Deficiency Waiver

[Jeff McIlhenny]

I have a short sale client that has two loans, both with BOA. I already know BOA is a pain, but just wondered if anyone might know the answer to this:

My client purchased his TH and lived there as his PR from 8/05-11/07. He then transferred with job, and has rented the home since then. Can he still get a deficiency waiver since he did use this as a PR at one time? A full waiver, partial waiver, or no waiver? It looks like BOA doesn't like to give these regardless, based on some things I have read.

Anyway, any help appreciated, this home is in SC.

[Scott Hubbard]

1. In both the listing agreement and a purchae contract, there should be a clause, either in the form of an addendum, or in the additional contingencies section, that the lender must agree to waive their rights to file a deficiency waiver.

2. In subsequent conversations with the negotiator, emphasize this "is" the PR. Generally, they will ask if the owner currently resides at the home. If they do ask this, then tell them about the relocation for his job. If he does not own another home, then they will not usually make a fuss about not residing there. Relocations are one of the justified prequisites for a short sale.

3. On your letter, fax, or phone calls mention the fact your seeking a waiver.

4. If the short sale is accepted, the approval letter will state whether or not the lender has waived their rights or not. If not, then go back and ask.


If you do the above steps, then you have done your due dilligence. Since it is up to the lender and ultimately the investor, then all you can do is try.

By the way, B of A will likely ask for a promissory note and will oftern do those in lieu of a deficiency judgment. I would let the seller know to expect to sign a promissory note.

In your state, I suspect that the alternative would be a deficiency anyway, so managing the seller's expectations from the onset is key.

Good Luck!