of their investors but that nothing would probably ever come of it. I searched very hard and tried many different tactics to get this clause waived for my clients, and wasn’t able to do so, until just last week. The short sale hasn’t closed yet, but in my next written blog I am going to state how I was able to get this deficiency waived by the almighty Bank of America in my current short sale with them. It was not easy and quite complicated, but stay tuned for when I reveal how this was done and how I can now provide this service to my clients with have a loan with Countrywide (Bank of America.)
Kurt Wannebo
San Diego Real Estate and Investments
www.shortsaleinsandiego.com
I need help with buy a short sale home from bank of american. My agent doesn’t have a clue what the process is in buying a short sale home. I have a offer in with Bank Of American since June 8 2009
with no answer from the bank please help.
My short sale is blowing up because we were not aware of this deficiency language until the very last minute when the approval was issued. Now we are faced with an choice of foreclosure or agreeing to let them persue a massive ($300k) deficiency. Please Please Please let me know how you are getting around this as I have had zero luck!
Dan
Charlotte, NC
Can you tell me what tactic you used to get B of A to change this language on the short sale approval letter?
FROM “ its investors may pursue a deficiency judgment for the difference in the payment received and the total balance due”
TO “will not pursue a deficiency judgment if the short sale closes…”.
Thank You,
Please tell me how you had this recourse language removed. I am 2 days away from the short sale letter and I need help.
Kurt, it’s my understanding that Realtors have a fiduciary obligation to not do harm to their clients. So I have question pertaining to the banks that may decide to pursue legal action in the future on a home that was sold short by with by a seller who used a Realtor. I assume if a Realtor sold a property and neglected to identify the language in a Bank of America agreement or another bank and completes the sale and the client later is sued or a collection agency starts the collection process to obtain judgement could the Realtor or the Real Estate Broker be held liable. I guess I am curious if the seller would have a possible legal claim against the Real Estate Brokerage or Agent. It seems like once the Banks start suing on these agreements the sellers will naturally seek legal counsel and I would think Attorneys would be all over this and some major Real Estate Agencies would be in for some major litigation with many of these sellers that were victims of poor advice by their Realtors. I agree…with you that consumers really need to work with a Realtor who is an expert due to the exposure and risk for the client. I can only imagine how many Agents completed a short sale with that crazy language in the contract. I also think it’s very difficult for most agents to do the right thing and not complete the sale and walk away from the commission and tell the client it may be in their best interest to let the bank foreclose! Please provide your feedback…very interested in your perspective on this!..by the way very impressed…you really handle yor business correctly.
I already know of local real estate firms gearing up for campaigns, to market to clients who were victims of short sales, who are now being collected by thier lender, to have them sue thier real estate firm or agent. I also knew this was coming. Unfortunately there will always be good and bad real estate agents. The good ones will be around for years to come. I teach short sale classes all over the country and amazing at the number of agents actually doing them with little knowledge or experience and are in prime situations to ahve lawsuits filed agaisnt themselves. It is sad. In some instances its very sad. The banks change policies and approval letters all the time, the learning curve is substancial for these short sales, and many agents want to do right by thier clients but are to uneducated in the matter and dispense bad advice. Some agents do know better and blantantly tell homesellers, they will never owe a penny again, they can do it for free, with little or damage to thier credit, with no tax exposure and those are the ones that I believe will go down in the end. If they are still around and you can find them. Just like with mortgage brokers, many agents will simply fade away and be unable to find or sue when the time comes.
A major problem here is that short sales are geared for people in distress or in a financial hardship, and so they may not have the money to confer with a good real estate attorney before jumping into a short sale. Unlike real estate agents who work for months for free before getting paid, most lawyers dont work this way and wont see a client or dispense too much legal information without a pretty penny. There are some, but not many. That leaves desperate home sellers with no money to have to listen to the real estate agents and thier advice, which may be full of ignorance, or motivated by financial gain.
Why the government or HUD has not set up FREE legal advice to warn homeowners of the pitfalls of short sales is beyond me. Or why they havent followed through with thier plan annouced back in May or standardized approval letters is beyond me as well. That is why I take it upon myself to offer free hour consults to anyone wanting info on short sales, and I give them clear and honest advice, that every situation is different and you may have to pay taxes, suffer some credit damage, or even pay the bank back even if you sell the home. Home sellers have to understand that banks do not do short sales for the home sellers benefit. They do it to to reduce costs or foreclsure, make the most money from the assest, and if given the opportunity they will want any money the homeseller has, as well as open the door to future collections if they can.