Bank of America continues to act as the 900 lb gorilla, ignoring CA state law

Bank of America continues to act as the 900 lb gorilla, ignoring California law.

The new California law, SB931, effective January 1, 2011 specifically states "the written consent of the holder of the first deed of trust or first mortgage shall obligate that holder to accept the sales proceeds as full payment and to fully discharge the remaining amount of the indebtedness on the first deed of trust or first mortgage."

For some inexplicable reason, Bank of America believes this law doesn't apply to them and continues to extract cash-contributions and promissory notes from sellers on a short sale (as recently as February 4, 2011).  The amazing part to this particular story is first deed of trust in question is a purchase money mortgage for a primary home - a non-recourse loan if the home goes to foreclosure.  In short, accept the sales proceeds now or accept the sales proceeds in foreclosure (after 4-6 additional months of losses) because that's all you're going to get.

I have been shocked at Bank of America's punitive policies in regards to short sales.  Before SB931 went into effect, B of A required a $3,000 contribution from the sellers in order to approve a short sale- almost the total sum of funds in the bank for a family of six with the primary wage earner unemployed (who, by the way, put 20% down when they purchased the home).  Both Realtors agreed to reduce our commission to provide those funds.  Bank of America REFUSED, stating "the funds must come from the seller or the short sale will not be approved."  It wasn't approved and Bank of America has incurred four months of additional losses and will incur a total of six months additional losses (approximately $18,000 in lost payments) before the home goes to foreclosure.

This was the transaction that made me realize that, with B of A, it isn't just about the bottom line.  There is a strong undercurrent of punishment in their negotiation process.....so strong that they will violate state law to continue their practices.  I now refer to B of A as Bank of Hate.