Posted by: jacob on Aug 25, 2010 Tagged in: Untagged
Want to know the scoop in the short sale space? Here it is. As per an article released by REO Insider magazine last week, Matt Vernon announced a new Bank of America co-op short sale test program. The program will include roughly 2,000 homes with BofA serviced loans with one specific loan investor. B of A has already pre-screened the borrowers / loans and has pre-negotiated the terms with the specific investor (note holder). BofA pre-screened these borrowers who have been considered for a modification under the Home Affordable Modification Program (HAMP) and a short sale under the Home Affordable Foreclosure Alternatives (HAFA) program. They have either fallen out of both programs or failed to qualify.
Under this test program, these borrowers will be offered a $3,000 relocation fee (sounds like HAFA), and the real estate agent gets a 6% commission. If it doesn't sell, BofA will accept a deed-in-lieu of foreclosure in order to satisfy the mortgage. (My assumption is these properties have one loan only)
Vernon said his department will assign a short sale specialist to work with the real estate agent and the homeowner to market the property for 120 days. (sounds like HAFA)
Letters have already gone out to the homeowners, and they have 120 days to list the property. Vernon said they are looking at a six month program. The bank will be working with the homeowners' real estate agents, meaning the bank will not be selecting agents to work with the homeowners. In a BofA webinar earlier today, Their representative said they will not be sending these leads to agents with Equator seniority. These homeowners will be contacted directly by BofA (or one of their component servicers specializing in outreach efforts).
What does all of this mean? Well it confirms that BofA's hands are tied as a servicer when it comes to streamlining the short sale process. Everything is subject to the specific investors cooperation and participation. That is why this program exists. BofA services loans for many, many loan investor groups and in most cases, delegated authority has not been given to BofA. Looking forward, if Vernon and BofA find success with this program, maybe they will approach other investors that they service for in an effort to launch similar investor-based programs. My fingers are crossed as this will be a huge step forward in our industry!
Now for Wachovia. I cannot reveal my sources, but here is the deal. Earlier this month I reported that Wachovia short sale managers nationwide were told to get the term postponement out of their vocabulary. As of August 1st, Wacovia will no longer postpone foreclosure for anyone, any time, for any reason! That got our attention. (I explained why in that blog post) Well the powers that be have recanted. They decided it was not HAFA-friendly to impose such an extreme program that was in such stark contrast to the program that the Treasury and the GSE's just recently launched. So...they have changed their tune. But a discerning person can see through the semantics of this mirage of a former company Wachovia. Facts: Wachovia sent out tens of thousands of HAFA homeowner solicitation letters in mid-late April to HAFA eligible borrowers. This letter had a 14 calender mandatory response time. If the borrower did not respond, they were FOREVER banned from the HAFA program. The catch is, almost no one responded. That's no surprise. Defaulting homeowners don't open their mail from their servicer. What a joke. New policy: If a default was recorded after April 5th (Treasury's HAFA launch date), and the loan and the borrower are HAFA eligible, Wachovia may postpone a foreclosure sale in order to accommodate a short sale. Kicker: If the borrower was one of the many that was sent a HAFA homeowner solicitation letter and did not respond, then Wachovia will not postpone the foreclosure sale, even if the borrower and the loan are HAFA eligible. One strike and you're out!!!!!!!
This is very disheartening for me. HAFA is being used as a barrier, not a savior. It's like a weapon in the hand of a lunatic. Sure, I know Wachovia is a different breed being that it is almost all pick-a-pay loans, and they were bought out by Wells Fargo at a huge discount. However, this is the kind of behavior that has caused consumers to lose trust in the major lenders, and the system. Oh, and by the way...my source says that most Wells Fargo serviced 2nds are not going to participate in HAFA either.