I am selling a house to a client here in NC. As soon as they close, they intend to attempt a short sale on a lot they own in Florida that they bought with a BOA mortgage.

They can't afford the new house payment and the lot payment. They owe approx. $200K (paid $55K down) and similar lots nearby are selling for $75-80K on short sales.

The question is: If they find a buyer, and a discounted price is accepted by BOA, will they be subject to a deficiency judgement once the propety is sold at the discounted price?

Thanks for your help. Doc

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Comment by Joseph C. Alfe on February 2, 2010 at 11:39pm
it is BOA policy on all short sales to not release debt. In other words, the possibility of them attempting to collect a deficiency is there.
Comment by Mark & Elly Ostrovsky on February 2, 2010 at 4:15pm
Mike is absolutely correct in stating that the outcome remains a mystery until you receive that approval letter. A few years ago we had a client with two houses on the same street, both with Countrywide mortgages. We worked a short sale on one of the properties and Countrywide forgave the deficiency. Client kept the other property. So who knows what BOA will do?
Comment by Mike Linkenauger on February 2, 2010 at 12:24pm
Thats a question they will not know until they get the approval letter in hand. The approval letter will state if BOA wants All, Part, or None of the deficiency repaid. Alot of it will depend on the sellers ability to repay the deficiency, and their hardship. If they just purchased a home, they aren't in a hardship when compared to most of the folks we work with. Good thing is that the put 20% down, so there is no mortgage insurance or a 2nd loan to deal with. Bank of America is a toss up, especially here in Florida, but if the owner is still employed, there is a decent chance they will want part of the deficiency repaid.

Remember however, everything is negotiable, and many times BOA will settle the deficiency for 10-20 cents on the dollar outside closing...

So to answer your question, there is no telling what BOA will do, but your seller is typically not obligated to sell the property if the lender asks the deficiency be repaid.


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