When I first heard that Bank of America was rolling out its "Cooperative Short Sale Program," I was under the impression that it was available to sellers without hardship. However, that is not really the case. The bank says sellers without a severe hardship will most likely be asked to make a seller contribution but it does want to see some change in the seller's situation between the time the loan was originated and today.
Bank of America is simply validating, in a way, what I've been saying all along, almost any bank will grant a short sale if a seller is willing to pay for the privilege.
I attended a special invitation webinar yesterday for Bank of America Cooperative Short Sales. I'll offer this service to my Sacramento short sale sellers. The main advantage that I see is we can save the buyer waiting time for approval, providing the sale is approved in advance of an offer, which is the purpose of the cooperative sale. It's to get Bank of America involved in the beginning of the short sale, to give the bank more control, prior to an offer. But it doesn't appear to really speed up anything. It's just like a HAFA short sale in that regard.
If an agent runs a seller through a Bank of America HAFA or the Cooperative Short Sale program, the bank collects the seller's paperwork, does a BPO, analyzes the situation and arrives at a list price, which may or may not be market. All of this takes time. The same amount of time, most likely, that a buyer would wait, except it's only the seller who is waiting when it's done in advance.
For a short sale buyer, it's great. It means a buyer will get a response in 2 weeks after submitting an offer on a Bank of America Cooperative Short Sale. For a seller, the drawbacks are the BPO might be too high, but a seller could run into that problem anyway, and #2, the wait is just as long. Oh, and in the event the short sale is denied, automatic deed-in-lieu. The benefits are a seller isn't sitting in the home on top of packed boxes wondering if the short sale will be approved, plus, the seller could receive a relocation allowance.
P.S. I have an answer for that nagging BPO problem, which seems to rear its ugly little head in almost every short sale. Why don't the banks get off their cheap-ass butts and order 2 BPOs, each from neighborhood specialists, instead of from any agent wandering around with a real estate license? I mean, what do you expect for fifty bucks? A full blown appraisal from a competent appraiser? You tend to get what you pay for, and most of it is crap.
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Certified HAFA Specialist
My Sacramento Real Estate Listings
Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.
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Wow, I will check it out, this could be really good news for many want to be sellers? A good luck with your BPO..
Of course I question the good intentions of anything B of A is doing. It will be interesting if they deliver on this as quickly as you hope they do...will watch your blog on this one..thanks Elizabeth
I have a couple of Bank of America short sales that are about to be listed. It will be interesting how this plays out for them. And I love your opinion on the BPO issue...now tell us what you really think!!!
BofA is intent upon getting a market price for short sale houses.
This program appears to be their way to make a short sale more competitive in eyes of buyers. They realize they are taking a hit on price (after all the same work and expense on their part) because buyers (and agents) have been shying away from short sales because (1) there has been no assurance of approval and (2) it's taken way longer for a purchase to close.
They figure this will net them higher prices.
And it will.
B of A also doesn't trust the ordinary listing agent....not to the extent they trust REO agents - whose income, minds, hearts, contract language and commission rates they control.
They are adopting this program because they see it as being in their financial (and bureaucratic?) self interest.
And it will be.
B of A is showing a lot of intelligence in going this route.
They will be promoting it to the general public, seeking to get upside-down sellers to contact them first. That way they will often gain, among other things, input into the selection and methods of the listing agent.
They will like that.
B of A will also gain the initiative on the whole idea of hardship and will have appraised the sellers ability and willingness to bring a cash or note contribution to the table. They will have the investors on board early and throughout, risking less time lost on sales that will not be accepted.
We may all like that.
And B of A will certain that, after all the expense of a short sale process, they are going (by way of deed-in-lieu) to actually avoid the outrageous (and duplicate) costs of foreclosure.
So after gaining in all these ways, is it any wonder (with Uncle Sam looking over their shoulder) that they are willing to pay the borrower a pittance to move out?
