SHORT SALE SUMMIT REVELATIONS BY BANK OF AMERICA

By
Real Estate Attorney with THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY
https://activerain.com/droplet/h2r

Some of my short sale staff and I met with Bank of America in Miami today at their “Short Sale Summit”.  We had a nice small group that met twice this afternoon - and I got to ask and have answered several questions which I think are important to those agents who are working short sales.  

bo

THEY SENT THE BIG GUNS 

First, we definitely had the top end management for this discussion. Bob Hora is the Short Sale, Deed in Lieu, REO, LandSafe Field Services Executive for Legacy Asset Servicing at Bank of America.  He leads a team of 5,000 associates – those that you speak to regarding short sales and deeds in lieu through Bank of America as lender or servicer.  Joining him was David Sunlin, Bob’s immediate junior who is Senior Vice President and Operations Executive for Short sales, Deed in Lieu and Real Estate Management for Bank of America – meaning he is in charge of real estate operations for Bank of America’s default loan servicing operations.   On a more local side, Matthew McCain is the Home Loans Manager for BoA and his territory is all of South Florida, and he acted as moderator. He is a go to guy for this region (his base is in Naples) and will make presenations to individual agent and Realtor groups if requested.

BoA FAVORING SHORT SALES OVER MODIFICATIONS

It seemed from the discussion, that BoA wants to do short sales more than they want to do loan modifications through HAMP or in house programs.  There seemed to be a more significant emphasis toward short sales for avoiding foreclosure than through modifications.  In fact, although they flew in about a dozen “expeditors” available for us to share specific file processing issues – none of them dealt with loan modifications.  There was zero mention of principal reduction programs.

INVOLVING REAL ESTATE AGENTS IN THE DEED IN LIEU OPPORTUNITY

BoA is seriously floating the idea that if a short sale is denied or a short sale cannot reasonable be consummated, the real estate agent can become involved in the process of a deed in lieu of foreclosure process.  This will have some limitations on the degree of involvement by agents as they cannot be forced into an unauthorized practice of law situation.  Watch for this to develop over the next several months and for some compensation to the agents for their involvement in the process.

CASH FOR KEYS WITH DEFICIENCY RELEASE TO AVOID FORECLOSURE DELAYS

This is on the front burner for implementation beginning September 2011 - Another program that we should begin to see put into operation is “an aggressive and meaningful” program to encourage homeowners to not ride out a foreclosure process for all its worth (ie: living in the property for as long as possible without paying the mortgage).  This is a “cash for keys” type program that more realistically takes into consideration the benefits to the homeowner of the extended foreclosure lawsuit timing vs. a waiver of deficiency rights coupled with a “cash for keys” that takes into consideration more than borrower income, but also loan size and size of home to make this successful – but expect it to be more meaningful than similar programs through HAFA.  This may be a huge opportunity for agents to convert to listings those that may have just been sitting out the foreclosure process as a free ride.

DO I NEED TO STOP PAYING MY MORTGAGE TO GET BANK ATTENTION?

Still think that you have to stop paying the mortgage to get a short sale? You are still wrong and this time we heard it not just from me - but straight from Bank of America.  Although proving up hardship can be easier with a stoppage of payments (and indeed some investors serviced by BoA require delinquencies ranging up to 120 days before a hardship is deemed “valid”), the specific statement of policy was that delinquency is NOT necessary provided other factors of hardship and imminent default can be shown.

NEGOTIATION MINUTIA AND FRUSTATION WITH NEGOTIATOR DEMANDS

They acknowledged that some of their negotiators sweat the small things (like “we won’t pay for the termite inspection”) instead of looking at the big picture, and they are working on training improvements to even-out the process of analysis and create consistency in the process.  Still, there are plenty of quirks in their systems. 

“THAT MAKES NO LOGIC” STILL PREVALENT  

One expeditor, who was trying to help us on a HUD issue regarding a seller contribution to the closing proceeds, listened to my explanation to my seminar attendees of the issue with “why is the banking thinking this way?”  At some of my seminars I have a PowerPoint slide that asks 3 simple questions that can be answered with logic. Everyone get them right and we all agree that everyone applied logic to get a 100% score. I then tell the seminar attendees to take a 10 minute break and go to their cars and lock their logic in their car trunks – and then come back so we can continue the seminar. Logic has no place in the short sale negotiation process.  The BoA expeditor (who was from California) said it was the best and most accurate analogy of the actual “without logic” process that she had heard.

