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RE: Successful Short Sale Closing with BOA

Licensed Real Estate Agent

Laurel, MD

December 05, 2009

I settled a short sale with BofA a year ago. The original loan was 80% of $708,000. The house was 2.5 years old. There was a divorce and a job loss involved in the hardship situation. BofA would not pay any closing help to the buyer. (I think I got them to pay all of the transfer and recordation costs which would have been more than 1.25% in that county. The total is close to 2.5% and although it is negotiable, usually the cost is split between the seller and buyer.) BofA paid $3K to the second, which was a HELOC that had actually been used to improve the property (flooring, granite for about 30+ feet of counter tops,etc.). The net to BofA was about $490,000. The house had dropped in value from $708,000 to less than $550,000.

The process took about 8 months. We ended up getting a buyer who wouldn't agree to BofA's sales price to come back and buy the house after we had an approval for another buyer who walked. We'd had at least three other buyers under contract who couldn't wait for various reasons or developed credit issues while waiting.

Interesting to see the posts indicating that BofA is now willing to pay closing costs. I don't know if those loans were originally Countrywide loans. Countrywide was paying closing help on their foreclosures last year (merger wasn't complete) while BofA would not pay closing. One buyer under contract was getting a new BofA loan and a letter from her BofA loan office explaining while this seller needed closing help did not get them to budge at all. We would have settled for a net at least $25K more and 4 months earlier if BofA would have paid that buyer's closing.

I did go up the chain a few times to supervisors, with inconsistent results. In the end, a supervisor told me the short sale was approved and I had to go back to the assigned negotiator and beat on him verbally until he produced the letter. I did better calling in the evening to get through to a supervisor. That BofA office did work on Saturday so I was also able to be on hold on Saturdays.

My sellers still have not heard whether BofA will be pursuing their deficiency. Maryland is a recourse state and BofA has up to three years to come back after them. I was lucky in having one of the sellers being a CPA. She was on BofA as much as I was. Based on my short sale experience this year, the seller(s) taking ownership of the problem and being cooperative is critical. I am going to be much more cautious in screening sellers that I will work with on short sales going forward.

Things have changed so much in the last 12 months that I don't know how helpful the story of this short sale will help. But I hope it will help someone and at least encourage some of us to hang in there.

I just saw stats from a banking group that 1 in 7 Americans is delinquent and 1 in 22 homeowners are in the process of foreclosure. This situation is not going away anytime soon.

Sherry Young

Licensed Real Estate Agent

Valrico, FL

December 06, 2009

I am here to state that I have in fact closed 2 ss with BofA (aka a B of $%@#@)'S

http://activerain.com/blogs/armandoruiz

One agent suggested that the title of my blog should be a comment I made ," BofA can't find their rear with both hands". Sorry for the color but if you read on you will understand.

This would be an update to my blog. On the Springway file it cooked for about 4.5 months, clean contract. Swore that this would be be last ss listing, That was in April .

The second one would try the souls and sanity of many. I took the LISTING in Dec. 2008 I wrote the contract in Jan 2009, CASH SALE! NO CONTINGENCIES!! That one closed 11-15-09.

Got 2 more pending and both look like we may close in 4-6 weeks. Mind you one has been listed for 17months and has had 8 CONTRACTS AND 8 BUYERS WALK!!!

Best suggestions.1. Be persistent 2.Call weekly 3. Ask for names,emails,phone #'s 4.if you fax , fax no more than 10 pages at a time. 5 try to email doc's PDF. 6. TRAIN YOUR SELLERS to cooperate7. TRAIN YOUR BUYER TO be patient 4-6 mts is the norm. 8. GET THE BUYER TO make an escrow deposit upfront, set a time table for a reply (refer to #7) without any skin in the game they lose int rest.

I have learned a lot this year with my 4 BofA ss files. It is clear that we as Realtors can not shy away from this horrible situation that our clients are in just because we have to deal with the likes of a company like

B of @##%@%'S

Licensed Real Estate Agent

Hopedale, MA

December 07, 2009

Your deals sound soooo familiar! BOA has no respect for what we are trying to do for them, and everyone else in the deal.

I made a suggestion to the last negotiator I dealt with. I'm wondering if any of us might know a path to the top of BOA where someone might see the value of what I suggest....

There are Realtors, like us, who have elected to be part of the solution to the housing mess this country is in, by becoming experts in handling short sales. Although we normally work for the seller, in a short sale, no matter what deal we come up with, it doesn't change the sellers outcome. Hence, in reality, we work for the lender who is taking the short sale.

My suggestion to BOA was/is to certify certain agents, skilled in mitigating short sales, to mitigate their short sales. Basically appoint field negotiators who can put together a short sale package that should be approved. Then when we do present it, make it easy to get an approval.

