Replies to This Discussion

Permalink Reply by Steele V. Propp on October 8, 2011 at 3:03am

Since forever...almost.  It actually is only fairly recently that lenders have looked at short sales that are not behind in payments.  Missing payments is a common requirement.  Not for all, but still practiced by some lenders.

This is an individual bank policy.  If BOA says there must be missed payments to be considered for a short sale, then the seller has to make that decision.  One thing we as agents should never do is to directly advise them to do so.  They must come to that conclusion on their own.

In your case it has been done.  Proceed with the short sale.  Just know that this could be the policy of lenders you deal with in the future.  As for having time to market, you should still be fine.  If they have a short sale in the making they are less likely to quickly pursue the foreclosure.  Besides, the foreclosure process takes months and months.  The average time line is well over a year now.

Permalink Reply by Wendy Smith on October 8, 2011 at 3:41am

FYI, I've closed several BoA shorts without the borrower being in default.  I admit though, if the borrower is in default, the short goes much quicker than if the borrower is current.  If you are in FL, this is an excellent time to initiate the short sale (new incentive program for FL borrowers).

Permalink Reply by Sameer Punjani on October 8, 2011 at 4:05am

In california its about 90 days before they file a notice of default then another 90 days to sell. I wouldnt worry bout running out of time, just market the property and present a good package to lender. If boa gives u trouble find out if the loan is owned by fannie or freddie and contact them via twitter..

Permalink Reply by Dean E Eshelman, CPA, CDPE, IRES on October 9, 2011 at 12:11pm

This is the type of activity that needs to be reported to the Federal Reserve, the Controller of the Currency and your State Attorney General. In my opinion it is absolutely un-excusable for a Servicer to require or especially to tell a homeowner that they have to miss payments to be considered for a short sale. I am assuming the home owner has legitimate reasons for the short sale like a change in employment requiring a move or a hardship.  This really makes the public have the type of image for the Servicer that they have.

Permalink Reply by ElizabethWeintraub00697006LyonRE on October 10, 2011 at 4:25am

I'm still doing short sales at Bank of America in which the seller is current. Policy is not set by Bank of America. It is set by the PSA. It could be that the guidelines for your particular seller's loan require default -- perhaps it is a Fannie Mae loan?

 

Elizabeth Weintraub

Broker-Associate #00697006

Lyon Real Estate

Sacramento short sale agent

Permalink Reply by joe beauchamp on October 10, 2011 at 4:41am

The difference I see is that they bothered to tell you that payments need to be missed.  Many times, at least in the past at many banks, they wouldn't say a thing - just take forever to do nothing about the short sale.  Think about it, these people do not care about anything but their money.  The homeowner is paying - the account is good.  Is there any reason that they would want to overtly go out and make it a bad account and a loss?  It sure isn't logical.  And you cannot dare tell a homeowner to miss payments - they can sue you for telling them to ruin their credit and the bank can sue you for telling them not to pay what they owe.  I say be grateful that the bank let your homeowner know that he will be ignored until he is behind. [Interesting tact to try to have the homeowner restart payments.  I assume this will not work - the bank will refuse them at some point, and if the bank doesn't, then what position does it put them in?]

Oh, another caution - BOA will send programs to your homeowners.  Any of which will destroy your short sale.  Oddly, on a couple of these, I've asked Home Retention if they had talked to the homeowner and I got an honest, "no".  One was in a repayment program to make up 7 payments by 9/30 - she doesn't speak English - totally unaware of it, but BOA didn't care - she was in a repayment "plan".  Do you really believe that BOA is incapable of having the department sending out these conflicting programs be aware that a short sale is in progress?  Yes, BOA can appear quite incompetent and bureaucratic, but notice how whatever they do ends up being in their favor (to keep the account).

But, for people who feel that BOA is the bane of homeowners, take heart, they treat their investors pretty much the same way.  I just had a successful short sale manipulated out from under me by BOA with a Deed-in-Lieu that cost everyone - except BOA who gets to keep the account through REO now.

As others have said, needing to be behind has been this way forever, and personally, I think that makes sense (someone owes you $400K, do you really go to him and ask if you can take a $200K hit for no good reason?), although some banks do as you suggest - more accurately, some investors - remember, the bank (the servicer) gets paid to manage the account - it is not their money to lose.