Crazy High BOA BPO's?
I spend a lot of time trying to understand BOA. Other short sales go to others in the office, I'm stuck with the fun one. For several months, it seems that BOA's counters have been insane. I have confirmed with multiple negotiators that they MUST obey their BPO number and no matter what I submit, CMA's, certified appraisals, etc., it doesn't matter. But, this has been in keeping with BOA's "We paid an agent $35 to whiz by the property so his number is better than your $400 certified appraisal" of forever.
In an effort to see if others are seeing the same, filtering out the people who say, "I have NO problems with BOA, get them done in 15 minutes," I've come across realtors saying that the BPO agent said BOA tells him to give higher numbers and BPO agents are told to not used distressed properties (thereby ignoring the main market and raising the numbers). I haven't personally heard these, so I can only consider them.
Well, yesterday, I got mine - BOA refuses to accept the certified appraisal from their appraiser. BOA wants him to include the subject property as a comparison, etc. Funny thing - he won't violate his license and give a bogus number to BOA - so I have no BPO/appraisal. Unlike what most BPO agents and appraisers probably say, he said if they don't like it, go get someone else to do the job.
I got my "certified" answer - BOA is clearly bumping up evaluations. So far, I have assumed that their "stick it to the agent" nature is part of the difficulty because BOA is a bank and bankers will kill anyone for a penny, but in the case of short sales, I keep questioning why they have any interest in doing short sales. I still go back to the premise that they only do short sales because of the P.R. if they didn't. What I keep seeing are efforts to make them difficult for agents (congrats - doing a great job there) and now verified that they are forcing artifically high property evaluations. Clearly, buyers and their mortgage brokers won't just kiss off an extra $50K just because BOA would like it. And, I've seen no concern from the main investor FNMA, who is on the taxpayer dole and hand out for another $5BB, to do their job of watching out for the taxpayer. So, I assume that this is just another unchallenged ploy of BOA to keep files as long as possible and send a lot of them to REO (to continue to be paid accounts by the investors) instead of cutting investor losses and doing the short sales.
Is there something contrary that I seem to be missing in my assessment? Would love to get it right. Thoughts?
Replies to This Discussion
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Permalink Reply by Mark Raatz on
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Joe: can you say "Shared Loss Agreement"? Here's an old article that mentions several banks including BOA
Is the FDIC Killing Short Sales
by Alexis McGee on October 21, 2009
Basically, IndyMac Bank (now OneWest Bank), is holding one of my clients hostage, demanding a $75k
promissory note, or they will proceed to foreclosure. For the life of me, I couldn’t figure out why they were doing
this. The BPO came in at the contract price of $275k, with a net to IndyMac of $241k. What advantage could
there possibly be for them to proceed to foreclosure?
Yesterday, I figured it out. You see, IndyMac was taken over by the FDIC and sold to OneWest Bank in
March/2009. Guess who the investors are behind OneWest? George Soros, Michael Dell, Steve Mnuchin
(former Goldman Sachs executive), and John Paulson (hedge-fund billionaire).
Now, listen to the deal they got from the FDIC….
Basically, they purchased all current residential mortgages at 70% of par value (70% of the outstanding loan
amounts). They purchased all current HELOCS at 58% of Par Value!!!
Next, in order to “sweeten the pot”, the FDIC stepped in and guaranteed the following: For any residential
mortgages where OneWest experiences a loss, the FDIC will step in and cover anywhere from 80%-95% of the
loss. The loss is calculated using the ORIGINAL LOAN BALANCE, not the amount that OneWest paid for the
loan. Let’s use my clients situation as an example:
Loan Amount is $478,000, plus 6 months of missed payments, for a grand total of $485,200. OneWest pays
$334,600 for the loan. We have an all cash offer of $241,000, net to OneWest. So, let’s do the math, shall we?
The net loss, according to the FDIC formula is the ORIGINAL LOAN AMOUNT minus the amount of the offer. In
this case, $485,200-$241,000, or $244,200. Next, the FDIC, according to their Loss Share Agreement, writes a
check to OneWest for 80% of the so-called “net loss”. So, in this case, OneWest gets a check from Uncle Sam for $195,360 (.80 X $244,200).
