Has BofA Hit the Tipping Point. You have to wonder.

By
Real Estate Broker/Owner with Cathy Ashley McAlister, GRI CDPE - Broker / Sacramento

Has BofA Hit the Tipping Point?  You have to wonder.   Take a look at this article by Jonathan Weil.  http://www.bloomberg.com/news/2010-11-04/bank-of-america-edges-closer-to-tipping-point-commentary-by-jonathan-weil.html

Earlier this week I posted a comment on a blog about pressure on lenders from the investor side of a bad loan.   It may be time for the lenders to start working through their short sale applications.  Not that it has anything to do with societal issues.  But to mitigate the loss they may take on from investors.   You have to wonder just what can happen when a lender like BofA (who swallowed a lender like Countrywide) is facing strong pressure from investors to force buybacks of what they perceive to be knowingly bad product.    

If lenders begin to approve short sales with more regularity, I bet it will have to do more with minimizing the possible buyback of thousands of loans at full value, than to finally just take the hit on a short sale.   None the less, if there is enough pressure this many be the motivation to finally work more short sale product through the system.

Comments (9)

Jon Quist
REALTY EXECUTIVES ARIZONA TERRITORY - Tucson, AZ
Tucson's BUYERS ONLY Realtor since 1996

BofA management is in world this strictly to protect their huge bonus payments. Anything they do is based on that alone.

Nov 08, 2010 04:42 PM
Steve Davis
Davis Coastal Properties - Carlsbad, CA
Carlsbad CA

Bank of America and Wells Fargo do not appear to want to do anything except serve themselves. I agree with Jon about their big bonuses. They have had 4 years now to get their act together and they refuse to hire and train and supervise properly.

Nov 08, 2010 04:50 PM
Cathy McAlister
Cathy Ashley McAlister, GRI CDPE - Broker / Sacramento - Sacramento, CA
Sacramento DRE#00648507

Jon,  I believe the investor pressure will become much larger than the short sale issue.  Hard to believe.  But the cost of an investor buyback is 100%.  At least, with a short it will be much less. 

Nov 08, 2010 04:50 PM
Cathy McAlister
Cathy Ashley McAlister, GRI CDPE - Broker / Sacramento - Sacramento, CA
Sacramento DRE#00648507

Steve & Carol.  That is the absolute truth.  I follow a couple of economists quite frequently and they have been speaking about this investor issue for a while now.  It's finally starting to make it's away in more mainstream media.  My hope is that will see the BofA's approve more of the "good" short sales or modify more of the loans that make sense to do so.  Yes.... they take a hit but not 100% to the investor.    Of course,   they will portray that act as looking out for the American Homeowner.

Nov 08, 2010 04:54 PM
Phil Leng
Retired - Kirkland, WA
Phil Leng - Retired

Hi Cathy,

An interesting speculation.

I have heard that the BofA short sales are much faster than they were

PHil

Nov 08, 2010 04:54 PM
Cathy McAlister
Cathy Ashley McAlister, GRI CDPE - Broker / Sacramento - Sacramento, CA
Sacramento DRE#00648507

Phil, we have yet to see that, but are ever hopeful.  

Nov 08, 2010 04:56 PM
Todd & Devona Garrigus
Garrigus Real Estate - Beaumont, CA
Broker / REALTORS®

Cathy - Bank of America does what is good only for Bank of America. Maybe this is what our market needs already.

Nov 08, 2010 05:11 PM
Cathy McAlister
Cathy Ashley McAlister, GRI CDPE - Broker / Sacramento - Sacramento, CA
Sacramento DRE#00648507

This time I am very hopeful that the fear of investor losses will drive them to approve more shorts.   The same economists I read are indicated that the banks (particularly BofA) are really shoreing up their balance sheets in anticipation of these lawsuits.   I don't really care about the reason - I just believe that more shorts/mods should be completed. 

Nov 08, 2010 05:14 PM
Elite Home Sales Team
Elite Home Sales Team OC - Corona del Mar, CA
A Tenacious and Skilled Real Estate Team

B of A and the other big banks are moving along quite content to stand in the middle and laugh at the homeowner and the investor.  They were bailed out.  Too big to be accountable.

Nov 08, 2010 06:11 PM