Finally, some honesty! I just had a great conversation with a negotiator from Bank of America for one of my short sales. The good news is that the short sale was approved. The bad news is that Bank of America's approval letter provides for them to pursue a deficiency judgement for the difference.
This loan was a "purchase money", "non-recourse" loan in the state of California. That means that the only recourse the bank has is to foreclose on the property. So, the upshot here is that if the owners sign that short sale approval letter they then become liable for the difference.
Of course, no responsible real estate agent would allow their client to sign a letter as such without attorney review. And, of course, no attorney would advise their client to sign that letter because it makes the future consequences worse than foreclosure.
The negotiator at Bank of America says there is no way to change the letter to a "non-recourse" approval. He says that Bank of America requires this language on all short sale approvals. He also suggested that I give any future Bank of America short sale clients a copy of the recourse approval letter in advance so they can agree or disagree to that language in advance.
The negotiator and I talked a bit about how this was a complete waste of time for everyone involved. He actually seemed sympathetic.
My clients are now considering bankruptcy and I will likely not be accepting Bank of America short sale clients until things change.
What a pity for everyone.
Oh- in case you think they won't come after your client- just let that go. Bank of America will likely sell off that right to pursue for the deficiency to someone who will wait in stealth for just the right moment to go after those sellers- I think they have 4 years to do so. At least here in California.