Understanding B of A’s Short Sale Process

Posted on June 18, 2010. Filed under: First Time Buyer help, Home Seller Tips, Lenders & Loan info, Orange County Real Estate, Orange County Short Sales |

B of A  Short Sales – What every party needs to know!

Today I’m taking a few hours out of the busy day to listen to Allen Seelenbinder, a VP with Bank of America, tell Realtors how to work better with B of A to get our short sales closed quicker.  Definitely good use of time, because short sales take waaaaay too long!!!  For Realtors looking for Equator tips, check this post.

Allen said the goal of the bank is to help preserve homeownership, they WILL attempt to modify your loan & help you stay in your house if you want to.  It’s part of being on the HAFA program, and you can even try multiple times if you get denied on your first loan mod request!  Good news if you’re late on the mortgage & want to keep your home, but you have to keep communicating & trying.

BUT…Did you know 60 percent of all loan modifications fail in the first 9 months?  Yikes, make sure you are working with a professional modification specialist so you are not a statistic!   Most times if you default on your modification, you’re not going to get another one, and its time to short sale.

For those who can’t afford the mortgage, & don’t see light at the end of the tunnel soon, you have options…

1.  Deed in lieu – leaving your home and giving the deed back to the bank willingly
2.  Foreclosure – defaulting on payments until the bank is forced to take your property back
3.  Short sale – selling your property for less than it is worth

Short selling your property will allow you to buy again sooner than if you get a foreclosure, so its a good option.  BUT, its complicated, so you need a good Realtor who knows what they are doing to help.

If you’re drained on the process, please keep trying.  If you allow foreclosure, your credit will have a huge hit, and you know how important your credit is!  Allen warned many times employers are looking at your credit as a gage on your responsibility, fight to keep it in tact as best you can!!

Short sales are the new normal!  Buyers, sellers, investors, Realtors, & banks need to work together 🙂  There are over 6 million homeowners late on their mortgage right now, and many more projected in the upcoming months.  Short sale will continue to be a household term for the next few years, unfortunately.

Why is the short sale process so long?  Well…theres a lot of hoops to jump through:

  • the process doesn’t begin until an offer is received, you could have a sign in the yard for months.
  • an appraisal & bpo must be done
  • the offer must reasonably meet current market value
  • the buyer must qualify
  • the seller must demonstrate hardship & provide documentation
  • arms-length has to be proved (that means sellers aren’t in cahoots w buyers)
  • the mortgage investor must approve the offer
  • 3rd party approvals (mortgage insurance, helocs, second liens.)

Unfortunately, there is a lot of red tape to untangle.  Buyers need to be prepared for at least 60-120 days for close, and agents from both sides need to constantly keep communication lines clear and all parties in the transaction updated.

What is financial hardship? Its better to say what it is not.  Financial hardship is NOT that you are under water on the property, that is simply a bad investement.  Its also not hardship if you can’t get a renter.  If you are widowed, but have assets, death is not financial hardship, its emotional hardship 😦  there are a lot of people now trying to claim hardship when they do not have truely have one.  You need to be able to show your hardship on paper.

One of the biggest challenges right now is getting 2nd loans, liens, and MI to reasonably come in line with the short sale loss.  Sellers, be prepared for agents to ask questions about ALL loans & liens on the property, and please offer up front and honest answers.  There’s going to be some back & forth necessary between the parties you owe $$ to.

Want to know if you are eligible for HAFA?  Check bankofamerica.reo.com/hafa to make sure you qualify!  B of A is also working on a program similiar to HAFA, but with better guidelines, called the Cooperative Short Sale.

B of A Cooperative short sale

Yes, its still in the works, but its pretty good!!  It will:

  • proactively outreach to customers
  • offer preapproved short sale pricing
  • promise offers reviewed/approved within 2 weeks
  • be similiar to hafa, but wider scope
  • rollout hopefully August 1st

Banks including B of A are all trying to make the best of our current market, and short sales are a huge percentage of it.  Look for more posts (and videos!) soon to help you through the short sale process.  If you or someone you know is late on their mortgage, The Weeks Team keeps everything confidential and we will be happy to discuss options!  877-230-3211 or info@successinweeks.com

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    Orange County, CA Real Estate for hip first-time buyers and investors. Plus, fun things to know and do in OC.

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