Special offer

Bank of America's Promissory Note Agreement!

By
Real Estate Agent with Prudential California Realty

Bank of America's short sale department requires that a seller of a short sale agree to some sort of repayment plan of the deficiency balance or a lesser negotiated amount. It is the agent's job to negotiate on behalf of the seller, a lesser amount of the total deficiency to be paid to the bank, if any at all. TA negotiator for one of my short sale files with BofA emailed me asking me if my seller would agree to a promissory note. Also, many other banks are now listing this on there questionnaire's that they send out to begin a short sale. Be sure not to answer this question on their form, but instead, write a letter to them explaining the hardship of the seller and that being the seller has no money, will not be able to repay any of the debt at this or any future period. Pretty much the same content that was put in the seller's hardship letter only a little more detailed and empathetic to the bank. Empathetic in that you, the agent, and the seller understand the losses many banks are taking in this very depressed economy. Send it in to your negotiator, wait 3-5 days for review and with a 7 business day period, you are more than likely going to hear from the negotiator to revise the HUD and expect the approval letter with a $0 dollar promise to pay clause on it. The biggest thing to consider when doing this letter is emphasizing to the bank that it would be a much greater loss to them to not approve the short sale and foreclose, rather than to get what they can to regain some of the loss and move forward. I hope this helped some of you that are having issues with Bank of America's short sale process. Feel free to message me for help.

Russ Ravary ~ Metro Detroit Realtor call (248) 310-6239
Real Estate One - Commerce, MI
Michigan homes for sale ~ yesmyrealtor@gmail.com

Thanks for putting it out there.  So many agents gloss over the issues

May 31, 2009 12:16 PM
Susan Neal
RE/MAX Gold, Fair Oaks - Fair Oaks, CA
Fair Oaks CA & Sacramento Area Real Estate Broker

Hi Georgio - This is so important to understand.  In California, especially, where we work on the trust deed system instead of the mortgages of many other states.  In a foreclosure, we have a short, quick, and relatively inexpensive procedure (a trustee's sale) for banks to foreclose, but if they choose that process rather than a lengthy and more expensive judicial foreclosure, they cannot pursue a deficiency judgment in some types of loans. 

In judicial foreclosures, they may be able to get a greater judgment, but if the debtor is already broke, it will likely be uncollectible and not worth the investment.  You can't blame the bank for wanting to see if a debtor will agree to pay the deficiency, but the debtor should understand when this is not required, and not allow themselves to be convinced that they MUST sign it.  Be aware, however, that each loan must be looked at carefully to determine whether it is a recourse or nonrecourse loan before advising a borrower what to do.

May 31, 2009 12:27 PM
Connie Betz
Berkshire Hathaway HomeServices Ambassador Real Estate - Omaha, NE
Top Omaha Realtor - Omaha Homes for Sale

I have a short sale where I represent the seller. The second mortgage is with Wells Fargo and based on Nebraska laws, they ALWAYS require the seller to pay the difference. 

May 31, 2009 01:12 PM
Eric Reid
Renaissance Realty Group of Keller Williams Atlanta Partners - Lawrenceville, GA

It seems like the banks just dont get it .. Most barrows are over it .. they are doing a short sale over a walk away out of respect and a sense of doing the right thing and if the banks don't wise up and start approving short sale offers buyers are going to pull back and wait on foreclosures

May 31, 2009 01:14 PM
Anonymous
Anonymous

bank of america is contributing to this foreclosure mess. there are still people who dont learn the lesson form the past . It is really hard to convince these guys that it is  hard to get apromissory note from the seller. they should get people who can think outside the box.

Jun 23, 2009 03:00 PM
#5