Short Sale Blog

Seattle Short Sales has just wound up negotiations with Bank of America (as both 1st and 2nd lender) that have resulted in the lender waiving all deficiency rights.

This means that the borrowers are not required to pay back all of the money they borrowed when the house sells at a loss. But, even more significantly, in this case the lender has agreed not to pursue the borrowers at a later date for the loss, or “deficiency.”

In this case, the couple who owned the home ran into trouble because of falling house prices, which resulted in the value of their home being less than the amount of money they owed on it. When the wife was laid off work, the couple could no longer afford to pay their mortgage payments, and were forced to sell the home at a loss.

Seattle Short Sales assisted in the negotiations. Both first and second mortgages were held with Bank of America. The total that the couple owed was $284,000, but they were only able to sell the home for $179,200. After closing costs and commissions, the amount paid back to Bank of America on the two loans was $159,000.

The remainder owing on the two mortgages was $119,000 - $45,000 of that deficiency being on the second mortgage, which the lender could choose to pursue. Seattle Short Sales helped the couple reach a no-deficiency agreement with the bank, where they paid the bank a total of $10,000 to forever relieve them of having to pay back the money owing - saving them over $35,000. This is the first time that Bank of America has ever completely released a deficiency.

Read this complete Case Study: Bank of America Case Study: No-deficiency judgment relieves sellers of loss