Bank reneges on short sale — after it closes

Bank of America approved the sale, then changed its mind after closing — more than once. The borrower had to file a lawsuit.

By Teresa at MSN Real Estate Sep 21, 2012 12:24PM

© moodboard/CorbisWe thought we'd heard everything when it comes to missteps, delays and difficulties in mortgage modifications and short sales.

 

And then we read this story: Bank of America denied a borrower's request for a short sale AFTER the sale had closed, Gretchen Morgenson reports in The New York Times.

 

Back in 2007, Alexandra Garcia bought an investment condo in Deltona, Fla., for $250,000, putting 20% down. But after the market collapsed and she couldn't make the payments, she asked Bank of America to let her do a short sale.

 

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She got a surprisingly quick response: Yes, a short sale for $72,000 was approved.

Not only that, the bank agreed not to come after her for any deficiency and said the sale would have to be closed by March 23. Garcia agreed to pay the bank a requested $1,000.

 

The sale closed March 5.

 

"Then the weirdness began," Morgenson wrote.

Two days after the sale was completed, Bank of America returned the money, rejecting the terms to which it had agreed. The next day, the bank sent a letter agreeing to those terms.

 

After some more back and forth, the bank rejected the short sale, saying Fannie Mae, the investor in the loan, did not approve. That was on March 20 — two weeks after the buyer had moved in.

In the end, Garcia had to file suit against Bank of America, and The New York Times had to ask questions before the bank agreed to accept the original short-sale terms.

 

Buyers and sellers often can't fathom why loan servicers make short sales so difficult, since they are much easier, quicker and cheaper than doing a foreclosure. Plus, the property usually stays in good condition.

Well, Morgenson writes, perhaps it's because the loan servicers themselves do not benefit. The servicers collect fees while a loan is in default, but they lose that money once a short sale closes.

 

"Why in the world would a bank ever finish one of these deals?" April Charney, a foreclosure defense lawyer in Florida, said to The Times. "When they renege, they get to keep servicing a defaulted loan."

 

 
9Comments
Oct 8, 2012 5:01PM
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I stared my first account with BofA when I was fifteen and am now 61 and am still with them. I can say that their terms for a loan often have required that I really not need the loan before they would approve it. That has always depended upon the economy and the lowest interest rate.  The biggest problem - today - is the federal requirements and each state(s) requirements placed upon BofA after they took the bailout. I have been lucky in life and have never borrowed anywhere near as much as my balance on hand in thier bank. But - I have recently had problems based upon Stupid Laws passed by the State of Texas regulating them unnecessaily after they took the bailout. Like always - BofA takes the hit after Fannie Mae and Freddie Mac change the rules - after they make a deal with a customer. Then - BofA gets embarassed into honoring the deal - and the feds are never blamed. BofA is in business to make money and does awful things like - take the bailout - and use it to pay bonus' to executives like every other corporation. They also will take the tax write off for honoring this deal.The corporations of this country always take the hit for the laws made by the people you elect - at every level of government. Sure - they lobby for these laws - but you are the ones who continue to vote for the same old garbage to represent you. Until "We - The People" change the way this government perverts the constitution, we can expect this to continually happen. This is only my opinion and we all have an opinion. My suggestion is that we write in "Neither" on every ballot at every level of government in this country - until such time as someone with basic moral decency and integrity runs for office. Ha - like a single one of you has the fortitude to do that. And - I do not blame you - as then the President could be elected by his own single vote - and that of his wife and relatives. If you want "change" - open your mouth and yell into the face of every single person you vote for at every level of government. BofA - and every other corporation - can not get away with this - only if YOU take action. "We - The People" have to take our country back !!! Just making snide comments online will not change anything.
Oct 8, 2012 12:23PM
Oct 8, 2012 11:54AM
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Just remmber Obama helped broker a deal for Buffet to help sure up BOA' s balance sheet. They give Buffet a  6% dividend and the try to make a  4% mortage loan and make money. They are a shady operation that is being propt up by a shady president who is doing it to help his rich friends. They don't give a D@@@ about people or housing , just making money....
Oct 8, 2012 8:49AM
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I just finally settled a Short Sale after waiting 9 months, 5 months of aggravated renting of the home I was buying and 2 months of back and forth negotiations, 3 cancelled settlement dates and then WHAMO finally just settled a week ago.  And yes it was with BANK OF AMERICA. The mortgage company said this was the worst they have ever seen.
Oct 8, 2012 8:42AM
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About a year after I closed escrow on a property, I received a letter from BofA stating that they had aquired the note on the property and were demanding that I purchase a special flood insurance rider on the property. The home was at the 2000 foot elevation in the foothills of Los Angeles. I called and was toild that if I did not purchase this insurance, they would begin forclosure...I wrote them a letter using a false letterhead of a Law Office I created asking for a copy of the original note, specifically, asking for the exhibit which called for such special insurance...Never heard back from them...

Oct 8, 2012 6:36AM
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BANK OF AMERICA DOES IT AGAIN  REMEMBER THE ATM FEES AND THE BANK FEES. PLEASE TELL BANK OF AMERICA YOU WILL NOT STAND FOR IT AND GO TO A SMALL BANK AND GET BETTER SERVICE. 
Oct 8, 2012 5:06AM
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BOA is just plain no darn good! The games they play. People need to stay away from them and teach them a lesson. Hit them where it hurts, right in their back pockets.
Oct 8, 2012 2:33AM
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Since when does BOA now have the freedom to decide what they want to do without regard to a legal transaction that was already agreed upon and completed?  CLOSE ALL YOUR ACCOUNTS AT  BANK OF AMERICA!!! It is time for the American people to make a bank accountable to its account holders! Our government bailed them out and this is what they pull on people!!!
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