Asked by Ivonne, Indio, CA Wed Jun 6, 2012

I am selling a house on a short sale, already bank approved, just find out about BofA is going to reduce principal mortgages to help customers to keep their homes. Can i cancel the short sale and try to fight for my house? what are my options?

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Ray Wright, Agent, Riverside, CA
Wed Jun 6, 2012
You've gotten several good answers already so I can't really add to them much. I hope you contact your bank and then weigh the decision carefully.

If you cancel the short sale now, I cannot say there won't be legal issues because I would need to review all your contracts and find out where you are in the process. But aside from all the work and time invested by all parties, what is the chance that the principle reduction will be offered to you? Will you be one of the select few? AND, what are the chances that the bank's terms will be acceptable or even desirable to you? Did you try to do a loan modification before conducting the short sale? If so, why didn't it go thru? Were the terms not acceptable to you? Or did the bank just not work with you on the modification? Will you again be back in foreclosure 4-6 months later because what they offered was not enough?

If you stay the course and close the short sale, you may never know what the bank was willing or not willing to offer you. One thing's for sure, you'll be done with a bad situation and can begin preparing for a brighter future.

I have clients that did a short sale 3 years ago and are now looking to buy. They spent the last 3 years repairing their credit and saving up money. Today, they are looking at homes in the same are they sold. Homes that are larger than the one they sold and their house payment will be 1/3 of their previous payment. They believe they made the right decision.

Consider all angles and speak with your lender and your Realtor. And please re-post here what your decision was and the final outcome. We often give advice and then never hear back. Good Luck!

Ray Wright
Keller Williams Realty
1 vote
Minna Reid, Agent, Woodbridge, CT
Mon Sep 10, 2012
The portion of BofA homeowners who will receive principal reductions is pretty small...and there are restrictions on how these will be paid. You may want to do some more research before assuming you will get a principal reduction.
Meanwhile, you are in a contract to sell your home. You will want to speak with your attorney about the consequences of walking away from a legally binding purchase contract. It may not be that easy.
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Nikki R Agui…, Agent, Murrieta, CA
Sat Sep 8, 2012
Hi Ivonne,

I think you first have to look at the guidelines for BofA Principle reduction program. It requires that you be applying for the Government HAMP Program.

Also, please note that the maximum principal reduction they are offering is 30%, and the Loan to Value ratio cannot be under 100%. For example. You bought your house for $400,000. The maximum reduction could be up to $120,000( new amount of $280,000), but if home values are at $300,000, then the most they will drop it to would be the 300K.

So ask yourself, if you were applying for a loan today - what would you honestly be able to afford that? If that amount is not in line with the Old loan principal minus the 30% reduction(if you qualify) then there is no point in seeking the reduction.

Like mentioned before - Talk to the bank directly before paying someone upfront for a "Promise" of a principal reduction. I hope the numbers make sense and you can keep your house, and if not, then Short Selling would be the best option.

Good luck and update the post with the outcome. Thanks
Nikki Aguirre
Short sale Specialist
0 votes
Soila Thomps…, Agent, San Diego, CA
Tue Sep 4, 2012
A quick item of note - Freddie and Fannie (held loans) are not agreeing to principal reductions at this point in time.
On the other side, knowing the banks, they do not want to do principal reductions. It is a matter of economics, they will, if you even qualify, put you though 5 levels of hassles. It may be better to get off the merry-go-round and stick with the house, if your rate is over 5% you may be able to get a HARP 2 refi (down @ 4-5 %), one loan.

Good Luck,

Soila Thompson
Realty Executives
0 votes
Jory Blake, Agent, Corona, CA
Wed Jun 6, 2012
As part of the $800,000,000.00 robo-signing settlement , the 5 major banks have agreed to do a number of different things to assist current, past and future homeowners.
Be warned, only a very small percentage will receive principal reductions...if any. You can gamble, but the best thing to do (As mentioned) is contact your servicer and get in writing what they are able to do for you PRIOR to cancelling your short sale.

Jory Blake
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Ron Thomas, Agent, Fresno, CA
Wed Jun 6, 2012
I know for a fact that BoA is sending out letters regarding a re-structuring and lowering of the Interest Rate and thereby, the Monthly Vig.
But I have heard nothing substantial about PRINCIPLE REDUCTIONS:
I would not believe this, until I saw it; it is just too far-fetched, considering the party involved.

Good luck and may God bless
0 votes
John Juarez, Agent, Fremont, CA
Wed Jun 6, 2012
BofA is sending out letters to those homeowners who have been chosen for principal reductions on their mortgages. I don't know what the timing is. You can contact your lender and seek more information. Keep in mind that canceling your short sale is more likely to result in foreclosure than a loan modification.
0 votes
Byron Lohman, Agent, Palm Springs, CA
Wed Jun 6, 2012
Wow, I agree with both other posts. It is imperative that you CONTACT your lender immediately. FInd out if you have options. They do NOT want to complete a short sale or take your home back! Verify this: I believe the BofA principle reduction is by invitation only, they contact you. Find out if you will be given that option before doing anything.

Byron Lohman, CDP, SFR
Prudential CA Realty, Palm Springs, CA
DRE# 01272085
0 votes
Laura Feghali, Agent, Stamford, CT
Wed Jun 6, 2012
Hello Ivonne,
I suggest that you contact BofA regarding lowering your mortgage payments before you remove your home from the market to find out if you qualify for a modification. Bank of America is one of the major lenders that was accused of "robo-signing" so now is required by the government to work with some of their customers on loan modifications.

Contact your lender and see what they can do for you. This should help in your decision making to sell short or not.

Good luck!

Laura Feghali
Prudential Connecticut Realty
0 votes
Ron Thomas, Agent, Fresno, CA
Wed Jun 6, 2012
If I tell you to CANCEL and fight; and it turns out that it was a lot of BS and rhetoric that was done to keep the politicians happy; what are you going to do?

If you stay the course, sell it on a Shortsale and realize later that it was true and you could have saved your house and your Credit.....

This is a no-win for anyone giving you advice:
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