RELATION OF CREDIT SCORES TO DEFICIENCY WAIVER

A conflict arose regarding a statement made many times that a low FICO score was a determining factor in obtaining the coveted waiver of deficiency in the short sale approval letter.  The conflict was relative to the statement that you can do a short sale without defaulting on the mortgage.  David remarked that no conflicting statement was intended, and that waivers can be determined not merely on FICO scores but on other factors as well.  Our experience in our office cannot correlate credit scores with whether or not BoA provides a waiver of deficiency.

CONFUSING SHORT SALE APPROVAL LETTER LANGUAGE

We recently received a very confusing approval letter that said both that the lender was reserving its rights to a deficiency and in the same letter that the lender will report to the IRS with a Form 1099 the forgiveness of income from the short sale.  Bob took the letter from me and promised a review from their legal staff and a response.  The letter is discussed in my article, NEW AND CONFUSING BANK OF AMERICA SHORT SALE "APPROVAL" LANGUAGE.

ESCROWS MAY INCLUDE ASSOCIATION ASSESSMENTS FOR FUTURE LOANS

Lastly, expect some pilot programs on new loans that add on to the escrow list not only real estate taxes and insurance, but condominium / property / homeowner association assessments.  The fight to get short sales through is constantly being waged between lender and association.  BoA is also considering setting up an association lien subset of negotiators to improve the short sale opportunities even with unpaid association fees.  [We maintain that the better course of action for homeowners is to continue paying the association, as unpaid assessments can be the straw that prevents the short sale from succeeding.]

The bad news is that the BoA time-line for short sales still deems 4 and a half months as acceptable.  So the educated buyer (educated by their agent?) is a key element for retaining the buyer through the short sale process.

Bank of America actually put together a meaningful program for agents and attorneys that process short sales and the experience was well worth the 3 hour drive.  Stay tuned for updates and developments!

--------------------------------------------------------------

 Copyright 2011 by Richard P. Zaretsky, Esq.

 Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make.  This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660  RPZ99@Florida-Counsel.com  - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide!  Shortsales@Florida-Counsel.com   New Website www.Florida-Counsel.com  

 See our easy to find articles at TABLE OF CONTENTS - SHORT SALE AND LOAN MODIFICATION ARTICLES.

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Re-Blogged 14 times:

Re-Blogged By Re-Blogged At
  1. Leslie Ebersole 08/16/2011 05:14 PM
  2. Fernando Herboso - Broker for Maxus Realty Group 08/17/2011 12:00 AM
  3. Joe Jackson 08/17/2011 01:00 AM
  4. Virginia Dean 08/17/2011 01:21 AM
  5. Sheldon Neal 08/17/2011 02:34 AM
  6. Tim Fennell 08/17/2011 02:37 AM
  7. Kelly Willey 08/17/2011 03:24 AM
  8. Sally English 08/17/2011 08:04 AM
  9. Nathan Tutas 08/17/2011 09:35 AM
  10. Maya Thomas, Broker 08/17/2011 04:30 PM
  11. Ginny Gorman 08/18/2011 12:27 AM
  12. Melanie Serrato 08/18/2011 01:23 PM
  13. Thom Abbott 08/18/2011 02:16 PM
  14. Yvette Chisholm 08/18/2011 02:24 PM
  15. Gabe Sanders 08/29/2011 12:45 AM
Topic:
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Location:
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Tags:
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Rainmaker
1,363,996
Cheryl Ritchie
RE/MAX Leading Edge www.GoldenResults.com - Huntingtown, MD
Southern Maryland 301-980-7566
I need to come back and read this more carefully. It looks action packed so I am coming back.
Aug 17, 2011 05:18 AM #28
Rainmaker
229,831
Nathan Tutas
Tutas Towne Realty, Inc. - Davenport, FL
Your Central Florida Real Estate Expert

Great informative article. The short sale process definitely needs to become more consistent with all of the lenders. But for a lender so big such as BOA it is essential that everyone is on the same page of music.

Aug 17, 2011 09:04 AM #29
Rainmaker
1,534,031
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Real Estate

Volumes were actually said with the 'no principle reduction programs'. I did enjoy your 'logic in the trunk of your car' scenario - ;-)  Wish I would have seen their ridiculous faces.

Aug 17, 2011 09:54 AM #30
Rainmaker
1,792,271
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

Richard, excellent information and honestly i have sellers that when they came to me this month B of A was still touting loan mods...what is that about !?  This is great  info and will pass it on.  

