Bank of America Short Sale!

Foreclosures
15yFollow

Bank of America Short Sale!

Ayo F.
Houston, TX · Member since 2011 · 50 posts · 8 votes

Hello BP Experts,

I am about to start a BofA short sale. The property is a 4/2/2 in a good neighborhood. The balance on the loan is $97,000 and the house is worth $100,000 after repair. It will need some updates. I have not gotten an estimate. Seller is 4 months behind and wants to do a short sale. It is a conventional loan.

Please, I need some guidance with the listing and drawing a purchase agreement.

It is my understanding that BofA requires offers be submitted via an agent through a system called Equator (whatever that is).

1) Do I get the house listed by an agent BEFORE i draw up any purchase agreement or should I get the purchase agreement signed first then get an agent to get it listed?

2) Who does the negotiation in this case? Me or the Agent? I prefer to do the negotiation but will the agent agree and will the bank agree?
3) Whose name should be on the authorization to release loan info? Agent or me?
4)Does it make sense if an agent says, the bank determines what the listing price would be on the MLS?
5) What is the general consensus as to... does the agent present a higher offer to the bank or withholds that offer? Is that hiding facts that can influence the bank's decision as to whether to accept or decline my existing offer? Will this be fraud?

Thank you.

0Reply
22 views

8 Replies

Jump to latestLatest
  • Maryann L.
    Specialist · MA · Member since 2009 · 858 posts · 306 votes
    15y

    1) the house needs to be listed and dated before the purchase contract is signed
    2)anyone the homeowner designates can negotiate depending on the laws in your state. The law in your state MAY require licensure for short sale negotiation.
    3)whomever is negotiating is going to be the authorized party - They will need to be licensed in order to access Equator
    4)Depends on if it's a HAFA short sale and traditional. The bank will determine the "approved" price in a traditional short sale but not the list price. They determine the LIST price in a HAFA short sale.
    5) The agent can only submit ONE offer at a time...not multiple contracts. if the first offer is rejected they can then go onto the next offer. It is only fraud if the higher offer was signed first and then a lower offer is signed next and submitted to the lender out of order. DO NOT HIDE FACTS from the lender. If you are planning on reselling this property immediately for profit, you MUST disclose that.

    0Reply
  • Ayo F.
    OP
    Houston, TX · Member since 2011 · 50 posts · 8 votes
    15y

    Thank you Maryann!
    Ok, so I would like to negotiate my own deals. I do not want to leave that task to an agents. IMO, agents think 88% of BPO is a good deal. they can move the property and get their commission that way. For the most part, that leaves the investor with nothing and no cushion in case property values continue to slip further downwards. How then to I handle a case where an agent needs to list the property and also access quator BUT I want to do the negotiation and also be the one who meets the BPO agent at the property?

    Which do you think is better, HAFA or Traditional Short sale?
    So do I then include something like this in my purchase contract.....Seller is aware that buyer intends on reselling the property for a HUGE PROFIT....?

    Also, isn't it against the law to give the seller money or portion of any existing equity ?

    0Reply
  • Ayo F.
    OP
    Houston, TX · Member since 2011 · 50 posts · 8 votes
    15y

    Which do you think is better, HAFA or Traditional Short sale?

    Should I include something like this in my purchase contract....."Seller is aware that buyer intends on reselling the property for a HUGE PROFIT"....?
    Would that suffice for full disclosure to the banks? If so, would the bank still be open to giving a steep discount?

    Assuming the bank requires the property be listed by an agent, who do I list on the authorization to release information? Me or the Agent?

    0Reply
  • Maryann L.
    Specialist · MA · Member since 2009 · 858 posts · 306 votes
    15y

    BOA is going to require someone licensed to negotiate the deal, so my suggestion is either hire a 3rd party firm to negotiate, or find a Realtor you trust that is investor friendly that can do it. If you are unlicensed you won't get into Equator which is their main platform to work the short sale.

    I am not a fan of HAFA because the "lender" sets the list price and it's usuallly grossly inflated. So if FMV for a home is $150,000 I've seen the lenders want $170,000. It makes no sense. HAFA is a government run short sale program and it favors the lenders. Since it's inception they've only successfully completed approximately 8000-9000 short sales. The top lenders combined in the same timeframe have completed well over 100,000 traditional short sales. The part that's interesting with the 8000 through HAFA is they don't break out how many they took back deed in lieu. They give the total of short sales AND deed in lieu, so realistically that 8000 number is even skewed. A deed in lieu is just as damaging on a homeowner's credit report as a foreclosure.

