Just one more file number to Bank of America..
My saga with the never ending Short Sale in Laguna Niguel, CA. continues. For the property history see my previous post. A couple interesting developments in this ongoing battle..the Investors for this one purchase money loan are..drum roll here…Bank of America! Well..that puts an interesting twist on things, doesn’t it?
Bank of America is the Servicer..they collect the mortgage payment every month, but on this particular note, they decided not to sell it off to a group of hedge funders or to Fannie or Freddie, but rather to keep it in their portfolio of “high-performing Loans”…or whatever they label that particular folder.
Normally, when I have only one loan on a primary residence and it’s a portfolio loan, I jump up and down because I’m about 99% sure I can get it closed relatively quick. This one should have been a slam dunk because the Sellers get me their docs immediately, and the hardship is a separation from spouse with reduced income, making it necessary to let the home go. Not so fast. If you have been following the news, you know that the Banksters just got a 26 billion dollar settlement agreement completed with the Federal Government. I don’t know all the details..I do know that the principal reductions that they are to take on some of their notes ONLY pertain to portfolio loans..not Fannie or Freddie. Hmmm..coincidence here? I suspect there is some extra money to be made at taxpayer expense, having to do with offering to reduce principals on portfolio notes..and that is what this one is!
So..yesterday I get a call from the Bank of America media contact person. She has read my blog and seems sincere when she says she is going to look into it. “I can’t promise you anything, but I will get back to you.” I’m still waiting..
Meantime..my esteemed negotiator, Camele, calls. She obviously knows nothing of the uproar surrounding this deal, which is curious since I communicate with her a couple times a week via Bank of America’s online short sale system, Equator. Nevertheless..Camele calls and says something like,
“My Investors want this deal to work, so let’s see what we can do.”
“Camele…your Investors are one and the same..Bank of America, and they absolutely do NOT want to sell this house! If they did, they would accept this offer of $865,000 because I have their approval letter, and so do you by the way, from my last Buyer, Buyer #3. Remember them? They were approved to close on this house March 16, 2012 for the Bank of America approved price of $865,000!”
Silence.
“Well, my Investors have to see less negative numbers, so perhaps you would reduce your commission?” says Camele.
“Camele..I have spent almost one year on this short sale. I have done my job exceptionally well I would say, by bringing them not 1, not 2, but FOUR qualified Buyers..my commission is off the table.”
Next she suggests getting the Buyers to throw in some money. Not an option in California first off, and secondly, their Lender has already said they will not appraise this property at a dime over $865,000. Shock and awe here because Buyer #3 Lender appraised the home at $825,000!.
“I want a copy of that appraisal, Camele, and I also suggest that no matter the number on it, your highly qualified Investors fire him (or her)!”
What don’t they understand here???? Your Investors gave me a number of $865,000 as FMV. I bring yet another buyer to the table at that number and you raise the number to $1,050,000. Isn’t it interesting that the new Appraised Value matches my original List Price which I picked out of the air based on the note value of approx. $1,085,000.
There is something very fishy going on with Bank of America’s Short Sales. They do not want to sell this home..period! Never mind what you read in the papers. Let’s see if I get anywhere today…I’m not holding my breath.
Oh by the way..the Buyers’ Agent told me yesterday that the Buyers will not go $1 over $865,000. So..if you see it re-listed at $1,050,000, just wait..it WILL come down. To think this home could have been closed six months ago..now THAT’S good business Bank of America!
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Bank of America; Short Sale Agents nemesis!
Bank of America is determined to ruin the Short Sale industry. I say this with complete frustration after doing short sales with them for over 5 years. I’ll have a great negotiator and experience with one and then the next crashes and burns because NOBODY at Bank of America seems to know what’s going on! Good Grief..how about some consistency???
This one particular Short Sale has been going on for almost a year! It is the longest one I have ever worked..except in year 1 where literally nobody at the Lender or Investor or even Realtor level had any guidelines in place. But that’s another story. Listed at $1,050,000 with one note and it is a primary residence. No offers or interest at that price so reductions begin. Finally..at $850,000 I get an offer and submit it. Appraisal comes back at $980,000! What??? Buyer walks of course.
