Comment

Comment by Kevin - Greenville, SC on February 21, 2011 at 4:46pm

Having negotiated many SS myself the decision for approval has been heavily weighted on the BPO/Appraisal, and it has not seemed to matter if the BPO/Appraisal represents an actual representation of FMV (what a buyer is willing to pay),  just what the servicer/investor is told by the BPO agent or Appraiser in their opinion what they believe FMV is.

 

Comment by Ben Benita on February 21, 2011 at 4:39pm

Thom - not sure who you asked, BUT I too negotiate short sales for agents all over the country.  Having done short sales for more than 6 years now, and, studied the ins and outs of the decision making process, the ENTIRE approval decision often rests on the BPO valuation????

 

Am I mising something?

How can you say the BPO has little weight?

I would be curious to hear what your Servicer contacts say is MORE important than the BPO/appraisal?

Would you mind checking for me/us and reporting back?

Comment by Thom Colby CA Brkr 888-391-5245 on February 21, 2011 at 2:57pm

Folks -

There is no rhyme or reason to the final result other than different investors make different decisions and are willing to take different Losses.  We just closed a Condo on 12/31/2010 in Long Beach CA.  Borrower owed $657,000 - no payments made for 3+ years. It sold as Short Sale for a whopping price of $206,500 less commissions and costs - Final Net to BofA was $186,304 on the 1st with $6,000 to the 2nd (also BofA).  No Deficiency, No Promissory Note, No Cash at Closing. In 2007 when we first started this Short Sale, there was an offer of $300,000+ but BofA declined the offer.  We changed negotiators 6 times and the required NET kept going up.  When this FINAL offer came in after 13 months without an offer - we told them it wasn't going to get any better than this offer and they finally got logical and took it but not without the dreaded "Executive Oversight Committee Review". So to get numerical about it, they got about 30% of what was owed.  This is becoming more common in SoCal....

Comment by Thom Colby CA Brkr 888-391-5245 on February 21, 2011 at 2:28pm

@Jim Hale -

Part of the "checklist" is a current BPO of not more than 90 days old. So once your deal gets to 90 days, they will order a new one if you ask. I don't know why, because they disregard most of them anyway !

Comment by Thom Colby CA Brkr 888-391-5245 on February 21, 2011 at 2:26pm

@Ben, I respectfully disagree.  I complete between 50 & 100 BPOs every month and typically I;m working on between 15 - 40 Short Sales at any given time since I'm both a Listing Broker and a 3rd Party Negotiator for other Brokers, I always ask the Negotiator for the Debt Settlement Company (Lender) how much weight the BPO has - 99% of the time they say "None or Very Little".  MY involvement is only in CA as Negotiating Short Sales in CA requires a CA RE License.

Comment by Ben Benita on February 21, 2011 at 1:49pm

NOTHING more important than the BPO in a short sale....LOTS of things you need to know about BPO valuations if you are going to be successful at short sales....

Comment by Jim Hale on February 21, 2011 at 1:32pm

Wendy -

Then it all does boil down to where you stand in relation to BPO.

But that means that they are basing everything on the price opinion of an agent who hopes to obtain the REO listing.  In Oregon, a BPO cannot be written that is not being done in pursuit of a listing.

So I have a listing where the BPO agent used comps from August and September...despite the fact that later comps were available.

I received a first counter from BofA at that BPO level.  I submitted comps that argued that the buyers price was on the market.  We received a counter at the lower level.  All that was with a negotiator in Texas.

Now a new negotiator from Florida has been assigned.  He is now back up at $137,000.

Is there some way I can actually get a new BPO?

Comment by Wendy Haisley on February 21, 2011 at 12:59pm

If BofA is servicing the first mortgage, what they will accept for offer depends on their investor's calculation of fair market value, regardless of what the seller owes on the property.  Investor calculates fair market value by ordering interior and exterior bpos, uses other bits of info obtained and comes up with their value.  What BofA or any other servicer can accept then as offered price is determined by:

Offered price minus costs to sell must be at least 85% of investor's determined fair market value.  88% is preferred. 

Example:  Investor's determined FMV is $200,000, then net proceeds to investor must be at least $170,000 or servicer will counter to the buyer.  When you consider 6% commission, 1%-2% seller closing costs, tax prorations, atty fees, and commonly 3% seller concessions to buyer, possible pmt to 2nd mortgage, then offered price had better be at or very near investor's calculation of FMV in order for offer to be acceptable as all these seller costs total 12%-15%.  There you have your 85%-88% net proceeds required.  It doesn't matter to them how much seller owes.  I have had short sales accepted with seller owing twice what property is worth and denied when seller owes only 10% more than property is worth.  It is not based on what seller owes, but is based on investor's interpretation of today's fair market value.

Comment by Wendy Haisley on February 21, 2011 at 12:49pm

The percentages I was talking about was the percentage of the UPB of the second lien.  Example:  If FNMA is investor of first mortgage and the 2nd mtg unpaid balance is $120,000, then first will allow 6% of $120k which is $7,200 or $6,000, whichever is lower.  In this case they would allow $6,000 to second from sale proceeds.  If UPB of 2nd mortgage is $40,000, then all first will allow them is $2,400.  That is regardless of the UPB of the first mortgage. 

Comment by Jim Hale on February 21, 2011 at 12:28pm

@Thom Colby:

 

If FNMA is the investor on the first, where does that likely put the expectation for per cent of UPB....at the 50% or the 90% level or just where in between?

 

I can easily see why they would not base anything on BPO value  But basing decisions on a flat percentage of UPB is even more arbitrary and unrealistic.

 

Do they not leave any room for judging on the merits of an individual case.

 

I feel like I'm dealing with the Wizard of Oz.

 

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