You have GOT to be kidding me- what BofA wants from short sale buyers now
So according to my negotiator at Service Link, BofA has a brand new guideline: All short sale buyers must provide proof of funds for Earnest Money & Down Payment at the time we submit the offer. (in Oregon EM is not deposited until we have ss approval).
I am beginning to think short sales will soon be a thing of the past..between Fannie Mae's absurdly bloated valuations and BofA roadblocks get me some Xanax. UGH
Replies to This Discussion
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Permalink Reply by Bill Sloss on
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as far as the buyers agent being able to negotiate a deal with the sellers bank, it makes no sense and is really none of the buyers business to know the sellers circumstances.....
Really? Lets debunk that nonsense and you cry disclosure.
Doesnt a buyer have the right to know that a SS will most likely not happen due to loan issues?
It makes plenty of sense and Ill give you an example. In your situation BOA sells a distressed property in a batch.
The new lender has no idea of the propertys condition.
Why should a buyer wait months to learn what the lender will need to come up with a price? And if the lender will negotiate? If they say no why waste time? Let em foreclose. Why when a phone call from a BA would resolve the issue in minutes not months. Its ludicrous to think otherwise especially when the SA will not advise the lender. While buyers attempt to buy property in good faith you have SA who does nothing. Nothing but push paper.
I am all for disclosure, disclosure, disclosure because all parties have the same objective in the transaction....to get it closed...
Youre talking out of both sides of your mouth. A limited 3rd party authorization allows direct communication regarding whatever the authorization says. There is no "really none of the buyers business to know the sellers circumstances" the authorization is limited to specific facts. Youre taking a short phone call into days of waiting for a SA to call you with the status etc. Its not necessary. Was the BPO done and back has nothing to do with the sellers circumstances. Would you like a second appraisal has nothing to do with the buyers circumstances. Its just excuses to maintain the old time power and control and works against what you profess to believe in to get it closed...
When one party wants to maintain control for no valid reason you may say its the same objective but its not. How does a buyers agent represent their client and act in their best interest when the SA denies access to the lender? For what reason?
There is none if youre all working together. Lender goes to SA SA goes to BA. Days go by. If its nothing let them tell the BA directly or allow the BA the respect to call. What can they possibly find out about the sellers situation or the deal? If everyone wants the house sold SO WHAT? Improve the communication and increase the speed.
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the fact that the seller has listed the property shows that it is able to be sold. That is not an issue.
In your analogy, BofA also has no idea what the condition of the property is. They just want their money.
To assume that a phone call from a buyers agent would resolve anything is just a fairy tale and has the potential of tipping the hand in the banks favor if the buyers agent happens to say anything that the bank can use to change the negotiations.
Why can the BA not call the SA for that info? There is no such thing as a short phone call when speaking to the bank. A quick phone call to the SA would yield much more success than to try to get a hold of the bank. You can trust me on that one. Or ask anyone here.
SA should NEVER take days to give information on a transaction and if that is happening to you, there is something wrong with your agent!
Ok, I am going to try to explain to you how this works. A seller puts their property on the market using a SA for the market value( if they are smart) and they get an offer. The SA assures the seller that the buyer is legit and can close and the seller signs the contract with several normal contingencies including that the sellers bank agrees that the seller can sell the property for less than they owe on the property. The SA then gathers the buyers information including the proof that they can actually close the transaction together with the information from the seller which shows their financial situation, hardship and other required documents and submits them to the bank for approval. The bank then takes that pkg and calls for an appraisal of the property to assure the value of the property. Then after that is complete, the negotiation begins between the SA and the bank. Aftrer an agreement is made between the SA and the bank, the documents are sent to the investor or their representative for approval. They might issue the approval right away or they may require more documentation or any number of other things may happen during this time. I have seen short sale approval take anywhere from 15 days to 3 years. The entire time that this is going on, the seller may or may not be in foreclosure but if they are, the foreclosure process continues until the approval is given.
There is absolutely no reason to allow the BA to enter into the negotiations with the bank and can in fact become an unwitting problem to the negotiation.
If the SA is not contacting the BA regularly with updates as to where the file is in the process, then that is on the agent. The BA needs to be on that SA to assure that the buyer is always informed.
Again, I want you to understand that the issue is not resolved in any way by having the BA involved with the sellers bank. The BA needs to be in contact with the SA. You as the buyer, need to force that issue. If you have a BA telling you that they need to be involved with the bank, you have a BA that has no idea what they are talking about.
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Ill give you a so what first and then a true story to prove Im right.
If the SA is not contacting the BA regularly with updates as to where the file is in the process, then that is on the agent. The BA needs to be on that SA to assure that the buyer is always informed.
So what? What are you going to do pout? Youre going to do nothing. What Im going to do is build my case for the state real estate commission and trust me I build great cases.
Put an offer in on a BOA SS. Months go by. BA says theyll accept and SA says sure. Clear blue neither did nothing and note was sold. I ask to who?
No one knows. I call BOA and find out. I call the new lender and find out if they have the note yet. They listen and say they need an authorization. Fine with me. I tell them the propertys condition and can hear the swallow hard and ask are they amenable to negotiate in a situation such as that. They say yep. I ask them to they accept contingencies in contracts? Yep.
So have the BA call the SA and find out whats up. The SA says dont know nothin. I wait. It took a week for the SA to get a 3PA. A week. So I put another offer in with a contingency and am told the lender wont accept contingencies. Thats fraud, bad faith and Im coming. I point out under the SSA the lender has the right to approve a contract and the SA wont even contact the lender. The SA wont give me a disclosure but wants me to sigh a HH and agree to accept the house waiving code violations they dont know about but do because they made them.