Buyer 2: Same experience..except that the value is dropping even more.
Buyer 3: B of A accepts $865,000 complete with Approval Letter for a March, 2012 close (this month). Buyer walks because their Lender will not appraise the home at $865,000 but rather at $825,000. B of A won’t budge.
Buyer 4: B of A orders a new appraisal (Forget the 48 hr. Buyer substitution..it does not exist). I am SURE we will get this offer closed..but wait. The new “full appraisal” comes in at $1,050,000! Oh..and the appraiser never contacted me and I believe never even went to the home.
Buyer will be walking. I am going to the Investor to see if I can get them to budge. Have asked Buyers Lender to submit a new appraisal. Have asked Buyer to contact B of A and threaten with Legal Action.
What kind of idiocy is this??? For some mysterious reason known only to the powers that be at B of A, this loan is going to go to Foreclosure. They have decided that..never mind “we are trying to reduce the inventory by closing Short Sales quicker..” That’s a marketing line from B of A.
The Banks do NOT care about the economy other than keeping their shareholders in the dark and driving housing prices further into oblivion.
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I often hear from a potential buyer..”I want a deal, you know..a Short Sale..something like that.” Let me make this really clear..the Short Sale “deal” is NOT always the best deal for you.
If you are considering buying a Short Sale, be sure your Agent understands how to handle the deal. It’s not just writing an offer and submitting it. The work starts BEFORE submission.
- Who is the List Agent?
- How many Liens?
- What is the Fair Market Value and what is the home priced at?
- How delinquent is the Seller?
- How accommodating is the Seller?
- Does the List Agent really UNDERSTAND the process?
- Who are the Lenders involved?
- Where in the process is the List Agent?
Even if all the questions are answered positively, there is always the issue of the incompetent negotiator. You have no way of knowing who your deal will be assigned to by the Lender..and that is crucial. A good negotiator can move a file to close within 90 days. A bad one can slow the deal down for many, many months. Are you tough enough for the Short Sale process?
Compare that Short Sale very carefully to the Standard Sales for comparable properties. $5-$10/sf more may be worth paying to know when you will acquire the home and when you can actually move in. Tread carefully when buying a short sale….that “deal” may not be such a good “deal” after all…
How much do you LOVE that short sale???
Just Listed in the La Quinta Cove. 4bd/2ba home built in 1997. $148,000. This home is cute as it could be with many Seller installed upgrades. The Seller is leaving window coverings, custom fans and custom lamps. She installed 18 by 18 inch ceramic tile floors and hardwood floors in three of the four bedrooms. The 4th bedroom has engineered wood floors and is lovely as well. Her father even installed a custom, wood carved mantle over the fireplace! This is a great family home.
This is Seller’s primary residence, she has a true hardship (disability), and only one loan with Carrington Mortgage, LLC, so we’ll get this baby done!
If you need an experienced Short Sale agent to help you understand the ins and outs or list and CLOSE your own Short Sale, give me a call!
Slab granite in kitchen!
custom hardwood floors!
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Former Model home; Whitehawk
Whitehawk in Palm Desert, California is a small, private, gated community in East Palm Desert. Located off of Country Club Dr., the 10 Fwy overpass is about 5 minutes away, shopping is across the street and also around the corner on Washington St. HOA’s are only $110/month.
This Short Sale, (Listing #21446840), is unbelievable..$100/sf for this former model home with all the upgrades, bells and whistles. Built in 1996, the home has 4bd/4ba with lovely outdoor porches and splash pool. Beautifully maintained, the Seller is current on HOA’s and keeps home in perfect condition.
Bank of America has the note on this one, and there is also a HELOC with them as the 2nd. The HELOC has already been approved..just need an offer to push back the Sale Date and get this Short Sale it’s final approval!
