According to an announcement yesterday, Bank of America is going to loosen its policies on short sales.  This is a result of a Treasury Department announcement of plans to increase incentives for lenders to work out short sale deals.

The norm has been for the bank to adhere to Fannie Mae guidelines of giving second lien holders about 10 percent of the 2nd mortgage balance in a short sale. However, this new information indicates that when it holds the second lien, Bank of America is willing to accept a mere 5 percent of the net proceeds of the short sale, Furthermore, when Bank of Americait is the first lien holder, it will offer the 5 percent to the holder of the second.

We see this as a positive move by the Treasury and Bank of America.  There are many sellers who through no fault of their own are in a bind because they must sell for one reason or another but there simply is not enough value in the home under current market conditions to cover the balance of their mortgage(s).  These homes MUST move in order to ease the current bottleneck we have caused by too much inventory and too few buyers.

We hope other lenders will follow suit.  The quicker we deal with these issues, the quicker we'll see economic recovery on every front.  Kudos to Bank of America!  We look forward to seeing positive things come from this.