From the BiggerPockets Blog

 BiggerPockets Blog »

Jump to Forum View All

Click a category below to view different forum categories.

BiggerPockets

General Info

BiggerPockets Q&A, Site Questions, & Announcements

1514 topics, 14412 posts — Last Post 04/24/14, 05:53PM

BiggerPockets Exclusive PRO Area

117 topics, 841 posts — Last Post 04/23/14, 08:28AM

New Member Introductions

11000 topics, 86734 posts — Last Post 04/25/14, 12:36AM

Real Estate Success Stories

400 topics, 6221 posts — Last Post 04/24/14, 05:13PM

General Real Estate

General Real Estate

Buying & Selling Real Estate

6008 topics, 47320 posts — Last Post 04/25/14, 12:14AM

Renters

651 topics, 5873 posts — Last Post 04/24/14, 03:20PM

Get Foreclosure Help - Help Stop Foreclosure Forum

317 topics, 2561 posts — Last Post 04/23/14, 08:28PM

Home Owner Association (HOA) Issues & Problems Forum

238 topics, 1611 posts — Last Post 04/23/14, 04:02AM

Do it Yourself

660 topics, 6334 posts — Last Post 04/24/14, 08:31PM

Reviews & Feedback

Real Estate Deal Analysis and Advice

3718 topics, 29817 posts — Last Post 04/24/14, 09:08PM

Real Estate Guru, Book & Course Reviews and Discussions

1140 topics, 11616 posts — Last Post 04/24/14, 08:58PM

Ask About A Real Estate Company

743 topics, 7348 posts — Last Post 04/24/14, 03:12PM

Real Estate Investing

Real Estate Strategies

Wholesaling

5647 topics, 44020 posts — Last Post 04/24/14, 11:32PM

Rehabbing and House Flipping

3354 topics, 31122 posts — Last Post 04/25/14, 12:15AM

Real Estate Development & New Home Construction

554 topics, 4696 posts — Last Post 04/24/14, 09:03PM

Innovative Strategies

705 topics, 6044 posts — Last Post 04/22/14, 04:06PM

Tax Liens, Notes, Paper, & Cash Flows Discussion

869 topics, 6706 posts — Last Post 04/24/14, 08:29PM

Rent to Own a.k.a. Lease Purchase, Lease Options

700 topics, 4961 posts — Last Post 04/24/14, 11:26AM

1031 Exchanges

143 topics, 1063 posts — Last Post 04/24/14, 11:10AM

Foreclosure Investing

General Foreclosure & Pre-Foreclosure Forums

1693 topics, 11322 posts — Last Post 04/24/14, 10:10PM

HUD, VA, and Tax Sales

416 topics, 3103 posts — Last Post 04/23/14, 02:29PM

REOs

1217 topics, 10604 posts — Last Post 04/24/14, 07:13AM

Short Sales

1539 topics, 13154 posts — Last Post 04/23/14, 08:25PM

Landlord & Tenant Forums

Landlord & Rental Property Questions

7260 topics, 71292 posts — Last Post 04/24/14, 10:48PM

Mobile Homes & Mobile Home Park Investing

639 topics, 5146 posts — Last Post 04/24/14, 05:13AM

Investor Basics

Starting Out

7739 topics, 60737 posts — Last Post 04/24/14, 09:18PM

Investor Psychology

434 topics, 6135 posts — Last Post 04/25/14, 12:29AM

General Real Estate Investing

4733 topics, 37341 posts — Last Post 04/24/14, 09:51PM

Real Estate Investor Marketing

1740 topics, 14165 posts — Last Post 04/24/14, 05:08PM

Commercial Real Estate

Commercial Real Estate Investing Forum

1414 topics, 9022 posts — Last Post 04/24/14, 04:12PM

Multi-Family and Apartment Investing

1125 topics, 9422 posts — Last Post 04/24/14, 11:32PM

The Business of Real Estate

Real Estate Technology and the Internet

Real Estate Technology, Social Media & Blogging

645 topics, 4913 posts — Last Post 04/24/14, 12:21PM

Business Basics

Goals, Business Plans & Entities

836 topics, 7599 posts — Last Post 04/24/14, 08:45PM

Real Estate Finance & Legal

Financial, Tax, and Legal

Tax, Legal Issues, Contracts, Self-Directed IRA

2806 topics, 20152 posts — Last Post 04/24/14, 08:36PM

Property Insurance

312 topics, 2059 posts — Last Post 04/24/14, 10:22AM

Personal Finance Discussion

330 topics, 2754 posts — Last Post 04/22/14, 12:06PM

Loans, Mortgages, Credit Lines

Private & Conventional Lending Discussion

2854 topics, 19852 posts — Last Post 04/24/14, 09:30PM

Creative Real Estate Financing

1222 topics, 8875 posts — Last Post 04/24/14, 10:28PM

Crowdfunding Real Estate

35 topics, 463 posts — Last Post 04/19/14, 06:24PM

Real Estate Professionals

Real Estate Professionals

Real Estate Agents

1219 topics, 8057 posts — Last Post 04/24/14, 10:08PM

Bankers, Lenders, and Mortgage Brokers

442 topics, 1931 posts — Last Post 04/23/14, 09:04PM

Contractors

268 topics, 1689 posts — Last Post 04/24/14, 05:05PM

Local Real Estate

Local Real Estate

Local Real Estate Networking & Recommendations

2023 topics, 11777 posts — Last Post 04/24/14, 09:52PM

Americans & International Real Estate

162 topics, 572 posts — Last Post 04/24/14, 03:31AM

Foreigners Buying in the USA

62 topics, 409 posts — Last Post 04/10/14, 06:27AM

Canadian Real Estate

66 topics, 442 posts — Last Post 04/24/14, 09:50PM

Marketplace

Real Estate Marketplace

Real Estate Marketplace

15103 topics, 54177 posts — Last Post 04/24/14, 11:00PM

Real Estate Events and Happenings

169 topics, 2630 posts — Last Post 04/24/14, 10:58PM

Off-Topic

Off Topic

Off-Topic

2909 topics, 32451 posts — Last Post 04/24/14, 07:22PM

Housing News & Real Estate Market

923 topics, 8398 posts — Last Post 04/24/14, 09:05PM

BiggerPockets Real Estate Investing Summit

97 topics, 1752 posts — Last Post 04/23/14, 04:51AM

BiggerPockets Resources

Forums » Short Sales » WTF BofA????? credit checking sellers?

WTF BofA????? credit checking sellers?

7 posts by 5 users

Signup

SFR Investor · Scottsdale, Arizona


Some agent that hasn't figured out that working with me will be waaaaay easier :roll: posted on her FB wall this morning an article by some other dude on some Broker/agent site: blaaaaaaah

