BoA REO purchase Requiring BoA pre-approval???

Question

I found a Bank of America REO that is well below market value and want to put in a offer on it. Long story short BoA is requiring that they per-approve before my offer can be accepted. Does anyone have any idea why this is a requirement and I have an existing per-approval from a different institution. I stopped doing business with Bank of America in 1999. Is there a way around this requirement?

John Chapman · Answer

Bill Gulley Yes,  a letter saying that BoA cannot finance me (in my case, it's because I have too many properties to qualify for their conventional financing.)  I have always been told by BoA people and listing agents is that the reason they want you to pre-approve with them is because they want a shot at originating the loan.

I've never been told it has anything thing to do with them making sure you can qualify for financing.   For example, BoA won't finance more than 4 properties, but other lenders will.  BoA won't finance properties that have structural issues with them, but HMLs will.  Therefore, I'm not sure what their approval process would tell them about whether I can obtain financing on the property or not.  This has just been my experience, though, so there may be other reasons.

Bill Gulley · Answer

John Chapman Yes, that is another point as well and thanks for that clarification. There are also lenders that will not finance their REOs. In my area Realtors began the same practice for listings as a clever way to serve their client, not losing a month of good marketing time to some fly by night.

Bill Gulley · Answer

John Chapman, I'm missing that, a denial letter?

This is done so that a seller does not end up taking a property off the market for a month or so while someone seeks financing and fails to qualify. The seller wants to know you have the capacity to do what you offer to do.

Last REO I picked up they asked and I had a phone call with the asset manager and the listing agent. The agent knew me and assured them I could follow through so that just was not an issue. Just make them feel good about the deal as time is money to them or any seller.

John Chapman · Answer

I've  dealt with this a lot.  What I have done is just gotten a generic denial letter from a BoA loan officer that I just resubmit every time I make the offer.  If you submit this with the offer, I have found that they do not require you to go through the approval process.

Jonna Weber · Answer

I've run into this twice.  It is a big pain to go through..but though they require the letter, they ultimately didn't require us to use them as the lender.  The first time, they approved us (although we wound up not purchasing the property), and the second time, they denied the approval  even though we had the credit/income needed.  This was based solely on the fact that we had more than 4 income property mortgages.  It is a silly game..but we played it anyway. You can choose to submit an offer without the letter, but I would be very surprised if they accepted it.

Mark H. · Answer

I've just ignored those instructions in the past and submitted my own pre-qual letter with the offer... I've never heard a peep, except on a nation star short-sale, they were grumpy about it but they caved after a couple of really grumpy emails.  In my case my financing was rock-solid, but all the pre-quals generated hard pulls to my credit, and my scores were dropping.

BoA REO purchase Requiring BoA pre-approval???

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