Aug 17, 2011 10:16 AM #31
Rainer
180,937
Michael Hobbs
PahRoo Appraisal & Consultancy - Chicago, IL
SRA, LEED GA, RAA

Richard,

thank you for sharing the experience of the gathering.  Lip-service or not, the presence of a few senior people from BofA is not lost.  The scope of the problem is so larger...much like the Federal deficit, there just doesn't seem to be an easy, inexpensive and palatable solution.

Michael

Michael Hobbs, PahRoo Appraisal & Consultancy

Aug 17, 2011 04:17 PM #32
Rainmaker
176,207
Maya Thomas, Broker
Tampa, FL
Please see my client recommendations.

Fabulous information Richard!  It's so important to have accurate information to share with my clients.

Aug 17, 2011 04:29 PM #33
Rainmaker
908,388
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

Thanks for sharing this update. Only thing is I heard this from a VP of BoA last year. It's still the same old from them. They keep saying they prefer short sales over foreclosures. Why don't they follow what they say they are going to do? Oh, I forgot, they're  BoA!!!

One thing is I really wish they would stop sending my clients letters saying they have options to foreclosure, such as loan modification, when we are in the middle of short sale review! These homeowners were all denied loan modifications. They tell my clients when they call that the letters are sent in error. Really?!! They say it's a different department and they are auto-generated. Really?!! BoA expects us to believe this?

My clients know they can't get a loan mod because they've tried. Does BoA get pleasure out of tormenting homeowners who can't pay their mortgage? 

Aug 17, 2011 05:12 PM #34
Rainer
206,584
Marge Piwowarski
Phoenix AZ Horse Property - Phoenix, AZ
Phoenix AZ Horse Property, LLC

Thanks for the post and sharing what they say they are going to do, I think they are divorced from their own reality.  Can you tell that I had another asinine conversation with a BOA negotiator today?

Aug 17, 2011 06:28 PM #35
Ambassador
553,475
Larry Story
Total Care Realty - Greensboro, NC
Total Care Realty, LLC, Greensboro, NC Real Estate

Richard,

Good info.  I saw the post when Nate Tutas reblogged it.  I have been wanting to attend one of these seminars for some time.   

Aug 17, 2011 11:15 PM #36
Rainmaker
281,232
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

Pamela #35

What a great "mantra" - DOES BOA GET PLEASURE OUT OF TORMENTING HOMEOWNERS WHO CAN'T PAY THEIR MORTGAGE?

I hope that message gets across - I emailed BoA's rep with the link to this blog

Aug 18, 2011 01:01 AM #37
Rainmaker
679,089
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Thanks for the information, Richard. Nothing earth shaking, just incremental changes. It is good that BofA comes down from the mountain to speak with agents so that both sides can get a better understanding of the ground rules.

Aug 18, 2011 01:10 PM #38
Anonymous
C Basilovecchio

Richard,once again GREAT article.Also you are highly respected for your work in the field of Short Sales and Foreclosures, but you are a victim of corporate fraud,and they will play any game ,any game that would buy them time.This is the first time in American history that a massive bank fraud has actually completely gotten away with outright bank theft.The other times that the banks (lenders) have committed these thefts they were taken over and many were punished and even jail time.(Over 1000 felony convictions).

Why such a great need for time? Answer so they can make money from the money that they can get for the next two years-practically for nothing.If sucessesful make enought to "bailout "more of their toxic assets. Maybe even push some more of it off to Freddie and Frannie -last week they pushed off 40,000 loans.

The REAL PROBLEM is they have leverage themselves over 9 times on their loan balances because they had to only keep a 10% reserve.This means that $1,000,000 comes in deposits they were able to loan $900,000 which in turn became an asset for $900,000 on their books;therefore they were able to make another loan for $810,000,etc.,this is how you get $9,000,000 in loans that has a reseve of just $100,000.SEE THE PROBLEM ? When the loans lose 50% of their value ,that is a $4.5 million loss that the bank only has $100,000 to cover.

This is of course the reason Bof A is tanking.They can not reaise enough capital to cover their losses .They are hoping for profit from the "almost free money "they can pick up from the FEDS.

I pray daily that Bernanke,and Obama  become GREAT Americans  and their names goes down in history with the likes of Ben Franklin,Abraham Lincoln,and Franklin Roosevelt.all those who have led this country thru many crises.Perhaps,with a solution..(1) of taking care of Freddie Mac and Fannie Mae by making them a LOAN SERVICING CORPORATION.(2)..that with the RECEIVERSHIP of B OF A (making it owned by the people,for the people and of the people) (3) and making all commercial and residential loans,not baking them which was shown to be folly and fraud,but actually making the  at low rates and longer period of time so they will BENEFIT THE GENERAL WELFARE ! Commercial 5% ,36 years and residential 3%,36 years.

