NEW SHORT SALE STORY

November 4th, 2011 at 12:04 am

We dealt with a new short sale issue this week that I thought I would share with you. In this deal, we represented both buyer and seller and the seller had retained a Short Sale Negotiator (“SSN”) to handle the transaction. The short sale, with B of A as the first lien holder, was approved and the approval letter provided that the second could receive a “maximum” of $3,000. The approval letter also had the following language: “Any additional fees that were not approved on September 6, 2011 will not be covered by Bank of America, N.A. and become the sole responsibility of the agent, the buyer or the seller to pay at closing.” Based on that language, the SSN told our agent that he needed to credit over $50,000 to the second lien holder at close of escrow. Both the SSN and escrow officer claimed that this language meant that an agreement to pay more to the second was allowed if it was made after September 6 and was not to be “covered” by B of A. As a result, escrow prepared a new commission instruction memorializing the credit and asked us to sign it.

As you can imagine, we do not agree with the SSN’s interpretation of the above clause and refused to sign the escrow instruction. The approval letter specifically says that the “maximum allowed to the Jr. Lien Holder…” was $3,000. Whatever the term, “additional fees” means in the clause quoted above, it does not mean that you can ignore the “maximum” language and pay the junior lien holder whatever you want. If any more money is to be paid to any other lien holder, it has to be approved by the first. The language cited by the SSN and escrow, is not enough. So please do not let anyone pressure you in to accepting this position. It is just the latest way people have come up with to avoid the limitations of the short sale process. As much as we want to close deals, we cannot succumb to this type of temptation. We are closing deals every day, and doing so the right. Let’s continue to do so.

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