HELP!! BAC says no loan origination fees to be paid for/by buyer?

We have had this file in processing since December 2011.  It is not an Equator short sale, it is processed through the HUD department as it is an FHA loan.  After the offer was submitted we quickly received an approval letter stating the net number that BAC agreed to including the amount of closing costs, commission and closing date.  BAC told us that this approval letter was sufficient for the buyer's lender to proceed with the loan process even though the letter did not have the buyer's name on it.  A letter with the specific details relating to the buyer would be generated once we submitted our estimated HUD to the negotiator. 

The file was approved by the investor and a specific approval letter was supplied by our negotiator.  We were instructed to prepare a revised HUD to match the terms outlined by the investor which we immediately prepared and remitted.  The buyer had signed their loan documents and deposited their final funds into escrow for closing.  This was back on May 22nd.  After daily attempted communication, escalation and resorting to verbal threats we received a response from the negotiator via email and phone.  We explained that the buyer is ready to close but we need the final HUD approved for escrow.  The buyer's rate lock expired and they are financially damaged and ready to walk away. 

The negotiator told us that she needed some additional fees changed on the HUD per the investor's request.  This is where it gets interesting......

Because the buyer requested closing costs to be paid by the seller, the investor needed to see exactly what the closing costs consisted of.  I suppose this is to ensure BAC that it is an arm's length transaction.  However, the closing costs exceeded the amount of the allowance provided by the seller by approximately $3,000.00 which the buyer deposited into escrow as part of their final funds to close.  BAC can see that the buyer's funds are in escrow ready to fund.  Anyway.....

After reviewing the revised HUD showing the buyer's side of the transaction BAC told us to remove the loan origination fees from the buyer's costs on the HUD.  The investor will not pay for origination fees for the buyer nor will they allow for origination fees to be paid in this transaction whatsoever.  "Please remove the origination fees from the HUD-1". 

Obviously this is impossible.  We cannot make BAC understand that this is impossible.  No matter who we talk to we cannot get the HUD-1 approved.  The buyer's funds remain in escrow and new loan documents are being drawn now that we have entered into July.  As of Friday, July 6th we are deadlocked on an approval.  A month and a half have elapsed with no end in sight. 

Just when I think that I've been through the most challenging short sales that BAC has to offer, I'm up against another one that does not have any logic to it.  The buyer is upset, seller is upset, buyer's agent and loan rep is beyond upset and we look like idiots trying to explain this insanity to anyone.  What did we do wrong?  How can we get around this obstacle and how can we prevent it from occurring in the future?  No loan origination fees shall be paid????  "Hello????  What do you mean????,  Hello???"

Thanks for listening to my pain.

I just uploaded a copy of the estimated HUD-1 for your review.  Give me your thoughts!  Thank you again.

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Replies to This Discussion

Permalink Reply by Valerie Pressley on July 7, 2012 at 11:33pm

Did you put the origination fees on the seller's side of the HUD or the buyer's side?  The bank doesn't care about anything that's on the buyer's side.  And that's where origination fees should be.  Credits to the buyer for closing costs should be on the first page of the HUD on the seller's side in a generic item called seller concession.

Permalink Reply by Diane Wheatley on July 8, 2012 at 7:29pm

Dear Valerie,

I uploaded a copy of the HUD-1 for review.  BAC cares greatly about the buyer side of the HUD when they have agreed to pay an allowance towards the buyer's closing costs or any other concession.  But as you can see from the HUD, there is no extra money floating around which could create doubt that this transaction is completely arm's length.

Thanks for your response!

Permalink Reply by Bryant Tutas on July 8, 2012 at 12:16am

You need to escalate to the social media team at:

 ***Need Help? Try this:

http://twitter.com/#!/bofa_help or email [email protected] 

 http://social.bankofamerica.com/

FHA and BofA have ZERO control over what the buyer pays for on their side of the transaction. This sounds like a communication issue.

Permalink Reply by Chad Gelsinger on July 8, 2012 at 1:04am

Hi Diane, I disagree with the some of the responses given. Banks do have control over the buyer's side on the HUD, especially if this is FHA. The Loan Origination must be listed on the HUD, line 103 must include all buyer expenses, and LINE 303 CANNOT SHOW MONEY GOING BACK TO THE BUYER. There are some items that cannot be included in Seller paid items and you must adjust for that accordingly. If I am understanding your attachment correctly, the buyer is actually getting money back on LINE 303. BOA may not be requiring you to remove the Loan Origination from the HUD, just remove that amount from the Seller concession and if that is the case, you may have to reduce the Seller concession. If you want, send me a copy of your final HUD, with private information blacked out of course, and I can review it for you. If I see some changes, I can offer suggestions. We run into this issue on Seller concessions all the time and some agents aren't aware of the guidelines. Email me directly at [email protected]. Chad.

Permalink Reply by Diane Wheatley on July 8, 2012 at 7:35pm

Hi Chad,

I uploaded a copy of the HUD here for review.  Check it out and give me your thoughts.  No money is going back to the buyer on line 303.  BAC does not want to see a loan origination fee on the HUD whether the buyer or the seller is paying it.  Go figure.????

Thanks for your input! 

Permalink Reply by ElizabethWeintraub00697006LyonRE on July 8, 2012 at 4:30am

I suspect you could be falling victim to a negotiator who cannot read the HUD. To comply with RESPA, escrow must show fees from the GFE on the HUD as a seller credit if it's a fee that benefits the buyer, even if it is not a seller credit. Here is a piece that fully explains this dilemma:

http://homebuying.about.com/od/financingadvice/qt/Why-Seller-Credit...

