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Right now, BofA is saying that they do not alter their approval letters.
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They don't have to alter their approval letter, they just have to send out the right one. They DO have access to a settlement letter; I had one of their reps actually read it to me, and it was word-for-word the same as Shkir's letter, except for the part that he managed to have added about deleting the late payments from his credit report.
Their stance, though, is that they do not offer the settlement letter if the amount they are going to receive from the short sale is less than 80% of the amount owed on the mortgage. I imagine that almost no short sales actually go for so much, so almost no one gets sent the settlement letter.
I have been trying to get through to them that in a non-discrepancy recovery state such as Arizona, the settlement letter is the only applicable response, since a person would be much better off just walking away from the property rather than agreeing to allow BofA to come after them for the rest of their lives for the balance if they agree to the "collectible loan" offer. The people in Loss Mitigation typically just say that they don't know anything about various state laws, they leave that to the Recovery department, and they don't really care if it goes to foreclosure or not. I think it is likely because each "loan analyst" has around 500 cases to work, and their goal is just to clear their plate.
I continue to be both amazed and angered by how non-responsive BofA is, even when trying to close a transaction that is clearly in their best interests to close. You would think that they would see that settling for a short sale is far better for them than adding another foreclosed property to their inventory, making them responsible for maintaining the property, cutting the lawn, paying the HOA fees, paying the taxes, eventually paying a realtor to sell it for far less than they could get if they just agreed to a short-sale settlement right now. I can't imagine how much money they are losing every day because of their ignorant approach.