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Are Short Sales Getting Easier To Close?
Posted by justin_lee | Posted in foreclosure, news, preforeclosure, short sales | Posted on 15-07-2009
An article in today’s Washington Post suggests that short sales are becoming easier to close. Before everyone gets all excited, take a look at this excerpt from the article:
Bank of America opened a short-sale call center last year. And the bank hopes to launch a pilot program within 30 days that would shrink to one week the time it takes to have a specific short-sale offer approved, Sunlin said. Under the program, prospective sellers apply to Bank of America to get preapproved to pursue a short sale in general, then go back to the bank for approval of specific offers as they come in. The program will initially focus on borrowers who fail to qualify for a government foreclosure-prevention program, he said.
“If they have come to the conclusion that there is no possible workout, they should contact us as quickly as possible,” Sunlin said.
So Bank of America is going to launch a “pilot program”? I’ll believe it when I see it. Call me a skeptic, but right now, our short sales in process with Bank of America don’t seem to anywhere close to getting approved one week from today, let alone 1 week over all!
The article is certainly worth a read, but remember that it’s written mainly for owner occupants who are looking to buy a short sale, not from the perspective of investors. Nonetheless, I’d love to hear your opinions about this.
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SECURE & CONFIDENTIAL
I know you guys here at Marketing Tips provide some great information. In light of that, I am compelled to share this information delivered to me just a hours ago in an email as follow:
“…There was some really big news in the short sale world recently, so I wanted to take this chance to explain its impact and how I am dealing with it in my business.
Bank of America, which also now owns Countrywide, quietly added a clause to its short sale agreements recently that obligates homeowners to pay back the deficiency owed as a result of the short sale.
In many cases, homeowners we deal with are only agreeing to short sales when the deficiency portion is waived by the lender. Because of this, we have stopped taking on deals that have Countrywide loans.
Bank of America’s new policy is expected to begin scuttling many short sales now in process with Bank of America or Countrywide because a lot investors like us now find it to be a complete waste to bother spending the time negotiating a deal knowing that they’re most likely going to slap a provision on there that makes it difficult for us to get a short sale approved that is acceptable to the homeowner….”
Best regards,
Bob Massey
http://www.TheAgentMagnet.com
Now, I am commenting with this info because as a newbie Real Estate Entreprenuer that I am, this is information worthy of my time to cross check it, as well as every other investor out there doing short sales.
One,
Freddie
Hi Freddie,
Thanks for your comment. I know Bob personally and have a great deal of respect for him as both an educator and an investor.
As far as BoA is concerned, an additional challenge to consider is recent provisions that they have been including in their approval letters.
Basically verbiage that makes is difficult for investors to do “back to back” closings because the title companies won’t allow them (based on the language that comes from BoA).
I would be wary of this as well when dealing with BoA deals.
More specifically, as it pertains to the deficiency judgment, I always remind homeowners a few things:
1. We will do out best to get the deficiency waived
2. If this property goes to auction, and there is a deficiency, the lender will absolutely come after the homeowner (and there is no chance for a negotiation at this point)
3. If the homeowner can prove insolvency at the time of the foreclosure/short sale, their is a chance the deficiency is irrelevant (please check with a local CPA)
Thanks again for posting,
Justin
The whole B of A thing is really a pain. Frankly, the no flip clause for 30 days that they have is more troublesome than the deficiency. Many times the deficiency can be negotiated away by the investor agreeing to pay more than the agreed upon price in exchange for elimination or reduction of the deficiency. The 30 day clause is much more difficult to get around. I have heard of a few having success getting it waived but only a few. They also are extremely slow in processing short sales and very burdened with layers of approval. Between the 30 day clause, the deficiency issue and the extremely slow pace I have decided to focus on lenders other than B of A where I believe there is better opportunity with far less hassle. There are tons of deals even without B of A
Great closing Bob…yes indeed there are tons more deals to go around.