This home is approx. 2900 sf and priced at $289,900..just $100/sf. Seller’s loss is your gain. Great investment opportunity as would be a great year round lease.
The Neighborhood of Whitehawk..
Furnishings available outside of Escrow..hurry..bring offer!!!
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This is not news, but it IS critical for any Seller thinking about listing their home as a Short Sale in California in 2012. Remember the MOST critical thing..the Debt Forgiveness Act expires on 12/31/2012. Will it be extended? Most likely. However..do you want to take that chance? Read on for a recap of our anti-deficiency law, 580e. It’s a fantastic protection for Short Sale Sellers in California!
One of the first things my Short Sale Clients ask me is, “How does the Deficiency work?” What they mean as a Short Sale Seller is, “Am I going to be sued for the deficiency by my Lender?
In a word, “no!”
The year of 2011 saw a very spescific change to the anti-deficiency law for the state of California. Section 580e of the California Code of Civil Procedure came into effect on Jan. 1. This law generally prohibited a FIRST TRUST DEED LENDER from obtaining a deficiency judgment. This law applied to 1-4 residential units.
Then on July 15, 2011 a bill was introduced that greatly broadened the powers of section 580e.
Now section 580e covers many types of mortgage loans for 1-4 residential units, including..
•Purchase Money
•Rate and term refinance
•Cash-out refinance,
•owner occupied
•rental
•second home or vacation home
(This Law has it’s exceptions! Other types of liens such as judgment liens, tax liens, or HOA liens are NOT exempt from deficiency pursuit by the note holders!)
WOW! Lots of encouragement from the Government to do a Short Sale instead of a Foreclosure.
So..you are protected from the second lien holder pursuit as well now. Your Lender may NOT..
•collect a deficiency
•have a borrower owe a deficiency
•request a deficiency judgment
•require a borrower to pay to get a short sale approved
•require a borrower to waive their rights
Tips:
Sellers: Although a Short Sale Lender cannot demand you contribute to get your short sale done, you may offer to pay something to get a deal to work.
Buyers: Carefully consider before you write your offer, HOW MUCH money a Lender is being asked to write off. Sometimes, if a Lender has to write off a huge deficiency, they COULD choose to not do a Short Sale and pursue their other options. Not a huge likelihood in California..but think about it.
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Critical that homeowners considering listing their home as a Short Sale do it in 2012..and in time to CLOSE by 12/31/2012. Why??? The Debt Forgiveness Act expires then! In California, although you will receive a 1099 for the debt that was forgiven, the debt is wiped out on primary and secondary residences..both first and second PMl’s. This helps you so much if you are not insolvent. Consult your CPA, then get that property listed and CLOSED in 2012.
Will the law be extended? I sure hope so. If not, Palm Springs and the La Quinta area will see more Foreclosures. We are really stabilizing in La Quinta. Prices are actually going up! Investors are finding that First time Buyers are able to beat them out in their bids!
Debt Forgivenss Act explained
If you are underwater on your mortgage and considering a Short Sale, get it listed NOW! Your final closing HUD must be dated no later than 12/31/2012 to qualify for your debt forgiveness. Consult your CPA, then get your property listed and CLOSED in 2012! Don’t wait and take a chance!
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The Sun is rising on B of A Buyer substitutions
Bank of America has been saying for months now that “if your Buyer walks in your Short Sale Transaction..don’t worry! We’ll allow a new Buyer to substitute right on in within 48 hours!” That was a joke. Never happened. Now it appears, they have changed that idea and now it looks like this…
This came to me via e-mail from Bank of America Short Sale Agent Update which is the same format they sent the last info in. I LOVE the idea of substituting a Buyer right on in. Eight days appears more reasonable to me since it seems to take forever for B of A Short Sale department people to learn any new rules. I am hopeful!
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8-Day Window to Submit Backup Offer
Based on agent feedback and to reduce overall cycle times, we are making a change to the short sale process. If it becomes necessary to submit a backup offer during a short sale, you now have a reduced window for making the submission. Instead of 14 days, backup offers must now be submitted within eight calendar days after the initial offer becomes invalid.