I see unqualified Realtors trying to negotiate short sales. They stumble along but very few actually make it. The sale fails or it gets turned over to a law firm to negotiate.

Law firms handling short sales... what a cash cow for them. Their may be an exception out there but the ones I've dealt with are like the following. They work in volume and plan on a certain % to make it. Their focus is on the bottom line. They don't seem to care about being part of the solution, they want to be part of the gravy train.

I negotiate short sales for other agents. There is one lawyer I try to work with who is fair and keeps his fees in line with the work he does. But other times, I have to work with a lawyer which my clients, or the Realtor picks. Then you see the fees go up and every charge gets padded. I added the excessive fees and pads on one HUD1 I submitted, prepared by the lawyer, and they were going to clear over $4,000 on the deal. And the sad part is that the banks never seem to question the legal fees!

Back to my proposal to BOA.... Certify certain agents in areas to represent the bank in short sale transactions. As agents, we know what is reasonable for our area. We can bring the bank the right best deal right away.. the right price, right conditions, right law firm (or title company) to handle the sellers side, etc. We can get paid a flat fee per short sale, similar to how lawyers get paid, from the proceeds of the sale (I currently [try to] get $3,000 to negotiate a short sale but have been questioning my sanity as I see the time spent out distancing the compensation). The bank then only has to briefly review the deal and doesn't have to harass us like is done now.

This sounds like a win-win for everyone. What do you think? Anyone know who at BOA we could present this to who would have the authority to do something about it?

RaytheRealtor

Licensed Real Estate Agent

Louisburg, KS

December 07, 2009

Ray has described a common sense win-win option that may make too much sense for the banks to adopt it. There must be more involved than we see otherwise the present system would have been scrapped a long time ago. It's a broken system. Everyone loses, even when they think they have won.

The Sellers who enter the Short Sale process have already lost their home and are now just hoping save a small measure of respect and credit worthiness.

The Buyers are unable to count on if or when they will gain bank approval for a deal that has already met the market test which is usually the one that matters in a real estate transaction. So many of the buyers walk after a wait that seems to have no end. They lose.

The Seller's Agent spends far more time earning the commission that too often is reduced by arbitrary and capricious negotiators for the lenders who have no idea what a real estate agent does and how the system would be impossible without professional agents who continue against all odds to help their clients. Hard to say they win.

The Buyer's Agent who presents an offer on behalf of a client is faced with daily calls from the buyers seeking any news and pressing for an answer the agent does not have to the question, How much longer will it be? When the answer finally comes the buyer's agent learns that a nameless, faceless operative has arbitrarily reduced the commission promised by the listing. They may also find that the buyer has now decided to walk, their exclusive buyers agent agreement having expired, and have nothing to show for months of holding their client's hand. They lose.

And finally the bank loses. If they end up close to where they started 4, 5, 6, or ? months earlier they lose. If the short sale is lost and foreclosure proceeds, they claim it costs them $40,000, $50,000 or more. How can they call that winning?

If Ray's proposal doesn't suit them, how about a government imposed or self-impossed 90 day limit on the banks for making a determination. How about a rule that banks have 90 days maximum to deny approval from the day a complete package is submitted. If they do not respond in that period of time, the deal is approved.

John
John E Cleek, Ph.D., REALTOR®
e-PRO, ABR, SFR, CSP
Education and Marketing Consultant
Licensed in Kansas and Missouri
Crown Realty of Kansas
Pho: 913-709-4423 • Fax: 913-837-2549
Finding the RIGHT REALTOR . . . Priceless!

Do something for somebody every day for which you do not get paid. -- Albert Schweitzer

December 07, 2009

armando,

thanks for the post. I love this short sale group, it helps educate me and i appreciate your suggestions. congrats on closing 2 and good luck with your next 2.

Nisi Maile,

St. George Utah

Licensed Real Estate Broker

Lighthouse Point, FL

December 07, 2009

Thanks to everyone who posted!!! Armando, thanks for the good details. Catherine and Gael, since it seems like you guys have been the most successful of the group with BOA, BAC, Countrywide and have more info...would you mind posting a little more details...not case by case but any special instructions, specific difficulties, average time, did you fax or email package, what you included in your packages, etc. ANYTHING that might help the group. Thank you very much and thanks again to EVERYONE that participated!!!

Licensed Real Estate Agent

Norco, CA

December 07, 2009

I have had 3 closed short sales with BofA and have 4 more in various stages of negotiation right now.