    Hafa will put a restriction on the deed that you cannot sell the property for 90 days. The good thing about the program is there is the lender (primary lender) will not pursue the deficiency, however, the secondary lender can. The homeowner also gets $3000 for relocation expenses.

    We HAVE been able to get a payout to the homeowner through a traditional short sale, but not through BOA. BOA has an addendum that they will make you sign stating the homeowner gets NO $$$. So I wouldn't even attempt trying to get the seller $$ as it could be interpreted as fraud. The addendum itself is a joke and poorly written so you'll need to really read it well and change what you feel you cannot comply with.

    You need a disclosure stating you are reselling immediately for profit (are you doing a back to back or rehabbing?) If you are rehabbing the deed restriction likely won't matter as you may not be in and out in 90 days. If you are doing a back to back you will want to do a traditional short sale.

    The authorization with have the negotiators name

    0Reply
  • George P.
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    15y

    BOA has the worst short sale process. all realtors run away from them.

    they can take 1 yr. Id never touch a BOA property.BOA in general is one of the worst company to deal with.

    my $.02

    0Reply
  • Eric Mieles
    Involved In Real Estate · Orlando, FL · Member since 2011 · 8 posts · 1 vote
    15y

    Actually Homer believe it or not BOA has made tremendous strides in their handling of short sales. In a recent survey they were ranked one of the beter banks to do short sales with and several other lenders have fell behind.

    Traditional short sales have sped up while initiating a short sale via HAFA has been horrible. BOA will use outsource companies such as LRC, AMS and UTLS to handle the huge demand of HAFA requests.

    Part of the problem will also be inexperienced agents/negotiators handling the files for you and not doing there due diligence up front.

    For exampleletssay your waiting on a deal to happen and the seller is going thru BOA HAFA and the agent/negotiator has submitted full package, has kept up equator tasks, been updating everyone only tone 4 months in and get HAFA approval yet didn't check if the loan had PMI and the PMI company does not participate in HAFA. All efforts went for nothing.

    Here in lies the problem and thus time delays, frustrations and no deal!!! I strive to learn as much as possible and go through a discovery/due diligence period on all short sales upfront.

    0Reply
  • James Martin
    Property Management · Memphis, TN · Member since 2009 · 668 posts · 362 votes
    15y

    Homer is right, I have been working on one now for 6 months that was already approved when we made our offer. Took 1 month to get offer accepted. It has been a waiting process since then. This will be the third short sale we bought from them thru their reo agent.

    0Reply
  • Jeff Coga
    Developer · Hollywood, CA · Member since 2011 · 81 posts · 29 votes
    15y

    BofA is no longer the "black hole"... when I started in SS 2 1/2 years ago... CW days... all the files disappeared in a black hole... now you have some structure to the SS process. Now bofa is one of the best (they all suck... some way and form)

    Just remember this... (two things no-one and 95% of folks who does ss don't talk about)

    1- Run a GI (general index) search on the borrower to make sure they don't have other judgments against them... why is this important? Because.. Things like IRS liens, personal abstract judgments don't show up on a prelims but will pull up when you run a SI (statement of information search... unless you get this all upfront-which is best)... this means... you will have to get the IRS to do a lien release or negotiate with other creditors for a release so you can close... you want to make sure you're not working on deals where the seller has other judgments. Which adds complexity to the deal... especially when the 1st don't agree to pay the "3rd or 4th" lien and you have to pay out side of closing... in that case.. someone can argue that is RESPA violation ;)... so it's a touchy touchy area...

    2 - Make sure home doesn't have MI (mortgage insurance)... these guys will kill your deal if you have MI on the loan. Why? Because... when a lender "ok" a short sale... and it closes the lender will file a claim against the MI companies... when the claim comes in the MI companies MUST pay out... that is #1 reason why MI companies will ask the seller to sign off on ridiculous p-notes... or won't even accept the SS. If the property goes to foreclosure the bank will not be able to file a claim until it sells as an REO... so you're kicking the claim down the road...VERBATIM from an MI company negotiator "We won't accept this ss offer because the claim bank of america will file if we approve this ss" (About 2 years ago MGIC told this to my negotiator... and we had it on speaker phone and I almost fell out of my chair)

    JC

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free