Does Bank of America ever get a seller to sign their short sale agreement?

BofA recently approved a short sale for my clients. The first mortgage is a purchase money loan. An offer from a well qualified buyer netting the bank $221,123 was submitted in January, 2008. BofA’s BPO valued the home at $220,000 two months later. No surprise since the home is in Stockton, CA , the “foreclosure capital of the US”. The value has since dropped substantially.
On my recommendation the sellers have met with an attorney who advised them to not accept the terms of the BofA short sale agreement. That agreement gives the bank and/or its investor the right to collect on any deficiency, a right they BofA would not have if the first mortgage is foreclosed on. As a consequence my clients have decided not to move forward with the short sale.

Information passed down to us from Bob Carus, Sr. VP of Mortgage Servicing informed us that BofA is unwilling to modify the short sale approval verbiage. It is the required verbiage on ALL BofA short sales….no exceptions.

I am having a hard time understanding BofA’s position. The bank/investor will incur additional expense of foreclosure, sell the home for less money, end up with a greater loss, and will have to while carry this non-performing note on its books for a longer time. Is there some banking law or regulation I’m not aware of that dictates this bad business decision? Do you think the BofA investors and Board of Directors aware of this decision?

And speaking of business decisions - why hasn’t BofA encouraged this qualified buyer to obtain a loan from BofA?

I will not pursue short sales with BofA mortgagors. It is not in their best interest. Rather I will counsel these to seek legal advice, and that they consider the alternative of awaiting the BofA foreclosure process and possibly file bankruptcy.
I do think that the public should be made aware of BofA’s position and have contacted the local media. Also requested that BofA provide a contact for the reporter to speak with but none was provide.

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