BiggerPockets

Bank of America, one of the country's largest mortgage lenders, says it is loosening its policies on short sales in response to the U.S. Treasury Department's announcement last week that it would increase incentives for lenders to work out short sale deals.

The government's plan is a boon to banks, says David Sunline, BofA's real estate management executive, because it provides guidance when there are multiple liens, a potentially litigious issue for lenders.

In the past, the bank followed Fannie Mae's policy of giving second lien holders about 10 percent of the second mortgage balance in a short sale. Now when it holds the second lien, BofA will accept 5 percent of the net proceeds of the short sale, Sunline says. When it is the first lien holder, it will offer 5 percent to the holder of the second lien.

Sunline says home owners considering short sales should contact the bank within five days of getting an offer on the home and expect its cooperation as long as the offer is within the range of other sales in the area and the borrower can demonstrate financial hardship.

Source: The New York Times, Bob Tedeschi (05/15/2009)

Yes, that is good news, even though Im posting this reply 4 months after the initial post. Im working one now that is a BofA / Countrywide mortgage.
Hopefully, things are loosening up a bit by now. I wont hold my breath though.

H Mann, I know you haven't been doing this very long at all but why are you having so much trouble with BofA 2nd's?

are you working with someone experienced in short sales? How many files are you working now with BofA as the 2nd?

Welcome to the sexy world of SS H Mann.

I would tell your 'fairly experienced' negotiator to pound sand if you're having so many problems right away.

If BofA is the first and the 2nd on this file, you shouldn't have any problems other than BofA is just a PITA all together.

Also, your 'other' offer was waaaay to much for that property and you shouldn't be surprised at the outcome. What you'll need to do now is back away and allow the listing agent(if there is one) list it for the seller. The last thing you want to do is screw over a homeowner b/c you can't make a profit.

Consider it a lesson learned that you still have a lot to learn and move onto the next one. Again, welcome to SS's it's not as fun as you thought was going to be is it?

I'm still new at this, but from what I've seen, initial offer price is generally 50-60% of ARV minus repairs.

So using your example, if you think ARV is 345K, then:

345K * .6 = 207K

You didn't mention any repair estimates, so I'll assume say 20K.

207K - 20K = 187K

So 187K should have been your initial offer price. Obviously the bank will almost always reject this offer but at least it gives you some negotiating room.

I'm sure that someone with more experience can expand on this more.

Here is how we do what we do:

1st Offer is about 10% of FMV.
2nd Offer (Counter to lender) is FMV- Repairs * 50%. We include the sexual preditor map for the area and comps.
3rd Offer (Another Counter to lender) is FMV- Repairs* 55%. We include estimated repair costs.

IF we need more offers, we include more info each time. All the while justifying our numbers.

Hope this helps.

did those answer your question H Mann?

as you can see there is a million and one ways to submit offer prices but the only thing that is important is that yours were waaaaaay to high.

again, tell your 'fairly experienced' negotiator to pound sand or expect failure around every corner. If your 'fairly experienced' negotiator gets offended by you then send them my way and I'll tell them why they(he or she) sucks LOL!!!

I know you're still new at this and you've got some great minds giving you invaluable info(Scott, James and myself of course) it's probably a good idea to listen ;)

good luck to ya

Robert,

Yes, my fist offer on a $200,000 property would be around $20,000. (It would be alittle different, cause I do not like whole numbers like that.)

I have and will have lenders question that offer. I have NEVER had a lender out right refuse to deal with us. But this does get the "ball" rolling.

*(not to mention I once bought a house for about 10% of FMV!)

But, Nick is right- there are MANY ways to get to the same place. But we all have one thing in common. We buy low!

You're 30 days away from approval

Of course I may have the answer to that problem! :lol: