Bank of America Addresses Their Deficiency Policies

Recently, an article was published on that discussed Bank of America and their intentions regarding short sale deficiencies.

The article quotes a Bank of America VP stating at a National Association of Real Estate Editors conference that Bank of America may begin waiving deficiency balances in many short sales: “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.”

Schakett goes on to say, “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. Customers would like to know if they do a short sale deal, are they done or not,” he said. “It’s best for both of us.”

If the lender is going to waive their rights to the deficiency, they are going to report their loss as ordinary income to the IRS which could mean tax implications to the borrower. If you are involved in a short sale, please consult your tax advisor to see how these possible tax implications could affect you.

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For more information regarding short sales and the treatment of the deficiency, please call our office at 941-954-9991

Posted by Karen Gagliardi, Business Development Coordinator with Berlin Patten, PLLC