"I have a property that I am trying to do a short sale for. The realtor that I am working with is not able to negotiate with Bofa (heloc) to settle the account. They want to take $5000 in cash to release the lien but charge-off the remaining balance (about $200,000). Do you think you can help me on this case?"

Thanks,
Natalie

Hello Natalie,

Very common set of circumstances relating to a BofA HELOC account engaged in short-sale review; actually this is their standard resulting resolution.  Unfortunately, they almost always include a clause regarding the deficiency in the approval docs, its standard.  I always instruct people that BofA will likely always include such a clause in the fine print so to speak.  However, the clause does not sucinctly state that they WILL pursue these monies, rather only that they preserve the right to do.

This is important because the reality is that they rarely do.  You must understand that it is about mitigation of loss, loss management.  Whereas, they concede their will be a loss, however they will take measures to ensure the loss is mitigated somewhat; to whatever extent possible.  Pursuing you for a deficiency costs the institution money.  That expense, which can be considerable, is internally attributed to that file thereby increasing the accrued loss for them on your loan.  Its really case by case Natalie; whereas if its finacially economical, justifiable they will consider exercising their options and avenues to pursue.  If it is not, then they won't.

Example; if they are already absorbing a fiscal loss on your file of say, $86k, how much economic sense does it make for them to incurr another $15k in expense to chase the $86k?  Those "risk vs. recovery" formulas are closely guarded secrets for them and I can only speculate.  But at some point, at some number or threshold it no longer makes sense to them.

The higher the balance, the higher the liklihood they may pursue.  But having a high deficiency does NOT ensure that they will.  They will always preserve their right and ability to do so shuold they choose.

Couple of variables will dictate whether or not your Realtor can get any movement from them.

1 - Has the account been charged-off yet?  If so, it will be in the Recovery Dept.

2 - What is the total outstanding principle?

3 - WHO IS THE SR. LIEN HOLDER??

4 - What is that Sr. lien remaining principle balance?

The answers to these questions will determine your probable outcome.  You should confer with your Realtor and share the following information I offer to you.

From the questions above:

1- Important to know because it determines in which dept your file is to be reviewed for short-sale; either Loss Mitigation/Home Retention, or.... in the event of charge-off status, the Recovery Dept.  Each dept has separate criterion/protocols for handling short-sales.  For example; Home Retention will start by requesting 10% of the principle as cash at closing to provide Jr. lien release.  Recovery will start at 5% of Purchase value.   On most files, if you do the math you will note that the Recovery dept formula is much more expensive for YOU.  However, it has been my experience that Recovery dept. is preferrable compared to Home Retention.  Recovery dept personnel:   - have much greater flexibility and autonomy to make immediate decisions - they are much more attentive, likely because they are each handling far fewer files than their Home Retention counterparts. - once they are assigned, the file file is typically theirs indefinitely.   So, if your account is in Recovery it may be more hopeful.

2- The remaining balance, or the deficiency is important because if it is very high, their will be a greater call for a higher percentage of recovery.

3- Important to note if your contention is with regard to the cash at closing.  This is because if the Sr. is BofA, Countrywide original, or BAC (the BofA, Countrywide hybrid firm) than your BofA HELOC file must accept $3k for release of lien,  They can start by asking for 10% of the balance, or for 5% of the Purchase value. but at the end of the day, if the Sr. is held by a sister firm, they must accept the $3k.  They will not volunteer this fact, they may even lie, or not know about it... but it is fact, just keep pressing.

4- Sometimes, if the Sr. lien holder is facing tremendous, or very high loss, the Jr. will show some restraint in what they ask for.

Anyway Natalie, hope this info has been helpful... I wish you good luck.

Dameon V. Russell

Administrative Partner

The Montano Group

Century 21 Landmark Network

Office: 916.266.4848 x109

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http://www.montanogroupc21.com/Seven-Short-Sale-Myths.aspx

There are millions of homeowners just like you who are looking for answers and don't know what to do. You're not alone and you're in the right place.

