The Berlin Patten short sale negotiating team recently attended a Bank of America Short Sale Seminar. The following is a brief summary of what Bank of America advised its seminar’s attendees:
- Short sales are about two primary things to Bank of America: Hardship and net proceeds
- Investors are reluctant to postpone foreclosures as the buyer may not hang in. There is NO difference to the investor whether it is a cash buyer or a financed buyer.
- When short sales initially became prevalent, negotiators had on average a 600 case workload. The average now is 100 files.
- Average number of days from initiation of short sale approval process to short sale decision is 50 days (Negotiator Comment: HAFA files take twice that long, if not more)
- New cooperative program: Relocation money can be used for other liens, cash contribution towards delinquency, and HOA fees. BOA is communicating this program to homeowners by phone and e-mail. This program is offered for those who apply 9/26/11 – 11/30/11 and only to those who do not yet have an offer.
- HAFA – Both the 1st & 2nd liens have to participate or they are not eligible. The homeowner has to find out if the investor on both loans participates in HAFA by calling their lender.
- BOA is the servicer for the investor. They are NOT the investor and do not own the loan. BOA has 500+ investors. Each loan may have several investors who have to approve the short sale. Each investor has their own individual requirements. What may be acceptable to one investor may not be acceptable to another. ALL have to agree to the terms. Whenever you have to go back and ask for an extension, deficiency waiver, negotiate a cash contribution, etc., the negotiator has to go to each investor for approval. This is why it takes time and why it may not be approved. BOA has “delegated loan authority” for some investors which means that they can make decisions within prescribed investor guidelines. They also have “non-delegated” loans in which the investor must make the decision. Each loan may have both types of investors, if more than one.
- If the property has structural damage, the investor requires that the seller file an insurance claim and present the proof of claim.
- Property valuations are good for 90 – 120 days. Why can’t BOA share the value? Answer: “Because you didn’t pay for it.” A question was asked by someone in the audience, “What if we agree to pay for it?” Answer: “You still can’t have it.”
- For FHA & VA loans, you can request and receive the appraisal.
- The valuation for a sole property is not necessarily the sole determinant for approval. Investors are making the decision based upon the whole neighborhood, not just this particular property, especially if they have invested in multiple properties in that neighborhood.
- You can request reconsideration of value. You must provide comparables, pictures (a big thing if problems with the property!), bids for structural damage (need 3 bids).
- Questions to ask prior to the short sale:
- How many investors?
- Is there MI insurance?
- Is there an evaluation on record and when does it expire?
- NOTE: The homeowner should call and ask the above questions as they need to be known before the short sale is submitted.
The Berlin Patten short sale team will continue to keep you abreast of each lender’s specific rules and guidelines. We plan to specifically address some of the topics above in more detail at a later date, however, in the meantime, please contact us if you have any questions. And please keep in mind that this is what Bank of America advised us. It does not mean that we necessarily agree with some of their contentions.