The best thing the SA has going is Im retired or shed be sitting in front of me wearing handcuffs. So I know what Im talking about. Thats a license Im going to want. On the day she executed a contract that said there would be no back up offers she solicited a back up offer from someone I had call and check. And they think were stupid. That we wont find out. I have a board of realtors covering for someone in an ethics complaint and they dont know I know and can prove it. So please. Please dont tell me how it is.
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Permalink Reply by Patrick Willard on
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Bill, you are wrong. A short sale offer is accepted by the seller subject to a lender approval. Yes, if the lender doesn't approval it will not close and the contract will become void but that doesn't mean it "means nothing". Almost all sales contracts have contingencies, inspection, financing, appraisal and so forth.
So what if the buyer keeps looking? So they lose their earnest money if they come back and say "sorry I found a house I like better". If the buyer keeps looking the seller should be allowed to keep marketing. Bill, how would you like it if you did your inspections, paid for an appriasal and were a fews days from closing and the seller said "sorry I got an offer I like better".
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It means nothing without a lender approval. Period.
Thats correct they lose their down if they back out and are liable under the contract
The seller can do whatever the contract says they can do. No big deal there. If it says delist and no backups and they agree guess what? Thats what must happen?
Bill, how would you like it if you did your inspections, paid for an appriasal and were a fews days from closing and the seller said "sorry I got an offer I like better".
Fine they can get sued for breach and specific performance. Its not rocket science
How would you like waiting and waiting and after two months of no communication the lender sells the interest in a batch of others because its "convenient"?
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well said Patrick....DUH....of course we want these things....I do not understand why there is even a question unless there are those who like spinning their wheels with some buyers who just simply do not qualify to purchase....I will even take it one step further....I will not even take a buyer out to look at properties until I feel confident that they can close a deal.....my time is just too important to me....I will always require a full approval from the buyers lender and I will talk to that lender also.....that way, when we go to look at properties, we can all feel confident that when they find that home that they fall in love with, they can actually purchase it....
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Look at how much whining youd prevent if everyone did it your way and how much time and energy would be saved
I will always require a full approval from the buyers lender and I will talk to that lender also.....
Thats why I suggested standards of practice be established.
Why are they whining and crying? Because they dont know what you do
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Permalink Reply by Pat Chadwell on
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I would not work any differently. I want to know I have a committed buyer that was also able to close the deal. I always submit this data with the package. I also require a deposit too.
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In real estate transaction, two minds have to meet at the same place and time to consider a valid contract. A listing agent has a fiduciary duties to protect the sellers' interests (time & money). The lenders have their fiduciary to protect their investors interest as well. Bill, have you heard time is money?
The question for this topic has not explained much in detail that what type of loans the buyers are using. I wondered if the proof of funds are for "ALL CASH" offer or a large down payment? If the buyers are using VA, USDA or FHA - the letter of pre-approved from their respective lenders would suffice. If it is a VA or USDA (that means "NO DOWN PAYMENT") and BOA asked for proof of funds.... the listing agent has a duty to advise them of the loan types and their guidelines.
I have heard and experienced first hand of "all cash" buyers or large down payment used tactics to alter contract terms after receiving short sale approval. I have had 2 occasions in early stage of short sale (2008 & 2009), cash buyers disclosed at the end that they are waiting for an investor in Florida to wire cash to their account (supposed as guaranteed deals). Those buyers did not receive the cash and loss their initial fees (in thousands of dollars) to this investor for using this method.
In business deal, I don't see the problem for the sellers or their bank to ask for proof of funds. It is imperative to protect your interests. The buyers have options to show POF by showing bank statement or asking their financial institution to supply an official letter (in their letterhead) that the buyers have sufficient amount to purchase the "heresay" property at the "heresay" purchase price. The later method will protect the buyers' privacy if you so worried. If you go to a car dealership to purchase a car with cash rather than financing it, please let me know if that dealership will not ask you to "show me the money!" (either the cashier's check or bring in the cash).
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Hi Joseph. This is really off subject but in regards to your comparision to the car dealership I have seen that. Back in 2005 I bought a 2003 Mach 1. It was on a Saturday and I told them I'd buy cash (bringing the check in Monday if we made a deal) and they never asked for proof of funds. The idiot asked for my SSN about 10 times to which I told him you do not need to run my credit if I buy cash. I finally had to talk to the manager because the salesman didn't want to write it up without my SSN. After signing they wanted to give me the keys right away. I said no, I'll take the car when I come back Monday with a casheirs check.
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Joseph I looked all through the Realtors Code of Ethics and couldnt find it. Where is it exactly?
What about the buyers time and money. Doesnt that count for anything?
"I have had 2 occasions in early stage of short sale (2008 & 2009), cash buyers disclosed at the end that they are waiting for an investor in Florida to wire cash to their account (supposed as guaranteed deals)." Then you were at fault not getting better info and they lost their escrow shame on them
"If you go to a car dealership to purchase a car with cash rather than financing it, please let me know if that dealership will not ask you to "show me the money!" (either the cashier's check or bring in the cash)." Your point being? It doesnt take more than 90 days to buy a car does it?
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Hello Patrick. 2003 Mach 1 is a super nice car. I am envy!!! I see your point.
Bill, I don't know if you are a Realtor or not, but if you take the same buyer(s) out to see different houses and make multiple accepted short sale transactions, you are not acting in "GOOD FAITH". It is Unethical. Please remember that foreclosure process is concurrently running with short sale process. It does not stop when a short sale package being submitted. Therefore, I will not advise my sellers to entertain any serious offers and cooperative buyer's agent without knowing the buyers' capacity to close the deal and especially the reputation of that selling agent.
In a short sale transaction, There is only one goal after the offer has been accepted by sellers - get it close! I have an open invitation to buyers' agent to come to my office and participate in the process so we all work together for our collective clients.
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