Anyways, it appears during his conversation with the BofA worker drone negotiator that the investor will pull the sellers credit to make sure they're not paying any other debts either. WTF?

Here's the link, be forewarned, I don't have any ties to this cult party: http://www.brokeragentsocial.com/GoodmanRE/blog/4631/



Real Estate Lender · Philadelphia, Pennsylvania


Nick,

We do this all the time as well. It has always been a requirement for each one of our short sale deals. We use it to determine if we should be going after the seller for a deficiency judgement or like the article mentions, a cash contribution or promisory note.

If a borrower has the means to repay their obligation but simply chooses not to, then they should not be allowed to be released from their obligation in a short sale, IMO.



Real Estate Investor · Naperville (Chicago), Illinois


Hi James,

What ratio does your company use when a homeowner is paying other debtors?

For example, the homeowner cannot pay their mortgage, however is still making car and credit card payments. Perhaps these amounts equal or are close to their mortgage amount. By looking at their financials, it's clear they cannot pay all three. In this scenario, do you require homeowners to sign promisary note?

I understand in a way, that the lenders are saying pay me over anyone else because your home should be most important. However, if the homeowner loses their car maybe they lose their job if they still have one and then really can't pay. Or if they are out of work and lose their car, then they really aren't getting a new job to catch up. On top of this, perhaps they are paying credit cards because they are then recharding the money to pay for other things, kind of like recycling the money. This is all hypothetical of course.

So where does your company draw the line in amounts being paid to other debtors? Is their a specific ratio used?

Thanks!
Danielle



Real Estate Lender · Philadelphia, Pennsylvania


Danielle,

First, I think it is important to point out that I only work on commercial properties, not residential, so maybe the rules are a little different. We do not use a specific ratio. But we do frown when we see a 600 dollar per month car payment that is on time and the mortgage payment hasn't been paid. We also frown when we see that they pay a 1000 dollar credit card before they pay their mortgage. It is not right for someone to have an 80k car and not be able to afford their mortgage payment.

Basically, we look at monthly cashflow. If they are making a ton of money every month and everyone and their grandmother is getting paid before us, then yes, we are going to go after deficiency because mortgages are collateralized debt, where as credit cards are unsecured. I think it is right that we feel that we should be paid first.



SFR Investor · Scottsdale, Arizona


James, I actually don't disagree with you one bit, especially if you're holding commercial notes.

This would be a damper in peoples 'strategic default' in residential properties. I actually kinda agree with the strategic defaults. My beef with them is some of the costs of living doesn't show on a credit report until they're late, for instance, utilities. Also, would being current on a $100 a month CC really be worth denying a short sale mortgage or a $300 a month car note



Rehabber · Tucson, Arizona


It is just due diligence. If I were to send in a financial worksheet into a lender, how are they going to verify its accuracy?

I think the numbers play a much bigger role in a loan modification than they do a short sale.

1. Does the borrower have a verifiable hardship?
2. Is the property underwater?

Generally, if the first two qualify, then they might look at DTI or look at there liquidity to see if the borrower can contribute to the deficiency.

If you are defaulting "strategically", then I beleive the lender should closely scrutinize the situation and ask for a contribution or question the borrower's choices. As a secured lender, they should indeed be paid before all other creditor's.

If I get a file and they guy has a newer car and is current on his credit cards, I tell him it is gonna cost you.



Real Estate Investor · Ohio


Nick,

It has been a while. Hope all is going well.

When I was in loss mit years ago, they always had a credit report as part of the package. It was to verify whether or not the borrower was accurately portraying their expenses and income. This is important because the analysis of their monthly surplus/deficit figures prominently into what the homeowner will qualify for. In some cases homeowners would try to manipulate their numbers to help them get a workout option they might want or thought they wanted (not that a borrower would ever do that, wink). For example, if they said the mortgage was their only bill but they had 3 credit cards, a gas card, etc., you knew they were trying to mislead and it is hard to say you don’t have any credit card bills (when figuring your monthly surplus/deficit) when they are right on the credit report with the payment histories, min payments, balance and so on.

This would apply to a short sale in that the borrower has to show unaffordability of the home before they will qualify for a short sale based on their income and expenses. In laymans terms, that means the income/expense calculation has to show a deficit, even if by just a dollar. The bank is only using the credit report for income/expense verification (and the occasional laugh in some cases).

Good investing

Mike C





Sign up