Elizabeth Weintraub

Broker-Associate #00697006

Lyon Real Estate's #1 Short Sale Agent for 2011

Permalink Reply by Diane Wheatley on July 8, 2012 at 7:32pm

Dear Elizabeth,

Good link.  Thank you for sharing that with me.  I guess you can't argue with stupid.  As hard as I've tried to explain and simplify the issue with BAC, they just don't get it and this sale is falling off its axis as we speak.  :(

Permalink Reply by Diane Wheatley on July 21, 2012 at 3:47pm

As an update to my previous post......


We are still waiting on final approval for this FHA short sale.  However, after we lit up everyone on God's creation and escalated the file we received a response from a Supervisor who indicated that she was going to provide us with an approval by the end of the week (yesterday).  You guessed it!  Still waiting.....

The Supervisor is aware that the buyer was pulling their funds out of escrow and have lost faith in the entire process or prospect of ever receiving the okay to close.  The buyer has left their original good faith deposit in escrow however. 

Another note that makes no sense is that BAC will be receiving nearly $20,000 more than what they agreed to on their approval letter.  Go figure. 

Permalink Reply by Diane Wheatley on September 19, 2012 at 6:51pm

Help!!  I'm still dealing with this disastrous short sale approval dating back to just about a year now. 


After going back and forth with the escalation team regarding various charges on the HUD-1 with 16 revisions to date, we were provided with an email from the negotiator.  Here is what was received:

On this file I need the following;

On the HUD –

  1. In section H. I need the name and email address for the Escrow Officer.
  2. In section I. the closing date of 9/12/2012.
  3. Line 505. Must only read – FHA Incentive  $750.00
  4. Line 512. Seller to credit buyer for closing cost $1240.00
  5. Section B. FHA box must be check or appropriate box must be checked.
  6. Note, all buyer fees must be on buyer side only.
  7. Line 1109. Must only read – Wire Fee $25.00
  8. Line 1302 must read – Natural Hazard Disclosure Fee - $123.00

For the NHD report please also send me an invoice.

Once I have these documents returned you will receive a revised document approving the closing.  The closing date is set for September 12, 2012.

My reply:  Okay….but just so you know, all of these corrections were already done and sent on 8/23 except for #5 and #8 and I will do those now. (a copy of the HUD-1 is attached).


Well, I'm sure you can guess from my post here today that September 12th came and went without the needed approval letter.  I escalated this file once again from Carol Galindo to Mary Rose Adams.  I explained our situation as follows in an email yesterday.

Hello,

I need your direct assistance with receiving written instructions for Short Sale Approval with a closing date.  We have had serious problems with getting the loan number referenced above in a position to close.  I have made and requested HUD correction over 16 times.  We were given a closing date of September 12th, which never happened.  Nor did your representative follow up with notifying us that we couldn’t close.  I don’t understand what the problem is but I’m demanding that it’s fixed so we can close this transaction.  Your staff has managed to discredit all parties involved in closing this file.  The buyers have performed with money in escrow ready to close.  I now have a closing date according to Carol, for the 28th of this month.  However, I can’t get the buyers to move forward until we have something in writing.  I can’t blame them because they have lost a large amount of money due to Bank of America giving out false information. 

I thank you in advance.   

*******Back to the present**********

Does anyone have any suggestions for me with this file?  We are told that a written approval cannot be provided until 48 hours prior to closing.  This is ridiculous.  A cash buyer, maybe.  But an FHA buyer can't possibly perform in 48 hours.  We have always received written approval letters on our short sales, BAC or otherwise.  Why is this an impossible request?  And on top of it all, we received an email right after we sent ours out to Mary Rose Adams from Carol Galindo that she needs corrections to the HUD-1 ***AGAIN***  She wanted us to be aware that only one (1) HUD correction had been provided in the past, not 16. 

Am I stupid for thinking this approval is a possibility????????  (I'm sorry if my post is difficult to follow, I wanted you to have the facts).  Thank you!!

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Permalink Reply by joe beauchamp on September 19, 2012 at 11:50pm

FHA at BofA is mostly a horror show. Even when you run into a negotiator who seems competent, he has to wade through months of neglect and mess from whatever BofA FHA people have done to the file. I see very little w/in BofA to fix an FHA situation. I recommend that you send an authorization to HUD and have them prod BofA to get you the approval. OF course it is absurd to only give an approval 2 days before closing.

I just don't see any "escalation" at BofA when it comes to FHA. My last call to the office of the president surprisingly (finally after a month) got a "special" negotiator assigned - who announced he was there because of my call and he promptly did nothing for another 2 weeks until the buyer decided that BofA had no intention of allowing the sale to go through and walked. (I prod every couple of days, etc.) This is why I suggest quickly going to HUD rather than hoping that BofA FHA will fix things.

Permalink Reply by Diane Wheatley on September 23, 2012 at 10:12am

Thanks Joe,


I can see from the amount of replies to my post that other agents must be just as perplexed by BAC's negotiating talents as I am. 

I did receive a call from BAC's social media department on Thursday in response to my SSS post.  Tim Fox provided me with a glimmer of hope in assisting with my efforts to achieve a reliable communication that could produce a breakthrough in my continuous bashing of my head against the wall.  However, just before end of business day on Thursday he called me stating that he could not find my 3rd party authorization on file.  Of course I sent it immediately to the fax number he instructed me to.  Oh brother. 

Permalink Reply by TOP END Properties on October 22, 2012 at 4:03pm

Exactly what the buyer uses the concession money for is irrelevant to the bank IF IT IS EVEN ALLOWED.  To me it sounds like you worded it to the bank like  'the seller is to pay the buyers closing cost' .. which would show up on the sellers side and would never be approved.  That is why you are not getting anywhere.  You need to say 'Seller Concession to Buyer'.  If the negotiator does not know what that is .. then you need to talk to a supervisor.

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