Getting ready to do first BofA PFS- DEFICIENCY JUDGEMENT & EQUATOR QUESTIONS

Hi.  Getting prepared to begin a BofA PFS (fha- only one loan).  Was wondering if I could be certain that B of A would not include there customary deficiency clause once we have approval.  Also wondering if Equator is used on on fha loans?  Any other advise, wisdom and/or tips would be greatly appreciated!

Tags: A, AMERICA, B, BANK, DEFICIENCY, EQUATOR, FORECLOSURE, JUDGEMENT, OF, PFS, More…PRE, SALE

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I just initiated my first BOA FHA short sale also. It is hard to get an accurate answer out of BOA on anything, but from the half-dozen calls I made to see if I could find anyone at BOA that actually knows how to do FHA shortsales, I found the following:
1) they do not handle these on Equator. You have to fax everything in to 1-866-808-5050.
2) they do not appear to care that there is a Mortgagee Letter 2008-43 which specifies exactly how servicers are to handle FHA PFS cases. They plan on doing it their own way.
3) They require a few documents - Authorization and Acknowledgement, Authorization, Negotiation Agreement, and Mortgagor Financial Information. I had to find these online - no one I talked to knew where to obtain these documents (which are their own forms).
4) They indicated they would not evaluate the PFS until we had a contract, HUD-1 etc... I patiently explained six times that FHA works differently, they would need to give us the "as is" value and then we would find a buyer that met the terms, etc...

Again, they don't seem to know or care that the FHA PFS system is different. So, I faxed everything in with a detailed explanation from the Mortgagee Letter hoping it will land on someone's desk that will follow the appropriate FHA procedures. We'll see. Good luck.
Mark is correct - you do not use Equator for FHA short sales. I am actually doing a couple B of A FHA short sale now and talked with my phase I negotiator yesterday on one of them. Fax the short sale package to the fax number that Mark gave you.

If you need copies of the various forms that B of A requires, let me know and I can get them to you.

Per the HUD guidelines, once the short sale is complete, there will be no deficiency.

It is very common for the person that you talk to when you call in to say that they need a purchase contract, HUD1, etc. They are not very eductated and the simple answer is you do not. It is OK to have the purchase contract and HUD prior to submitting the FHA short sale package - they will certainly take it. But it is not required and I never do it that way.

Just fax in the complete short sale package consisting of: The below is directly from B of A

- Bank of America requires proof of income for the most recent 30 days
o Paystubs
o Unemployment insurance award letter
- Bank of America requires the 2009 tax returns or W2s/1099s. Do not send both for an individual.
- Detailed Reason for Default letter signed and dated by the borrower
o Include dollars and dates throughout the letter
o Begin with the annual household income just prior to hardship
o Explain what date the property was vacated and WHY (if applicable)
Completely fill out and return these attached forms
Auth and Ack for Financials
Letter of Authorization
Negotiation
Financials

The Listing Agreement must be signed and dated by all sellers. The Listing Agreement must contain the following clause:
"Seller may cancel this agreement prior to the ending date of the listing period without advance notice to the broker, and without payment of a commission or any other considerations, if the property is conveyed to the mortgage insurer or the mortgage holder."

In addition - when you do submit your contract - they want the following verbiage in the contract:

The purchase offer (sales contract) must be signed and dated by the buyer and seller and contain the following clause;
"Sale is contingent upon the seller obtaining the prior written approval of Bank of America Home Loans"


Seller's estimated net sheet (Please note the maximum commission that can be paid out on an FHA Short Sale is 6%)
Any liens against the property must be released, or the lien holder(s) must be willing to accept no more than $1,500 to release the lien.

(The amount to release a lien can be increased to a maximum of $2500 by using the full seller incentive)
Wow! Great info- thanks to both Mark and John! John I would greatly appreciate a copy of the forms- any help is always great! My seller has not yet missed a payment. I never imply to clients that they should stop making their payments, however most everything I read states that FHA wants you to be at least 30 days delinquent....thoughts?
It actually states in Mortgagee Letter 2008-43 under section A Loan Default:

A. Loan Default

At the time the PFS closes, the loan must be in default (i.e., delinquent more than 30 days). Mortgagees may exercise their discretion to accept applications from mortgagors who are current but facing imminent default. However, by the date the PFS settlement occurs, the loan must be in default. Mortgagees should document this decision in the claim review file.

I have attached the documents that B of A wants.
Attachments:
I never tell people to default. But, it must be 30 days or more at the time the PFS closes or they are not eligible for an FHA PFS. Servicers have discretion whether or not to entertain a PFS request for a loan not in default at the time of the request. I highly recommend you obtain a copy of HUD Mortgagee Letter 2008-43 which contains the blueprint for how it is supposed to work. I hand it out to clients and ask them to review so they understand the program. Google is your friend.
I know this is a old discussion but I wondered if more BOA FHA Short Sales were being successful.  I understand that if there are difficulties with a Lender following the FHA process an Agent can contact HUD directly.  Has anyone tried to do this?  Margaret C.

Margaret,

I am working with a BofA pfs short sale right now, and I had to call in four times before anyone knew what to do with me. They kept saying, pre-approve the short sale...we don't do that. Keep calling, also let them know that HUD assigns trebble damages for failure to participate in loss mitigation, which includes the pfs program, then ask for a supervisor.

Thanks for the information and encouragement.  Margaret C.

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