I just had a Bank of America short sale closing for a home near Destin, FL. BOFA issued TWO different approval letters for the same junior lien:
1. Approval Letter Emailed:
Bank of America agrees to accept $1000.00 in certified funds as payment in full of the loan. Upon the Bank’s receipt of the payment of $1000.00, the Bank will report the account to the credit bureaus as “Settled”, with the explanation “Account legally paid in full for less then the full balance.”: In addition, the Bank will be reporting the amount of the debt forgiven to the Internal Revenue Service as required by the Revenue Reconciliation Act of 1993.
2. Approval Letter Mailed Separately to Seller – (Dated Same Date as Above Letter)
Bank of America agrees to accept $1000.00 as payment towards said loan. Upon receipt of $1000, Bank will release the lien and charge off the remaining debt as a collectable balance. Our recovery department will be in contact with you to make arrangements on this balance. Will report the account to the credit bureaus as “charged off”, and show the balance remaining owed to Bank of America.
The bank insisted the sellers sign both letters. If BOFA tries to collect on this balance, certainly the sellers can show evidence by the first approval letter that BOFA stated the loan was forgiven. To say the least, Bank of America’s behavior is mystifying.