October 19, 2011
Yippee! We finally have an offer that looks like it will stick. So on Monday I submitted the offer to B of A and a complete short sale package to the new servicer for the 2nd lien holder. As you may remember, the borrower had already started the process for the Bank of America Cooperative short sale before we even put the home on the market, so at this time the only items requested by B of A include the offer and an estimated settlement statement.
So the clock started ticking on Monday, October 17. Let’s see how long this process really takes. Bank of America of course advertises that their cooperative program is executed more quickly than a traditional short sale….
Yesterday, I received an email from B of A notifying me that the original negotiator to whom I had emailed the offer and HUD statement had been promoted and she would no longer be my contact. A new negotiator has been assigned and I was assured that the file would be passed to her and that I could expect to hear from her shortly. Nothing so far today….
September 20, 2011
Well, probably not a show we’ll see in the new HGTV line-up, but reverse staging is a form of short sale fraud that is becoming increasingly common. Unlike traditional staging where a home is de-cluttered and dressed-up to present the best possible appearance, reverse staging accentuates the negative features of a home. Reverse staging is part of an attempt get a low Broker Price Opinion (BPO) of the actual value of the home by inflating repair estimates and making the home appear to be in greater disrepair than might really be the case.
A Broker Price Opinion is a mini-appraisal, ordered by the lender in a short sale to determine how much they should expect to recoup from the sale of the property. It is ideally performed by a real estate broker or agent who is familiar with the market and is a critical component of the short sale process. If a BPOcomes in above fair market value it becomes more difficult to get a short sale approved, as it is likely the lender will want to hold out for a high offer in line with the BPO.
Trying to manipulate the BPOto reflect a below market price is usually done to accelerate a sale. However it is also done by agents who will hide a higher offer from the lender, rig the sale, and then turn around and flip the property for a profit. No two ways about it….this is fraud.
In most every short sale transaction all parties are asked to sign an “Arms Length” Affidavit that acknowledges that there is no fraud in the sale of the property. As a short sale agent, it is my ethical responsibility to protect the best interests of my clients – this includes protecting them from any involvement in a fraudulent sale. So, reverse staging might help short sale a home more quickly, but it could also land you in jail.
August 29, 2011
With short sales accounting for over 17% of all sales in July, and thousands of homeowners upside down on their mortgages, the California Association of Realtors believes that short sales will be a part of the real estate market place for years to come. Economic growth just isn’t happening quickly enough to keep pace with the number of homeowners who are sinking closer to foreclosure with each passing month. For many, opting to sell their home in a short sale is the best option because of the less damaging impact on their credit. But agreeing to list a short sale can be the start of an uphill battle for the Realtors involved.
One of the biggest issues facing short sale transactions is the time involved for even a preliminary review of the offer and submitted documentation. This step alone can often take one to three months before the lender even assigns a negotiator to the file. Another annoying reality is lost or misplaced documentation. With many lenders one feels that there must be a trash can on the other end of the fax machine as requests for the same documentation are made over and over. All of this takes time…and the buyer is often out there still looking for something they can buy more quickly, with less hassle.
The California Association of Realtors has recently sent urgent requests to the heads of all the major lenders, JP Morgan Chase, Bank of America, Citigroup and Wells Fargo with recommendations about how the whole process can be streamlined. A few of the items requested include:
As a dues paying member of C.A.R. and a Realtor in the short sale trenches I’d be thrilled to see even one or two of these recommendations become part of lender procedure. In the meantime, I’ll just be the one on the phone politely nudging them along, every step of the way.
May 30, 2011
In March of this year, I reported on the newly introduced Bank of America Cooperative Short Sale Program. As noted in that post, the two key elements of this new program are the relocation fee of $2500 paid to the sellers, and the timeline. Instead of waiting for the short sale seller to find a buyer, this program was designed so that a seller could submit all paperwork in advance and be approved prior to a purchase offer. According to Bank of America, by approving the property value and seller hardship up front, this would decrease the amount of time needed to process the actual sale and approve the buyer once an offer is presented to the bank. At that time, the bank indicated this would shorten that approval timeframe to about 10 days.
So when my negotiator called last Friday to let me know that Bank of America had determined that one of my files might be eligible for a Cooperative Short Sale, my first thought was, “Great!” I figured that we’d be able to get this closed quickly as we already have a strong buyer, and my sellers would receive $2500 to help with moving costs.
I then asked about any down-side to my sellers accepting the Cooperative Short Sale versus a traditional B of A short sale, and my negotiator’s response was surprising. She said that in her experience, (and she has been a full-time short sale negotiator for several years), the Bank of America Cooperative Program takes about 6-8 weeks LONGER than their regular short sales. Longer??? The normal B of A processing time is 6-8 weeks, and now participation in this program would essentially double that? According to my negotiator, the reason it takes longer is because there is a more intense review of all seller financials – probably needed to justify the $2500 relocation payment.
My first thought as a Realtor protecting my seller’s interests, is that participating in this program could double the chances of a buyer to walk! It is hard enough to keep buyers waiting 6-8 weeks for an approval, but to extend that period for another 2 months is asking for trouble! I have also heard it rumored that by performing a more intense financial review B of A is actually looking to see who has sufficient assets to target with a deficiency judgment. I don’t have any evidence to support this, but it could pose a potential risk if there is any question as to whether or not the seller’s loan is protected under the state’s anti-deficiency laws.
I presented the choice to my sellers who quickly decided that the risk of losing their buyers was not worth a $2500 gamble. Who knows? Their file might have been processed quickly, but on the other hand we might have ended-up back at square one looking for a new buyer. It is definitely a choice that each seller will have to make based on their unique situation. If anyone out there has experience with this B of A program, I’d love to hear from you!
Inside San Diego Short Sales 