I want to thank all of you who have purchased and benefited from my book, The ABCs of Prospecting.  I recently hit a sales benchmark and it seems that my system for prospecting, leads generation, and effective CRM is paying off for a lot of sales professionals!

If you are a real estate or mortgage sales professional in this market time, you MUST have this book. Its all about increasing productivity by converting leads to prospects, then to closings!

Thank you all!

We've been successfully specializing in short-sales since mid 2005 and have been as much a part of the evolution of how these things get done as we have been a witness to the evolution.

We've seen first hand how lenders have buckled under the deluge, and struggled to create, adapt, and adopt systems, & new personnel to handle it all; it hasn't been pretty.

All in all, I think these newest guidelines under the MHA program will generate significant improvements to the process, and remove substantial "waste" from it. Two thumbs up!

I am a realist however. As such, I realize that since this all began, every single short-sale processing problem has been about only one thing: volume, and the inability to deal with it. Nothing else, only volume. Lenders and servicers have thrown money at the issue of volume, they've thrown significant human resource increases at it, they've attempted, and re-attempted modification of their protocols, expanded coverage, added whole depts, fax numbers, e-faxing, imaging, more new or expanded depts, with support depts to support those depts....etc.

Too date, NOTHING has resolved the overall, and underlying problem of, volume. Frankly, I do not hold out hope that ANYTHING ever will, except a decrease in.... you guessed it.... volume.

If I am an optimistic realist, I can hope that eventually a more streamlined process from the new MHA guidelines can have a possitive impact, but for now, its the status quo.

Anyone wanting to get the full scope of the new MHA guidelines, simply email me and I will reply with the PDF attached for you; its good info. we all should read.


Dameon V. Russell
Administrative Partner, TMG
Century 21 Landmark Network
Direct: 916.266.4840
Office: 916.266.4848
Facsimile: 916.266.4830
Dameon.Russell@c21LN.com

"Working for our Clients diligently in tandem with Lenders to achieve mutual resolution!"

WARNING: To Anyone Possibly Conducting Short-Sale Business With First Federal Bank in L.A.

I feel obligated somewhat to warn ALL of my colleagues about attempting to work toward mutual resolution with First Federal Bank; DO NOT DO IT!

This bank's short-sale policies and protocol are such that one can only summize that they do not truly wish to do them. First Federal Bank is a portfolio lender out of southern Cal, (Los Angeles). I've recently had two nightmarish encounters with them. I will not drudge on relaying every awful detail of those two stories; instead I will simply bullet point a few of their more troublesome policies and allow YOUR imagination to work:

- Faxing & emailing not permitted; ALL docs, and submissions must be mailed.

- They absolutely DO NOT pay credit backs to Buyer, NOT even for FHA, no exceptions.

- 2/3 of the HUD items "normally" paid by lenders, First Fed will NOT pay.

- Commissions may begin at 5%. If the agent is double-ending the deal, its 2.5% TOTAL commission, no exceptions.

- They offer little or NO assistance toward Jr. lien payoff; & further, will NOT allow anyone else to contribute to Jr. lien release. If they see it on the HUD, they will take it, applying it to their net proceeds.

- Regardless of the probable outlook of any short-sale review, First Federal DOES NOT, ever postpone Trustee Sales.

- Check that (above); they WILL postpone Trustee Sale action IF they have a FULLY approved short-sale, and IF... the Buyer wires $10k, thats right, $10 grand to them for a one-time 30 day postponement. The $10k is not refundable if you do not close. If you do, it goes toward the net payoff.


I could go on, but do I really need to? This bank is REDICULOUS!! I have an agent that worked with a Buyer for 8 weeks, showed them 2 dozen homes. Just so happens that the home she finally got the family to settle on was her own short-sale listing. Because it was her own listing, because it was First Federal Bank, she gets a total commission of 2.5%. So, after 8 weeks she simply does not get compensated for the representation of this Buyer because she hooked them up with one of her own listings?? Really?

