Real Estate Investor · SPRING HILL, FL · Member since 2009 · 12 posts · 0 votes
Since they instituted a clause in their approval letter that says they will rescind the short sale transaction if the property is resold within 30 days . This is provision # 10 in their short sale approvals which is policy they adopted from countrywide when they acquired them.
If you have your title agent or attorney challenge this verbiage, BOA/COUNTRYWIDE will usually replace # 10 with a new clause that is even more broad based and prohibitive for flips/resells.
has anyone else experienced this? , or challenged this successfully?
Rehabber · Tucson, AZ · Member since 2008 · 1k+ posts · 802 votes
16y
Originally posted by H Mann:
I offered 275k on a BofA property. They countered with 370k, which I'm guessing is their BPO.
What do I counter back at? 80% of that? 82%?
I agree with Will... You need to know how much the property will sell for quickly. This is where your listing agent should be helping.
Secondarily, you cannot assume BOA is countering at the BPO valuation. BOA does not always counter at the BPO. Sometimes they counter above, at or below. Where did your market analysis say the FMV is? Assuming the BPO came in at $370K, is that accurate? What are distressed comparables selling for?
Thirdly, it is a fallacy that lenders will automatically discount up to 80% of the BPO.
Instead, substantiate your offer with anything that shows they will NET less as a foreclosure than would by selling to you. At what discount to FMV do homes sell for at the courthouse steps? How much have REO comps sold for? How much is the average foreclosure cost in your area. What are the carrying costs? Does the property need any repairs?
You need to know what it will cost them to foreclose an how much they can expect to NET as a result. After all, this is the formula they base their decisions on.
Lastly, based on your numbers and adding extended financing via Will and 6% commissions, closing costs, a 5% price discount to the end-buyer, then 80% is probably a loser. I think you would be leaving a lot of money on the table if you settled for 80% of BPO.
Real Estate Investor · New York, NY · Member since 2008 · 105 posts · 69 votes
16y
Resurrecting this post.
I just read a blog post from an attorney in New York which provides the actual memo from a title insurer that will not underwrite with the anti-flip language.
Has B of A been removing the language upon request or are they still not playing ball?
Blog Post: http://www.nyrelawyers.com/2010/01/short-sales-no-flip-clauses-in-the-approval-letter-removing-a-roadblock/
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
16y
Unfortunately for all, including John M in the video, what you explains you must do does not work very often. In fact, rarely. Why - because you can have your title company send all the letters you want to the short sale lender stating they can not insure this transaction, but ultimately, Bof A will tell you to go take a long walk of a short pier.
While they have no legal grounds to stand on, they get away with it because A) the title companies will not insure and B) they DO have the right to NOT accept yoru short payoff.
Your real options are to get your attorney involved and threaten lawsuit since they have no legal gronds to make these ridiculous stipulations.
If I sell you my house or car, I have no legal right to tell you that you can not re-sell it for a specific period of time. Once it is yours, it is yours to do with what you choose.