BAC Deficiency Language

BAC Home Loans Servicing, LP and/or its investors may pursue a deficiency judgment for the difference in the payment received and the total balance due, unless agreed otherwise or prohibited by law, if the short sale closes on the loan referenced above. In addition, if this loan is covered by mortgage insurance, the mortgage insurance company may reserve the right to pursue the seller for the deficiency based on the terms of the mortgage insurance policy. Furthermore, there may be tax consequences associated with entering into a short sale. The seller is encouraged to seek guidance from an independent tax advisor, and/or an attorney, before proceeding with the short sale.

BAC Waives Deficiency Language

Upon receipt of the agreed amount, BAC Home Loans Servicing, LP, and/or its investors will waive the remaining balance due on the above referenced loan and release the borrower from further obligation therein, and waive all rights to pursue further judgment or deficiency. BAC Home Loans Servicing, LP will report the debt as “settled for less than the amount owed” and issue a 1099 for the remaining balance. The seller is encouraged to seek guidance from an independent tax advisor, and/or an attorney, before proceeding with the short sale.

If it is subsequently determined that the approval of the short sale was based, in part, on information which BAC Home Loans Servicing, LP later determined to be false or misrepresented or fraudulent, BAC Home Loans Servicing, LP reserves the right to pursue the remaining balance of the note.

Isn’t it amazing that they would even try to sneak this by my client? Be careful with your short sales! If you decide not to use my services, please make sure your short sale approval letter follows this verbiage.

Disclaimer: This is for informational purposes. I am not an attorney, and this is not legal advice.

You could sell your home, owe nothing more on your mortgage and get $20,000!

Dear <homeowner’s name>:

We’re contacting you because we have a new program that could be right for you. Don’t lose hope – you have options that may help you avoid foreclosure and make a fresh start.

You may be able to owe nothing more on your mortgage and get $20,000 after you sell your home!

We would like to talk with you about the possibility of selling your home for less than the amount you owe. If we agree on a lower sale price and a few other terms and you sell your house for that amount before foreclosure, you will get $20,000.

After your home is sold through this program you will not owe any future payments for this mortgage. This program also may allow you to stay in your home while it is for sale. Plus, after you sell your house, you can use the $20,000 to pay expenses, including moving to a new home.

Avoiding foreclosure is possible.
Call us today at 1-877-496-3820

Sounds great, right! For sure, if I was offered $20,000 to short sale, I would in a heart beat! So who qualifies? The target homeowner is a person whose loan has the following qualities:

• Loan was originated through Washington Mutual and was acquired by Chase through the merger
• Loan is a pay-option arm, also known as negative amortization loan, also known as pick-a-pay

There may have been no crazier idea during the boom than the negative amortization loan.  Sure, the NINJA (No income, no job or assets) loans are great to laugh about even though they were a large contributor to where we are today.  However, allowing a homeowner to decide how much of a payment they want to make toward their mortgage is definitely financial suicide for the banks.  Effectively, if you had what would normally be a mortgage payment of $1000 per month, the bank would accept between $300 and $1000 every month.  Anything short of $1000 would be added to your principal.  You think you’re underwater today? Wait until next month when you’re guaranteed to be more upside down!

OK, time to get off the soapbox.  Now that these banks are starting to regain their sanity, they know that these pick-a-pay loans are ticking time bombs.  They want to approach the homeowner before they walk away, and they ask that the homeowner keep the property in good condition so that it is marketable.  To motivate the homeowner, Chase is waiving all deficiency and offering up to $20,000. Best of all, the seller does NOT need to be behind on payments to participate, and they are not required to provide hardship or financials.  This is a great program, and from what I hear, Wells Fargo isn’t that far behind.

One thing you will notice is that this chart shows a Trustee’s Sale is different than a Judicial Foreclosure.  Trustee Sales is what happens every day at the court house steps and in law offices.  These are by far the most common form of foreclosure.  The alternative is Judicial Foreclosure.  This is what happens the lender goes through the court room to foreclose.  For the most part, lenders don’t like this route for a couple of reasons.  One is that there is almost no benefit to them, and second, there is a redemption period, and that makes the waters too murky for the lenders.

So what does this table tell us?  Regardless of whether you are the owner occupant or you are an investor, as long as the property is a single family dwelling or duplex and on 2.5 acres or less, you will not have any deficiencies from any lenders if it goes through a trustee sale.  Any junior deeds of trusts get wiped out after a trustee sale.  Please note that these do not wipe out judgments or HOA liens.  The way it has been explained to me is that even if it’s a cash out refi or you bought 10 big yellow hummers, you’re fine as far as deficiency goes.  Uncle Sam will be knocking on your door for sure, though.

Now, if this is a situation where the home is on more than 2.5 acres or is neither a single family dwelling or duplex, then through a trustee sale, the lenders can come after you for the difference.  However, the Arizona Revised Statutes (ARS) state that the lender has 90 days to file, or else they’re out of luck.  We hear 6 or 7 years thrown out a lot, and it is simply untrue.

So what happens if the bank decides to go through a Judicial Foreclosure?  Well as long as the property sits on 2.5 acres or less, the home is single family or duplex, and all the debt is purchase money, you’re safe.  If even one of those is not true, then the distressed homeowner is subject to a deficiency.

So with all those questions answered, we now have to consider short sales.  It looks like anybody doing a short sale needs to ensure that their short sale approval letter states there won’t be any deficiency judgments.   In most of my short sale approvals, the language goes something like “Paid in full for less than the full balance.”

This is a lot of information to digest, so please feel free to comment below or contact me directly for clarification.  As always, I am not an attorney or an accountant.  Please do not make any legal or tax decisions based on the information here.  Please consult a lawyer and tax professional when you are ready to make any type of decision.

For the full flow chart, review the deficiency judgment flow chart.

Chandler Short Sale

Approved already at $500,000! Immaculate TW Lewis home located in the Gorgeous Gated Community of Andorra at Valencia! Home includes many upgrades; 4 Bedroom 4.5 Baths,3 Car Tandem Garage, Gas Fireplace. Custom Red Dragon Granite on Kitchen Island custom dark cherry cabinets throughout. All Baths have custom granite, Basement has complete media area and also a master bedroom perfect for mother-in-law quarters or student.Back yard is amazing with sparkling pool,fire pit, built in bbq,full regulation pitching mound!Too much to mention. Must see!

Successful Short Sale

If you or anybody you know are in desparate need for short sale help, I hope that you would let me help.  Our short sale services are 100% free to you since the bank pays all our fees.

Short Sale Success