GOD willing if this were to be for $20 trillion we would actually become a debt free nation.Rule 72 states 2% will double the taxpayers money every 36 years.

Could you imagine,"Taxpayers paying interest (read taxes)of taxpayers money,for taxpayers,by taxpayers.

May God continue to bless America.

justaluckyfool/Basilovecchio

Aug 18, 2011 01:11 PM #39
Rainmaker
281,232
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

I try my best to present what I see.  The article is not gospel - it is a report of what we were told, so I don't consider myself duped - I voice no opinion in this article (and if you read my others, I try not to get up on the soapbox - at least not too often!).

Aug 18, 2011 01:38 PM #40
Rainmaker
281,232
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

Kevin #3 - YOU'RE IN LUCK!

Did you know the historical average number of contracts is actually 3.8 before one actually closes on a short sale?  See my (very old) article - MULTIPLE SHORT SALE CONTRACTS AND HOW TO AVOID THEM

So the GOOD NEWS is that the NEXT contract is gonna stick! ---- unless of course the lender through the normal processes, screws it up.............

Aug 18, 2011 01:55 PM #41
Rainmaker
217,470
Yvette Chisholm
Long & Foster Real Estate, Inc. - Rockville, MD
Associate Broker - Rockville, MD 301-758-9500

Thanks for this important information - will do a reblog on it!

Aug 18, 2011 02:19 PM #42
Rainer
139,896
Ben Benita
Ben Benita - Gainesville, VA
Speaker, Author, Game Changer, Coach

DAMN DAMN DAMN.....pardon the language, but REALLY would have loved to go to one of these and talk to these clowns.....can you tell me where you heard of or saw this?

I keep getting notices after the fact about the meetings.

If you hear anything, or know where we can learn more, please e-mail me - BBenita@Comcast.net

Aug 19, 2011 03:35 AM #43
Rainmaker
25,041
Joseph Alfe
Short Sale Processing Inc. - Chicago, IL

I went to the summit last year, and I have seen great improvement.  To all you say BOA is terrible and you can't get anywhere or Equator is bad....I'm sorry, but I'm seeing that most issues are "user error."  We simply do not have these problems with 95% of BOA files?  Why?  We understand their guidelines, we know Equator inside and out, we understand the escalation process, and most of all, we SUBMIT PERFECT PACKAGES!  When we attended the summit, the BOA VP (I forgot who it was) admitted that fully 70% of the short sales in their pipleine (and they get 50,000 per month!) would never close.  The reasons were:

1-Offers weren't legitimate

2-Buyer's weren't qualified

3-Submission package was incomplete

 

If they are recieving 50,000 submissions a month, and your package and buyer isn't perfect, how much time or effort do you think their negotiators, who probably have a que of 1000 files, will pay attention to your file?

 

Either learn the short sale process inside and out, or bring in someone who does.  A brokers license does NOT qualify you to conduct short sales.

www.ssnegotiators.com

Aug 19, 2011 03:52 AM #44
Rainmaker
524,252
Wendy Rulnick
Rulnick Realty, Inc. - Destin, FL
"It's Wendy... It's Sold!"

Richard - Thank you for the well-summarized information.  I hope BOFA meant it when they said their legal department would review the approval language.  Did you have a chance to discuss the new BOFA addendum, or maybe that will be the next summit?

Sep 05, 2011 08:23 AM #45
Rainer
218,050
Kimberley Kelly, SFR, HAFA, GREEN
HK Lane, Christie's International Affiliate, 760-285-3578 - La Quinta, CA
I do Real Estate like I played polo-to WIN!

Great info..agree with Lenn that principle reductions MUST and WILL be part of the solution at some point.  B of A has improved greatly over my past 4 years.  My average with them is about 4 months..still too long and I generally lost the first buyer while they're piddling around, but they do get closed.  

Nov 09, 2011 01:39 AM #46
Rainmaker
127,962
Wendy Cutrufelli
Alain Pinel Realtors - Walnut Creek, CA
Contra Costa Realtor

I popped over to this post from your Fraud post.  While the Big Guns at B of A state that a homeowner doesn't need to be late on their mortgage, that message doesn't appear to have made it to the group of people who process the short sale hardship packages.

Nov 09, 2011 01:50 AM #47
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Rainmaker
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Richard Zaretsky

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