Bank of America Revises Short Sale Policy

[Ty H.]

Bank of America, one of the country’s largest mortgage lenders, says it is loosening its policies on short sales in response to the U.S. Treasury Department’s announcement last week that it would increase incentives for lenders to work out short sale deals.

The government’s plan is a boon to banks, says David Sunline, BofA’s real estate management executive, because it provides guidance when there are multiple liens, a potentially litigious issue for lenders.

In the past, the bank followed Fannie Mae’s policy of giving second lien holders about 10 percent of the second mortgage balance in a short sale. Now when it holds the second lien, BofA will accept 5 percent of the net proceeds of the short sale, Sunline says. When it is the first lien holder, it will offer 5 percent to the holder of the second lien.

Sunline says home owners considering short sales should contact the bank within five days of getting an offer on the home and expect its cooperation as long as the offer is within the range of other sales in the area and the borrower can demonstrate financial hardship.

Source: The New York Times, Bob Tedeschi (05/15/2009)

[Scott Hubbard]

Originally posted by H Mann:

Nick, yeah...I'm working with a fairly experienced negotiator.

Actually I shouldn't have said "seconds."

There's one property where we have the approval from BofA on the first, and the 2nd was originally with GreenPoint, now BofA.

We've been basically waiting on the approval on the 2nd for a while...and the negotiator at BofA who approved the first said:

"I'm going to close this file, because you'll be 65 years old by the time the 2nd is approved. Bank of America is NOT approving seconds at all right now."


Not to mention, we are having a hard time getting decent approvals on BofA/Countrywide firsts.

We offered 295k on another property, and BofA countered at 320k. The property can sell for 345k, but after escrow fees and transactional fees...there isn't much profit.

BOA is approving 2nds, I just got one. It was not with Greenpoint and I have never dealt with them, so I cannot say for sure if your negotiator is able to work through it.

You need a strategy for getting seconds to approved quickly.

For myself, I will send in two seperate HUDs. One for the the first where I am requesting a payoff to the second for 15% of the principal. And, on the HUD I submit to the second, I request a payoff approval for 5%.

When the loss mitigators are negotiating the terms, they need to show their supervisors that they are improving their net. If your able to counter and build on your initial offer, it makes the negotiator look good. You'd be surprised how well this works!!

As for the lender's initial counteroffer, you need to be countering and re-countering until they call the police on you for harassment. I feel bad if I do not counter at least twice. And, usually will counter at least three times. If your negotiator is telling you this is the lowest they can go, they are bluffing. If you counter, you need to be able to justify your numbers. Countering without support will get you nowhere quick.

BOA is a pain in the arse, but not for the reasons you stated.

Class is dismissed!!

Scott