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Law Educator, Esq.
Law Educator, Esq., Lawyer
Category: Real Estate Law
Satisfied Customers: 111468
Experience:  Licensed attorney practicing landlord-tenant, land use and other real estate law and litigation.
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I had a short sale in October 2011. I satisfied the terms of

Customer Question

I had a short sale in October 2011. I satisfied the terms of the short sale. BOA is the bank. The approval letter says, "If this short sale is contingent upon BOA 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. This offer is contingent upon BOA receiving a properly executed and notarized Promissory Note, if applicable, to this short sale transaction.
"BOA will report your existing account to the credit reporting angencies as 'Charged off,' and with the remaining balance outstanding. If the remaining balance on your account is pursued for repayment, we may report a new account reflecting that outstanding balance to the credit reporting agencies."
I am now trying to purchase a new home, and the mortgage broker told me that this item needs to be addressed prior to being awarded a new mortgage. This item is showing up in the collections portion of my credit report.
I have contacted BOA, and they indicate that they are unwilling to send a letter saying I do not owe that money.
I have the HUD form indicating terms of short sale were met. I think it says I do not owe any money to the bank (BOA).
How can I get this item reclassified/removed/resolved so I can get a mortgage?
Submitted: 9 months ago.
Category: Real Estate Law
Expert:  Law Educator, Esq. replied 9 months ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.
Unfortunately, unlike a deed in lieu of foreclosure, where the bank forgives a deficiency, in a short sale the lender can reserve their rights to deficiency. Here BoA has reserved that right to deficiency and under OH they have up to 15 years to sue after the short sale.
Based on the wording of your agreement above, the BoA is in breach of their contract with you, since they agreed to charge off the debt if you met the terms of the short sale. So this means you would have to sue BoA for breach of contract in order to get the lien removed.

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