Alright so I am ready to state how my client was able to get this verbiage removed from the BofA short sale approval letter. Remember I have talked to numerous attorneys about this subject and hundreds of real estate agents across the country and this was the first instance of a victory that I had heard of in the short sale fight against Bank of America. Basically I came across an attorney firm that had experience litigating with banks (years of experience). They were willing to take on the case after dealing with many other banks for the past couple of years on short sales but not Bank of America, since they had changed their approval letter, remember this was just done about 3 months ago. I worked the file to the point where I received the approval letter and turned it over the attorneys. They spent countless hours working their way up the chain of command within Bank of America, into their legal department and went back and fourth with negotiations for over 4 weeks. The attorneys burned countless hours, researching case law to recite in their conversations with Bank of America and haggled back and forth. I have seen transcripts on some of these conversations and they are pages and pages long and cite case law all over the place. Bank of America put up a huge fight on this issue. It is very clear that they plan on doing something with all of these short sale approvals and the sellers very well may be on the hook after one is completed. It is important to note that the seller and client I was dealing with was a primary residence owner, which purchase money loans. So the case law was in favor of the seller as they did have the option to let it go to foreclosure. Since then we have done another file using the attorney, with a refinance loan (recourse loan) and the attorneys were again successful in getting the famous deficiency clause removed again. They had to cite all different case law, and talked to different people within Bank of America, and it took even further hours of research to do it, but it was completed.
My conclusion out of all of this, is this. I did not have the capability to get this removed for my client myself. This issue went well beyond and outside my skill level of deal with the Bank of America executives and attorneys. I only have the ability myself to get in touch with VP’s and manager’s within the Bank of America loss mitigation department and the attorneys were dealing with the Bank of America attorneys and senior executive officers. This decision went very high up to get approved. Nobody I know could have ever gotten this done, nor had I ever heard of it being done, and I travel the country teaching and going to short sale seminars all the time. I have even spoken with some of my contacts over there at the VP level and they state they have never heard of this ever being done before. This particular attorney firm is familiar with CA real estate law and has extensive experience litigating with manyof the national lenders. This is not a run of the mill attorney firm. While I feel some other attorneys may try to do the same thing, they may not be able to produce the same results, as these attorneys definately have a reputation with these national lenders and know what they are doing, and I feel very fortunate to have found them.
Banks are getting tougher and tougher to deal with in regards to short sales and they are making significant changes to come after home sellers, and it is aggressively beginning, with Bank of America. Soon I feel, that many short sales will need to be handled by attorneys due to the fact that banks are trying to take this hard line stance. 3 months ago I was able to get acceptable approval letters from Bank of America specifically stating they would not pursue the seller for a deficiency, but since they have revised the letter I cannot. That is why I have teamed up with these attorneys to do the legal part of it for me when we do not get an approval letter that is acceptable and does not waive the deficiencies for the seller. If you are a client of mine you will have the option of having this attorney firm represent you if you are a Bank of America home seller. We will discuss all of your options and goals before listing your home and put you in touch with them when the time comes to get your approval letter. I will handle all of the real estate aspects, while the attorneys will handle the legal aspect of the deal. Give me a call today if you have a Bank of America Loan, have a home in San Diego and want to do a short sale.
Kurt Wannebo
San Diego Real Estate and Investments
www.shortsaleinsandiego.com
Kurt,
Thank for your invaluable insight. Short sales the Five Trillion pound Rat in the room. Without legislation addressing short sales each short sale could be a ticking time bomb for a homeowner.
We have federal and State policy on Loan Modification, Short Refinance, and Foreclosure. Not one Federal or State policy on Short Sales. No clear law on protecting the homeowner after a short sale. How can we get Congress to address protecting the citzens of America?
Durrell,
You are absolutely correct. Policy was briefedly mentioned back in May about creating lender incentives and standardized approval letters, but since then, nothing. I believe this issue is the same as it was with loan modifications and doing principle (balance) reductions. They absolutely refused to address it. Just as they didnt force lender or investors to do principle write downs for a loan modification I believe they will do very little when it comes to demanding banks waive thier deficiency rights in a short sale. All legislation to this point is simply in favor of the banks and nothing for the homeowners, remember all loan modifcation guidelines put into place were only if it made financial sense to the investor to do it, if not they would deny you and force a homeonwer to loose thier home. Same thing with short sales. All of my emails, letters and phone calls to state legislators have gone unanswered or ignored.
As these banks pay back the TARP funds, the government will have little leverage to force banks to totally forgive any balance left for a homeonwer after a short sale. I forsee that lots of people will do BofA short sales, where investors recoup a portion of thier money, reinvest to go on and make large profits again, while at the same time collect against these homeowners. This will cause another, while probably smaller, real estate market decline where homeowners who have since financially recovered from thier previous short sale are now unable to buy again or enter the market because they are being hounded and chasing down by collection agencies for the unpaid balances on short sales.
Other banks are taking the high road (Wells Fargo, CitiMortgage, etc) and they issue great approval letters stating specifically stating they will NOT pursue the homeowner after a short sale. Because of this I am starting to close ALL of my Bank of America accounts and credit cards, and give my business to banks and lenders whom I feel has a better level of service and perception of thier clients. I am sure many other people will probably fall in my footsteps as well.
I literally have had hundreds of calls and emails about my blog post from sellers, agents and prospective BofA home shortsellers asking me about this and they are all apalled at this information. Very unfortunate that Bank of America is treating clients like this and may force many homesellers to have to choose a foreclosure over a short sale, if they are worried about the deficiency hanging over thier head.
By the way Kurt…its great to see you are doing the right thing for your clients you go the extra mile…I work with one agent in Phoenix who does the right thing…I wish you all the success as its definately deserved.. Great Job!
Kurt,
Do you have any updates on federal laws protecting home owners from banks pursuing a deficiency on a primary residence after a completed short sale? Or just any federal laws in general regarding short sales?
I’ve heard people talk about such things, but for some reason can’t find the relevant information at this moment. My company is negotiating multiple short sales and we need to give clients the correct information.
We did just receive some information from a BofA negotiator regarding HUD preparations and the new incentive.
If you have any information I’d greatly appreciate it.
Sincerely,
Virgil Horner
208-308-0703
Vh,
At this time there are no new laws that proptect homeowners directly from deficiency both on the State level or the federal level. It boils down to the state statutes and the approval letter you receive, and sometimes the type of loan you have. There is a new incentive program called the HAFA program which states lenders must release deficiency rights but it is a completely voluntary program, and won’t be implemented until April 2010. I highly doubt that any lender will be willing to obide by the rules set rforth, but we shall see.