Especially, when they will often be able to make that up by steering the sale to a listing agent willing to take less commission on the listing side.
What's not for them to like about all of this?
But BofA appears to still be prone to getting their cheap BPO's from (1) out-of-area agents with no local market knowledge (and often no physical visit inside the home) or (2) their own REO agents, who clearly have a conflict of interest.
It would be wise for BofA to take your suggestion to routinely get a second (albeit cheap) BPO opinion.
After all the process expense they have on these sales, you would think they'd realize that was in the interest of their investors/stockholders.
Certainly, we'd all like them to do that.
You certainly have a lot to say about Bank of America and short sales, Jim. I think they are offering the seller a relocation check because it ensures the home is left in good condition and helps the sellers to move. Not every seller in a short sale seller has enough cash on hand to pay a security deposit and movers.
Elizabeth -
Your comment is correct...on all counts.
My last BOA short sale they did send out an appraiser, and then counter offered 20K over the appraised value. I am not sure what BOA is trying to do anymore.
This post raises very important points regarding the benefits of the HAFA Short Sale Program and other cooperative short sale programs where the underwriting, and, as a result, the unknowns are addressed upfront so that the short sale buyers trying to purchase the financially distressed seller's short sale home do not have to wait months for a response to their offer. That plus the offer of a release from financial liability from the deficiency balance are other great benefits of these types of short sale programs. That is why I help my Nashville Tennessee underwater and financially distressed homeowners to apply for these short sale programs. However, as this post aptly points out, these programs still do not address the persistent problem of inflated BPO's. Unfortunately, regarding the BPO's there are really 2 problems: (1) the BPO agents not wanting to, or being able to determine the correct value and (2) bank BPO guidelines (i.e. not using distressed sale comps), which almost guarantee inflated/non-market valuations. Hopefully, once the government bailouts are over and banks are forced to revert to realistic accounting standards, the banks will actually start valuing the short sale properties as distress sales since that is what they are!
Like Jim Said!
Actually I am on the fence about B of A. I have heard such horrible things but to date my short sales have been let's say...Not Bad. Not great but certainly not as bad as others.
Thanks Elizabeth. I didn't know about cooperative short sales before this post. Love the BPO P.S. What I wonder is how many BPOs does an agent have to do to make a living?
Great Post Elizabeth! great snapshot of the new bofa program, I was wondering the exact same thing until I got more details about the program. Thanks for sharing!
I guess we'll wait and see how it goes.
FHA has been doing this all along and tey are great to work. Not sure why the other programs don't work as well.
BofA has tried this on one of my listings, and the price them came in with was close to the price the original buyer was willing to pay. Unfortunaltey, that buyer is now unable to purchase. Let's see if this speeds up the process any the next time we get an offer.
Another good one! Totally agree with your "PS" statement too. From the begining of the collapse, everything coming from Uncle Sam or his wall street banker pals has been hype with regards to making short sales faster/ better/ easier and with regards to helping home owners/ borrowers. The only people out there that seem to care are the agents. Well, some of them anyway... Nice Post!
I always submit with any SS contract, comps, most lenders are very appreciative, BoA could care less.
Great news for buyers! I sure hope BofA can work out the doc resubmission thing as well. Resubmitting docs over and over again is ridiculous at any point of the listing, whether before or after.
Hi Elizabeth, THANK YOU so much for the recap, I was unable to be on that call yesterday, and I really wanted to, we have a good book of BofA shorts, any little bit helps. If we can do the paperwork ahead of time, that is a huge advantage as we will likely not loose as many buyers...
I prefer to initiate the short sale prior to approval and sort of do a "blend" between the traditional and cooperative. Because it puts the control back into the seller's hands, where we'll most likely get a reasonable offer that can actually close. I also think Bank of America has figured out that part of the problem with pricing on short sales is the buyers don't want to wait and they don't want to wait out an unknown. The bank would get a more reasonable price if buyers didn't have to wait for approval, and that is a primary motivating factor behind the cooperative short sale business, in my opinion.