Now, I am aware of, and respect the fact that the short-sale alternative is not something the banks are even obligated to entertain; I do. However; if you are going to accept these proposals for review, then do it seriously. We have determined that First Federal Bank is NOT serious about considering short-sale proposals and have therefore concluded to refuse these files with liens from First Federal.

We strongly, strongly urge our colleagues to do the same... don't waste your valuable time.

1). Fax in your initial submission: 35 to 55 pages, must be broken down into individual 10 page faxes.  Allow 12 to 15 business days for these items to be imaged and processed as "received".

2). Once imaged & received, allow 20 business days for the new short-sale file to be assigned to an initial Phase I personnel. (Just to get assigned).

3). Once assigned to Phase I, the assigned personnel now has up to 30 business days to do their part and advance the file to Phase II.

4). The time in the cue between Phase I & II is typically 3 to 5 business days.  Once assigned to Phase II Negotiator, this person now has 20 business days to do their thing; package the file to present upward to the Investor.

5). If that Investor is Fannie, or Freddie, allow at least 6 weeks for the response to come back to BAC where the file is then assigned to your BAC Closing agent.

Where the real chaos begins is when the Phase I, or II, negotiator initially assigned to your file is overwhelmed with a file load deluge, and as a result, 3/4 of the way through their allowed time, the file is re-assigned to a new negotiator who then has the normal 20 or 30 business day time frame.  The re-assignment essentially resets the clock at that Phase!

This absolutely pathetic system is no doubt the result of the tremendous volume.  Well.... then fix it!  Adjust for the deluge.  Listen I used to have empathy; now I'm just frustrated with it due primarily to several recent occurrences.

Most notable: After 5 months of processing a particular file, 3 buyers later, a Phase II negotiator, Felicia Young, contacted me, with attitude demanding a couple of updated items, and a few minor HUD revisions, permitting me 48 hours to comply under threat of "closing out" the file.  I complied that very same business day within 3 hours!!  UNFORTUNATELY, as noted in item # 1 hereinabove, it took 14 calendar days to be imaged!!  You guessed it, Ms. Young closed out the file!

Upon being re-opened at my formal request, the file languished for about 10 days and was re-assigned to.....wait for it...... Felicia Young!

No kidding, 26 days later during which there were NO NEW NOTES, NO contact from Ms. Young, she called again to request updated pay stubs in a voicemail in which she again gave me 48 hours to comply.  Again I responded towards the end of that day by fax.  Not wanting a repeat, I tried to contact her to inform her that I had faxed in the requested items and to please not close the file again.  I attempted to get her email address (this was back when everything but the first name of a negotiator was a state secret!), couldn't get it.  Best I could do was have the Short-Sale Support rep. leave an internal message for Felicia.

You guessed it..... I phoned in again to follow-up on the next business day, a Monday, only to find that Felicia Young had in fact closed out the file again for non-compliance!!!

That's just ONE nightmare, I could fill volumes with other instances.  Where does this end.... when does the process actually improve??  Not looking for it to be easy, just ..... sane!

By the way, the case referenced above dates back to January, '09 and has not yet been sent up to the Investor.  Really?!

To forward your BAC Countrywide/BofA horror stories to someone who can actually do something... send to:

Kimberly Dawson
Bank of America Home Loans
Vice President - Group Operations Manager
Short-Sales
7105 Corporate Dr., Bldg C
Plano, TX 75024
Tel: 972-526-6970
Kimberly.dawson@bankofamerica.com

Contact her.

Reitterating the New BofA Home Retention Team Short-sale Protocol

Supplemental NEW info. regarding this lender's short-sale protocol for Jr. liens/HELOCs.

Recall in my previous post I conveyed the new BofA protocol for everyone's benefit. Well... there's more; just one additional bit of info.

The 10% minimum recovery comes with an equalizer. Whereas, the actual protocol calls for "10%, or $5k, which ever is GREATER". So if you've got a balance under $50k, the 10% sum will be rejected; in such cases BofA will accept no less than $5k.