Please note... you may find the following educational. As Countrywide was becoming BofA they changed their template, see if you can figure out why.
Also note, if you loan started out as A Countrywide Loan, let your negotiator know. Bank of Amercia knows they have problems documenting Countrywide loans.
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This new template is a significant departure from Countrywide's previous short sale approval templates.
Going forward, sellers can look forward to tough negotiations with Countrywide. People with "Purchase Money - non recourse" loans may not wish to complete their short sale and people with recourse loans may want to stay current on their first loan until they speak with an attorney.
If countrywide is your lender, make sure your Short Sale negotiator knows how to gain some leverage against them. Dealing with Countrywide is no longer safe for amateurs. Even top short sale realtors are likely to hear excuses such as - we can't change the wording. Or, we only seek a deficiency if it is legal and we can not seek a deficiency in this situation. Don't believe it, unless it is in writing or you have talked it over with counsel.
Imagine what you will be saying when a collection law firm calls you and says you owe for the entire balance of your second loan. Are you going to say - "hey the negotiator at countrywide told my Realtor that countrywide could not collect the deficiency under California law. Therefore, please cease your collection activity and stop dinging my credit..."
Update: March 03, 2009, Countrywide is even using this template on some of their senior liens. Before you begin the short sale process you should make sure you know all your options.
If you have loans with Countrywide or Bank of America, you may wish to consider RESPA requests and loan lender liability audits.
Here is their new approval letter:
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This letter will serve as Countrywide’s demand for payment and advises you that Countrywide and/or its Investors and/or Insurers have agreed to accept a short payoff involving the above referenced property and the referenced account(s). This demand should be used by the closing agent as our formal demand statement. No additional statement will be issued. This approval is exclusive to the offer from the buyer referenced in this letter.
what this means to the seller
Countrywide and/or its investors may pursue a deficiency judgment for the difference in the payment received and the total balance due, unless agreed otherwise or prohibited by law, if the short sale closes on the loan referenced above. In addition, if this loan is covered by mortgage insurance, the mortgage insurance company may reserve the right to pursue the seller for the deficiency based on the terms of the mortgage insurance policy Furthermore, there may be tax consequences associated with entering into a short sale. The seller is encouraged to seek the guidance from an independent tax advisor, and/or an attorney, before proceeding with the short sale.If this short sale is contingent upon Countrywide and/or its investors receiving a promissory note, we will reserve the right to collect the full amount on the new promissory note which may lead to us pursuing a deficiency on that balance should the need arise. If the short sale does not close, then we will pursue all remedies under our note and mortgage. The conditions of the approval are as follows:
Closing must take place no later than or this approval is void.
The approved buyer(s) is/are the sales price for the property is
Another buyer cannot be substituted without the prior written approval of Countrywide.
Closing costs including realtor commission is not to exceed $. This figure includes the payoff in the amount of $3,000.00 to the 2nd lien.
Proceeds to Countrywide to be no less than $3,000.00
The property is being sold in “AS IS” condition. No repairs will be made or be paid out of the proceeds, unless specifically stated otherwise.
Seller is to contribute $0.00, to assist in the closing of this transaction.This contribution will be in the form of:
PROMISSORY NOTE (Signed and returned prior to closing):$0.00CERTIFIED FUNDS CONTRIBUTION (Due before closing):$0.00If a promissory note is required, it must be signed and returned to Countrywide prior to the close of escrow. It is the responsibility of the closing agent to ensure that the promissory note is signed and returned to Countrywide. If a promissory note has already been signed and agreed to between the seller, investor and the Mortgage Insurance Company, a signed certified copy must be provided to Countrywide prior to the close of the short sale transaction. It is the responsibility of theclosing agent to ensure that Countrywide receives the copy.*** Sales proceeds will be returned if the note has not been received. This will result in a delay of the transaction and/or possible cancellation of this short sale transaction. ***
The sellers will not receive any proceeds from this short sale transaction. If there are any remaining escrow funds or refunds, it will not be returned to the seller; it will be sent to Countrywide to offset the loss.
The property must be free and clear of liens and encumbrances other than those recognized and accounted for in the HUD-1 approval, on which this approval is based.
Countrywide does not charge the borrower for statement, demand, recording, and reconveyance fees on short payoff transactions. Do not include them in your settlement statement. Countrywideprepares and records its own reconveyances.
Other: All funds must be wired. Any other form of payment of funds will be returned. Payoff funds must be received within 48 business hours of the HUD-1 settlement date.
Other: Should the closing be delayed and the Investor/Insurer agree to an extension of the original closing date, the Borrower(s)/Seller(s) will be responsible for any per diem fees through the new date(s) of closing, extension fees and foreclosure sale postponement fees. The Borrower(s)/Seller(s) will be responsible for any additional costs or fees over the stated approved amounts.
Realtor’s commission, paid from proceeds, not to exceed $
If the seller is entitled to receive any proceeds based on a claim for damage to the property under any policy of insurance, including homeowner's, lender-placed, casualty, fire, flood, etc., or if seller is entitled to receive other miscellaneous proceeds, as that term is defined in the deed of trust/mortgage (which could include Community Development Block Grant Program (CDBG) funds), these proceeds must be disclosed before we will consider the request for short sale.If we receive a check for insurance or miscellaneous proceeds that were not previously disclosed, Countrywidewill have the right to keep the proceeds and apply them to Countrywide’s loss after the short sale. We similarly would have the right to claim the proceeds to offset our losses if it were not previously disclosed and it was sent directly to the borrower.