Bank of America has always been a love-hate type relationship. They struggle at times, they do better at other times.
Thank you for the update. and you are absolutely correct about the BPOs. I make it a point now to meet with the BPO agent, with my own, just to make sure.
I was on the call also, and this is a continuing move on BOA to improve on it's performance, and what a difference the last year has made from Equator and now this. In reference to some of the above comments I have had little probelm with BPOs but many problems with appraisers. I am finding out that dedicated BPO agents know more about the nature of short sales than many of the appraisers. The other complication on a price coming in high is not the fault of BOA or many of the appriasers, it is FHA and VA guidelines that prohibit appraisers from using distressed comps. My definition of a distressed sale is certainly a short sale.
Why don't they order BPO's from neighborhood experts? Because they want to get any hungry agent who will do it for the pittance they're offering.
Elizabeth - Each day there are new things to learn with short-sales. Thanks for keeping us informed. The larger the circle of light, the bigger the perimiter of darkness:-)
I was excited to be on this call too. it certainly is a step in the right direction. BPOs ughhh, when I do them I always push back when they say no distressed properties and they accept them IF you write up the market conditions correctly and thorughly on the BPO the lender is more likely to take it.
I loaned out your short sale book and it was returned to me today. I need to study it some more.
Hey I love your PS. They try to box BPO agents in with all their requirements and there are agents out there that aren't even getting $50 for it (although the bank may be paying that to the BPO company) I've heard some banks are ordering 3-4 BPOs on one property. I agree an appraisal would be better.
I'm told people are starting to get upset about this poor practice. I know people hate lawyers but a few lawsuits and maybe agents and their brokers will think twice about taking BPOs in markets where they have no knowledge. Is it worth $35-$50?
Elizabeth - I think I was on the same seminar and had higher hopes for the possibilities though I'm hopeful it will help.
This is a step in the right direction for BoA. I have two cases for you - both successes:
Client A had a mortgage with BoA. They did a loan mod on it. We listed the house as a short sale. Within 10 days of submitting the offer to BoA we got back an approval letter. And the letter waived all deficiency! Yep - this happened last week.
Client B - has his loan with Wells Fargo. I received an offer last week on the home. Turned in a complete package on Monday. I was assigned a negotiator on Wednesday - BPO ordered on Thursday - I met the BPO agent at the house today! That's 5 days total! Wow!
Maybe the banks are listening - maybe I got lucky - maybe my CDPE is paying off!
I think BOA is really trying, but they still have some work to do. I find their BPOs to be higher than all the other lenders I deal with. I was on this webinar as well and I was really glad to find out how to go up in the ladder to get some issues worked out. We'll see what happens.
My experience with the Coop program (they have had previous versions and different names) is that they are all over the place on the seller contribution! I had two identical short sales in Orlando..exact same units..two different owners but both with BofA and the incomes of the owners were withing about $5k...one was $80k per year and the other about $85k..same expenses etc...BofA had $20k contribution on one short sale and $50k on the other and the short amount was almost identical and the sales price was almost identical too!!
Interesting. I'll wait and see how this turns out in our area.
If the banks could at least use full time agents for their BPOs...
I listned to this webinar also and even wrote a post about it, too. I think that people are going to get over excited about this program. Even if it is fast and efficient, if there is another lien at another bank, well...
Honestly, I wouldn't trust any program that BofA put together. They have just too many dirty dealings for me to trust them.
I am going to an in person B of A meeting on Feb 3 that I assume will be about this program as well. Should be interesting. They are only allowing each B of A mortgage broker at the office to bring 1 agent. I thought it was because of space limitiations but I wonder if there is something else going on.
BOA is not as bad as one thinks... I closed a short sale with them and it was very straight forward. Took 110days for the approval letter, but everyone was happy, mostly the sellers. Best of luck with your BOA transactions.