"What happens to the difference?" is definitely the most common question my Santa Cruz County Short Sale clients asks prior to attempting a short sale. Jack Schakett, Bank of America senior vice president for credit loss and mitigation strategies, said this week that if a borrower proves he can no longer pay the mortgage and has few or no assets, the bank will waive its right to a deficiency judgment during the closing of a short sale. However, if someone can afford to pay or has assets, the bank will try to negotiate a set fee for the borrower to pay at closing or ask the borrower to sign a partial or full note. And in the event the borrower refuses to turn over financial information, Bank of America will retain its right to go after the money.
Let's look at Jack's comments a bit closer. First of all, how is "few or no assets" defined? It is whatever the Bank calls asset. If you have a job and after you pay your bills you have money they will ask you to agree to a promissory note for a stated amount. So you should be prepared. However, Bank will offer an incentive. If you contribute ½ the amount of the promissory note, sometimes called "cash at closing" you saved some money and the Bank loves it. Why? Most promissory notes never get paid.
If you decide for whatever reason not to provide a bank with your financial statements the Bank will go after you. No exception! I had a client who Short Sale was taking 6-8 months, hard to get a buyer and my clients hated me asking that they update their financials every 90 days. We get buyer and had an Approval that waved everything. It was great! Unfortunately, the buyer walked. From that point my client refused to keep updating their financial statement. Got a new buyer but that Approval stated they were going after the deficiency with both barrels.
I had to go back to the trenches and workout this out with the bank. I was successful and got full release and they waived the remaining deficiency for 2 CHASE loans. You have to hire someone that closed at least 20 Short Sales to pull that off. My experience with CHASE bank was the main factor in my success. They are really tough to work with but I have closed a lot of files with them and I know how to work it.
Comments(1)