THE COLLECTABILITY OF A PARTICULAR DEFICIENCY JUDGMENT IS THE MAIN FACTOR
Jack Schakett, Bank of America senior vice president for credit loss and mitigation strategies, said this week that if a borrower proves he can no longer pay the mortgage and has few or no assets, the bank will waive its right to a deficiency judgment during the closing of the short sale deal.
But if someone can afford to pay or has assets, the bank will try to negotiate a set fee for the borrower to pay at closing. If the borrower refuses to turn over financial information, the bank will retain its right to go after the money.
“We want to help customers who legitimately can’t afford to make payments, but we don’t want the ones who have a bunch of money to just be able to walk away,” Schakett said. “They have to share some of our pain.”
The short sale process is becoming standardize with 7 out of the top 10 mortgage lenders now use an electronic system called Equator.
Unemployment, not just lack of equity, is driving foreclosures, Rick Sharga of RealtyTrac, the leading source of data on foreclosures, told a gathering of real estate editors. Processing of so many foreclosed properties has slowed down and the so-called “shadow inventory” has grow so large that it will take until 2013 to work them through the system, he said.