Short Sale Alert/Important New Information

I just had a very interesting conversation with a negotiator at Bank of America. As you may or may not know, short sales can be a very frustrating real estate experience. When I relayed my dismay at yet another delay to the negotiator, he felt the need to explain some policies that will delay the short sale decision.

Here is the information you need to know:

1. The negotiator has guidelines from each investor and when he/she reviews a short sale file, determines if it meets those guidelines.
2. A credit history is pulled on the owner of the property and all financial information is confirmed before short sale is sent for approval.
3. If it is determined that the owner can contribute financially to offset the loss, the short sale approval will be contingent on the owner bringing approximately 10% of the loss to the closing table or sign a promissary note for a higher amount at 0% interest for several years.
4. If an owner disagrees with these terms, he may provide additional evidence that they are financially unable to contribute any money towards the loss or try to negotiate a different settlement. This will be presented to a vice president for review.
5. If the vice president rejects this proposal, the file may be turned over to the Fraud Department for further review.

Real Estate Agents:

Don't take this lightly! Make sure your sellers understand there may be grave consequences if they do not provide complete financial information to the lender or servicer. Make sure they speak to an attorney if there is any question or concerns whatsoever!!

If you are working with a buyer who wants to put an offer on a short sale, make sure you have a conversation with the listing agent. You need to ask if the seller is prepared to make a financial contribution if asked by his bank. If not, you could be wasting your time and your customers time!

Sellers:

All financial information will be scrutinized. Make sure you submit a complete package to the lender. Speak to an attorney before proceeding with a short sale!

Consider each offer seriously, you may have a greater financial obligation with unrealistically low offers.

Buyers:

Find an experienced agent who understands the short sale transaction. Understand that the lender or servicer controls the short sale, and there is nothing that can be done to speed up the process.

Make a reasonable offer, if a seller is savvy, they will realize there is no benefit to them to take an offer below market value.

Please note:

Although this information came from a conversation with an employee of Bank of America and may not be the official stance of Bank of America, I think it is worth taking heed. It makes sense that lenders are continuing to lose large sums of money and will now start to reduce these losses in any way they can. I am sure Bank of America is not alone and I am sure most other lenders will look at short sales differently.

I look forward to your comments and your own personal experience with short sales.