We just received this notice from BofA regarding FHA's new policy:

Mortgagee Letter (ML) 14-15

Effective October 1, new Housing and Urban Development (HUD) guidelines require agents to have the property listed on the Multiple Listing Service (MLS) for a minimum of 15 days before any purchase contract can be reviewed by the servicer.

Note: The 15-day requirement starts when the property began listing on MLS at the appropriate price in relation to the Federal Housing Administration (FHA) "as-is" appraised value.

Additionally, the FHA Preforeclosure Sale Addendum & Real Estate License Certific... has been updated on the Agent Resource Center (ARC) under the Forms & Tips tab.  Please discard any previous versions you may have and begin using the updated version immediately. 

So let's get this straight.. The way BofA SHOULD handle FHA deals is now like this:

  1. Submit Application to participate
  2. BofA orders appraisal
  3. BofA Issues the Approval to participate with appraised value listed
  4. List agent changes List price on MLS to match value as shown on the Approval to Participate
  5. 15 days later seller can accept an offer and send to lender
  6. Lender issues approval.
HOWEVER,  BofA Won't Open an FHA Short Sale without an offer, right?
So then are we now following this procedure instead? 
  1. List house on the MLS for fair market value
  2. Find buyer and sign contract, send that to BofA
  3. BofA opens file in their system
  4. BofA orders appraisal
  5. BofA Issue Approval to participate with appraised value listed
  6. Seller breaks contract with Buyer because offer came in prior to the 15 days following approval to participate.
  7. List agent changes List price on MLS to match value as shown on the Approval to Participate
  8. 15 days later we can accept an offer and send to lender, which can be the same as the previous offer if buyer is still the HIGHEST AND BEST offer.
  9. Lender issues approval.
Am I missing something or is the way it will happen from now on?
-Neil

Views: 1431

Replies to This Discussion

BOTTOM LINE FOLKS, Bank of America needs to be told by the Realtor Association that they do not mandate our MLS individual board rules and to stay out.  If the State of National Association sends them a letter then I believe they will back off.  So we go from over the weekend to now 15 days then will come 30 days.........  They need us so we need to dictate to them what our rules are and have been.  

I don't even want to list the property until the HUD PFS Appraisal is complete and the value known.  The whole list it first stuff just wastes everyone's time.  What if a buyer wants to make an offer and the appraised value is not known yet.  The 15 days won't start so you would be in the 2nd scenario anyway with a contract that needs to be broken which exposes you the agent and the seller to legal claims from the buyer.  Not interested.  I guess we should just list at an absurd price and put in the MLS Remarks - Seller not interested in selling right now.  Do not write an offer because it will be thrown away....

Ok guys - here is the actual FHA update - http://portal.hud.gov/hudportal/documents/huddoc?id=14-15ml.pdf

Look at page 8. Maybe I am missing something, but I see they now require a 15 day marketing time, but I see nothing about it being tied to the appraisal price.

I think BoA is just misinterpreting the guidelines. 

Since it does not say specifically 15 days at the appraised value I am guessing that HUD will say this is at the servicer's discretion.

That would be nice.  However, BofA services most mortgages so it's interesting that they're choosing the FHA value.

Bottom line I wonder about is this: Will they begin ordering appraisals without contracts? That would be GREAT!

Not sure what you mean.  This notice from BofA only pertains to FHA short sales via the HUD PFS Program so it would only be the FHA AS IS Appraised Value.

more than likely you're correct.

Fannie Mae required 5 days on the market over a weekend. Banks / investors can require certain days of marketing time, and as long as it's noted in the comments, an agent can do it. Although I think it's self defective in many aspects, yet I can understand why they want to do it. They don't trust the agents to do their jobs.

The banks don't have to trust the agents.  The banks just have to trust the vendors they hire to submit accurate valuations.  That what this is all about - the banks have no idea what these properties are worth so they want to minimize their valuation mistakes by making sure the market speaks to them.

Jim the banks dont trust their vendors either, that is why they have such a turnover with vendors.  Heck the banks dont trust their own employees

Yes, that is what Ai was getting at. The banks are trying to let the market tell them what a property is worth because they don't trust the appraisers, BPO vendors, etc. I would be fine with that if it was a 2 way deal where the banks make a house be listed on an online auction and accept the highest bid and it is over. Unfortunately, the banks don't care if their values are too high resulting in a foreclosure. Therefore, the 15 day listing requirement only helps the bank to see if the list price is too low, but does nothing to address if it is too high.

What I presume the lender wants us to do is this:

Initially list the property AT OR BELOW what we think the FHA Appraisal will be and do not accept any contract until the 15 day period expires.  That way when FHA completes their appraisal and values the property at or more than the list price, the 15 day requirement will already be met.

The catch to this is that the appraisal may come in HIGHER than the initial list price.  If that happens will the lender then require we raise the list price to match the appraisal and start the 15 days over again, or will they allow the buyer to raise their offer to meet the minimum NET to lender?

Has anyone addressed these types of questions with a lender yet? This is quite a problem as many of you have stated.  I haven't been able to speak to anyone with decision making capabilities about this yet.

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