When a backup offer becomes necessary:
Within eight calendar days, resubmit the listing data, submit the short sale offer, and upload the offer documents and supporting documents. Any backup offer will require analysis and investor approval, regardless how similar it may be to the previous offer.
If no backup offer is available:
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The short sale will be closed in Equator by your short sale specialist.
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You should return to marketing the property.
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You may initiate a new short sale in Equator when you receive a new offer on the property.
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short sales CAN be a beautiful thing..
I’ve been noticing more and more, how many real estate agents are now “Short Sale Specialists.” Hmmm…got me to thinking. What IS a specialist? For a person to specialize in anything, they must do that one thing over and over. This creates experience. Experience teaches us how to handle problems that may arise in our “specialty”. Not until a person has handled MANY transactions and the problems and issues associated with those transactions over a period of several years at minimum, may that person claim to be a “specialist.”
Here’s an example…two agents that work together. In 2011, they take some seminars that claim that “short sales will be the wave of the future in real estate.” Uh-huh. They get certified by a Short Sale Negotiation company, (about 3 hours of instruction about how to hand over your short sale listings to them and they’ll do ALL the work.) Now, they are ready! Two new Short Sale Specialists are born. No ads came out stating such..until they landed a Short Sale Listing and handed it to the Negotiation company, and it closed. Bam! Now, their print ads read, “Short Sale Specialists.” What????
To me this feels fraudulent. I believe we will be seeing law suits over these fraudulent claims in the future. Why not just start working Short Sales, gathering experience and being honest? If you as a Short Sale Seller, are considering listing your home as a Short Sale, I would suggest you find out how many Short Sales your Listing Agent has closed last year? How many years of working Short Sales do they have under their belt? What do they know about your particular Lender? Are they simply taking your listing, then handing it off to a Negotiation Company that the Buyer pays for, thereby reducing the net to your Lender? Do you want a 3rd party negotiation company in the mix, or would you rather have a List Agent that talks to you directly? Get some references from your List Agent. Find out how past clients feel about their experience.
I know that a Short Sale is personal to each person enduring it. I handle my files myself..personally. My Sellers are real human beings to me..not just a commission pay out. Short Sales are long, arduous and require constant nurturing. But..2012 will be my 5th year of Short Sale negotiating with many different Lenders, MI companies, IRS liens, personal lenders..it is a skill. Not one that can easily be labeled a “specialty” by just anyone that takes a couple classes.
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The Short Sale BPO is critical to the Short Sale process. Remember that your Lender and the Investors above your Lender do not know you or your property..it is simply a file # to them. When I submit a Short Sale offer for approval, they order a BPO (many order a full appraisal). A BPO is a Brokers Price Opinion. A BPO Agent is paid very minimally ($50 or so) to create one of these reports..needless to say, they may not spend a ton of time on each home!
There are several problems with BPO’s for Short Sales.
1. The Agent is not a local Realtor and doesn’t understand the area/development of your Short Sale. They may use comps that are NOT comparable and mess up the FMV (Fair Market Value) of your property.
2. The BPO Agent is also an REO Agent (Foreclosure) and may even work for the Same Lender in their Foreclosure division! Conflict of Interest? Yes. The Agent may want the home to go to Foreclosure so he/she can get the Listing!
3. As mentioned above, the BPO Agent doesn’t spend much time on the property..
What to do? Have an experienced List Agent is most important. The List Agent will try to re-submit supporting comps for the offer and other financial documentation to support the Investors accepting the offer. If no success..sometimes, it’s just best to close the file, allow 60 days to expire (BPO’s are good for 60 days), then re-submit a new offer. A different negotiator, a different BPO and you’re in!
Crazy..yes. But sometimes, you just have to go with the system until it is smoother. Every year, Short Sales become smoother-no matter your Lender. Hang in there and trust your List Agent!
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