Add the $195,360 to the sales price of $241,000, and you get a grand total of $436,360. Remember, OneWest
paid $334,600 for the loan. So, OneWest puts $101,760 in their pocket, thanks to the FDIC. Folks, that is over
$100k of our hard-earned tax dollars!
So, you ask…Why does this program hurt short sales? Because, our brilliant government offers this SAME
PROGRAM FOR FORECLOSURES! The only difference is, the government picks up 80% of the tab on all of the extra costs associated with a foreclosure (BPO’s, upkeep, utilities/maintenance, legal fees, etc.)
So, If I’m OneWest, why would I want to waste my time negotiating through a Short Sale, when I can make the
same amount of money (if not more) by just letting it go to foreclosure? And we wonder why nobody can get a
Loan Modification? Why would OneWest approve a loan modification for this guy, when they can foreclose and
make over $100k? And, to add injury to insult, they have held this loan for 6 months! Not a bad ROI, huh?
What infuriates me the most is that in my particular case mentioned above, they have the guts to hold my client hostage for a $75k promissory note, after they are already making more than $100k on the sale!!! This is his primary residence, 1st Position loan, and OneWest has NO RECOURSE! Imagine if they could make $100k, then get a deficiency judgement! Talk about making some big bucks!
Can you say “GREED”?
The scary thing is that over 50 banks have Shared Loss Agreements in place with the FDIC. Some of them
include: Bank of America (go figure), CitiMortgage, Wells Fargo, etc.
This entire agreement between the FDIC and OneWest can be found here, on the FDIC website. It’s all there, for the world to see! They have it all layed out. All of the formulas, worksheets, etc.
Now, it’s up to us to bring it to the attention of our elected officials and the media. Enough is Enough!
Wait, it gets better…The FDIC just announced that it needs to start borrowing money from the U.S. Treasure in
order to replenish it’s deposit insurance fund (the same fund being used to pay all of these banks in the Loss
Share Agreements). Go Figure! –Robert Hertzog, Summit Home Consultants”
Now, if you want an easier, smarter way to find great deals, you need to focus on “getting on the inside” with REO agents and asset managers, so you can help them unload their non-performing assets and get a great deal for yourself at the same time.
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Permalink Reply by joe beauchamp on
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Yes, I have seen this before and read through one of the agreements. I have seen no followup nor anything to say if this is 1 property or 3MM properties. I do believe that the "attention of our elected officials" is firmly on the money that banks routinely pour into their pockets - not on their duties. They appear to be bought and paid for. Unless you have some other fix, I think we can only work around such things as best as possible.
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Permalink Reply by Arlene Garcia Hanner on
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All I can say Joe is that the short sales that I have handled that had the buyer using BofA for their financing, were the ones that I got miracles accomplished, relatively quickly for BofA. Whenever I have had buyers use a different bank for their financing, I get counters at higher prices and everything seems to drag on and on. Do you think it is a coincidence?
Arlene
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It has been a while since I had a BOA SS with buyer going through BOA. The last time, the poor mortgage broker was embarrassed because the pinhead negotiator rejected her pre-approval letter - because it didn't have her signature on it. She had never signed any of them. Leave it to BOA to reject a pre-approval from....BOA. Duh, pick up the phone, idiot and call her. Not that a boneheaded move from a negotiator negates your point - I haven't had a chance to see what you say. "Way back then" it seemed that BOA plodded along but would eventually get a majority of SS's through. I don't see that today - seems much more like a non-reality wall now.. I'll keep your point in mind - thx.
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Permalink Reply by Shamekia Goldsmith on
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After making a stink and being very demanding I was did 2 BPO disputes on 1 listing. The first time they were adamant that fair market value was $1,140,000. The second time I used comps and telephone interviewed agents of surrounding listings that supported my dispute. Provided the bank with listings and comments from the other listing agents about the neighborhood and values.
Was able to get the BPO's redone with a new fair market value of $900,000.
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