Of the closed sales we had-
  • loan balance 545K, sales price 359K
  • loan balance 944K, sales price 549K
  • loan balance 595K, sales price 425K
Each of these had been approved without the sellers contributing to the closing. Consistently BofA takes approx 4 months to get the approval letters. This includes at least weekly calls to BofA for updates and escalations. One of the approved sales had three different offers submitted on it as the buyers kept walking away due to the length of time it was taking BofA. I had learned through that process, from BofA, that as long as a replacement offer was within 5K of the original offer it was very easy to replace into the existing working file and continue on. If the difference was more than 5K then the short sale file would need to be started over from step one.
I have also figured out that BofA has 3 levels to their short sales-
· Phase 1 - this is where all of the initial paperwork is reviewed and BPO ordered.
I almost never can get any response from this level negotiator and have good luck getting this level escalated to level 2 after two weeks without response to emails.
· Phase 2 - this is where you will get the approval and is usually the longest process. I have had my phase 2 negotiator changed several times on me before but have had very good response from this level even if there is not any info to provide the negotiators seem responsive.
· Phase 3 - closing phase! After the short sale is approved and the letter(s) are issued the file is now assigned to the closing dept. This is who will get the final HUD, issue extensions, deal with minor closing cost issues. By minor closing costs I was told if costs were within $2500 it was relatively easy to have them approved and added into the approval letter. All though the file I needed adjusted did not get reapproved because it had to do with property taxes and BofA had already paid all delinquent taxes.
All in all I do not mind BofA files. Once you get used to them and have an understanding of their process the stress level goes down. I caution all of my sellers and buyers of the time frame I have been seeing from BofA up front and work with that. I have found for the most part that the folks I talk to on the phone are very nice and helpful. When I am frustrated with the process I am still nice to the person on the phone but let them know what I am dealing with. That seems to be when I get the best response including the phone reps email address so she can submit my subsequent offers directly as the file is escalated again!

Licensed Real Estate Agent

Pinellas Park, FL

December 08, 2009

Quoting :

I have had 3 closed short sales with BofA and have 4 more in various stages of negotiation right now.

Of the closed sales we had-
  • loan balance 545K, sales price 359K
  • loan balance 944K, sales price 549K
  • loan balance 595K, sales price 425K
Each of these had been approved without the sellers contributing to the closing. Consistently BofA takes approx 4 months to get the approval letters. This includes at least weekly calls to BofA for updates and escalations. One of the approved sales had three different offers submitted on it as the buyers kept walking away due to the length of time it was taking BofA. I had learned through that process, from BofA, that as long as a replacement offer was within 5K of the original offer it was very easy to replace into the existing working file and continue on. If the difference was more than 5K then the short sale file would need to be started over from step one.
I have also figured out that BofA has 3 levels to their short sales-
· Phase 1 - this is where all of the initial paperwork is reviewed and BPO ordered.
I almost never can get any response from this level negotiator and have good luck getting this level escalated to level 2 after two weeks without response to emails.
· Phase 2 - this is where you will get the approval and is usually the longest process. I have had my phase 2 negotiator changed several times on me before but have had very good response from this level even if there is not any info to provide the negotiators seem responsive.
· Phase 3 - closing phase! After the short sale is approved and the letter(s) are issued the file is now assigned to the closing dept. This is who will get the final HUD, issue extensions, deal with minor closing cost issues. By minor closing costs I was told if costs were within $2500 it was relatively easy to have them approved and added into the approval letter. All though the file I needed adjusted did not get reapproved because it had to do with property taxes and BofA had already paid all delinquent taxes.
All in all I do not mind BofA files. Once you get used to them and have an understanding of their process the stress level goes down. I caution all of my sellers and buyers of the time frame I have been seeing from BofA up front and work with that. I have found for the most part that the folks I talk to on the phone are very nice and helpful. When I am frustrated with the process I am still nice to the person on the phone but let them know what I am dealing with. That seems to be when I get the best response including the phone reps email address so she can submit my subsequent offers directly as the file is escalated again!

This is so well thought out and helpful to Realtors dealing with BoA!!! MUCHO THANKS TO SUZANNE.

Jennie Blackburn

www.stopforeclosurenow.com

AMERICAN FORK, UT

December 09, 2009

Thanks for your very helpful posts. I have a short sale with BofA that has been assigned to a Phase 1 negotiator for 5 weeks. No response other than she apparently did postpone the first foreclosure from Nov. 10 to Dec. 22. This is a Fannie Mae loan with no second mortgage, originally through Country Wide. How do I get this file escalated to phase 2 and does it do any good to contact Fannie Mae and, if so, who or where do I call at Fannie Mae?

Licensed Real Estate Agent

Ontario, CA

December 10, 2009

Brett, Fannie Mae has stalled the process for every lender, not just B of A. The are backlogged for over 2 months. You are lucky that your file made it to Phase 1.. You have to look at this way.. a file cabinet at a negotiator desk (or their inbox on their computer) can only hold a certain number of files and many of those files are waiting approval from Fannie Mae. When a file is moved from the "cabinet" then it can get a new one. There are thousands of short sales pending with Fannie Mae, so it will do you little good to call them. Best you can do is educate all parties and sit back and wait

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