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Columbus OH Real Estate News

by Jason Opland & The Opland Group

By Jason Opland | Agent in Powell, OH

Bank of America / Countrywide - Short Sale

Bank of America Short Sales

Bank of America Short Sales

Bank of America has introduced a new automated system called Equator that it is currently using to process all of it’s short sales of conventional loans (that is all of it’s non-FHA and VA loans) as well as former Countrywide loans which it acquired when it purchased the company. Equator has expedited Bank of America’s short sale process by having the borrower, and their real estate agent upload the short sale package, that is the application documentation, directly to the Equator System. 

Bank of America Short Sale Process - Getting Started

The first step to initiating a Bank of America / Countrywide Short Sale is to list the home with a Realtor who specializes in short sales and has significant experience with this lender. Your agent will be critical to the success of your transaction and while many agents have begun marketing themselves as short sale specialist, few of these individuals possess the knowledge and experience required to warrant this title and it is imperative that you select a true short sale specialist to represent you in the sale of your home.

The listing of a short sale is initially quite similiar to the listing of a traditional sale, however, the your lender will require the following additional documentation; the previous two years’ tax returns will be needed (these should also include  W-2s as well as tax schedules), paystubs for the previous 2 months, your previous 2 months’ bank statements for all accounts, borrower financial form (a detailed list of all of your income, expenses, loans and bills), a hardship letter (why you are no longer able to afford the mortgage), and a third party authorization (gives your lender permission to speak with your agent about your account).

Why are these documents needed?

Just as the you were required to apply and submit documents to obtain the loan, the bank is now going to require that you apply and submit proof that you can no longer longer afford the loan. The bank requires these documents and uses them to help better understand the borrowers financial situation and to determine if the borrower should be granted a short sale based on their circumstances. They are also going to want an explanation of the circumstances including what happened to put you, the homeowner in the hardship that you are in, ultimately causing you not to be able to afford your payments.

Who’s Eligible?

To qualify for a short sale Bank of America will want to see a clearly demonstrated “financial hardship”. Acceptable financial hardships include; relocation, loss of a job, payment increase or mortgage adjustment, business failure, reduced income, to much debt, illness or death, divorce, damage to property, incarceration, etc. In any of the fore mentioned cases, BofA will typically agree to a short sale and will accept this as payment in full on the loan (ie. the bank will not demand cash or a promissory note).

* Note if your payments are current, there is very little reason for the lender to consider a short sale. If your payments are behind, then a lender may be more agreeable to negotiate with you.

Thus the documents listed above will enable you in your efforts to successfully present a clear case to Bank of America that you are eligible and deserving of a short sale.

How does a short sale affect your credit?

The damage to a Seller’s credit is far more severe if they go through foreclosure or give the lender a deed-in-lieu of foreclosure. The points lost on your FICO score may be as follows:

  • Foreclosure or Deed-in-Lieu of Foreclosure
    Both of these solutions affect credit the same. A sellers can take a hit of 250 to 280 points. This means if a seller’s FICO score before foreclosure is 680, it could dip as low as 400.
  • Short Sale
    The damage to a credit report from a short sale is much less drastic and in the range of 80 to 100 points. The hit will be indicated as a “settled account” or as “pre-foreclosure in a redemption status”, or if your real estate agent knows what they are doing and is successful they may even be able to convince the bank to agree report the account as “paid in full”.   

The Bank of America short sale application consists of the following:

Listing Agreement Two Months Bank Statements (most recent)
3rd Party Authorization Two Recent Pay Stubs (most recent)
Hardship Letter  Borrower Financial Form (completed directly on Equator)
Two Years Tax Returns (most recent) 

Bank of America’s system is a little different than other lenders and homeowners need not submit the short sale application until an offer is received on their home.  Once and offer is received the homeowner must first call Bank of America’s Loss Mitigation Department at 866.880.1232 to setup a login.  Agents may also initiate the short sale for the homeowner by logging onto Equator but homeowners must still call to setup their personal login. Once a login has been setup, homeowners will then need to logon to the borrower end of Bank of America’s website at http://www.bankofamerica.com/shortsale.  

As your agent we can assist you in walking you through the process of initiating the short sale, preparing the short sale package and uploading the proper documentation, this in addition to marketing the home and securing a buyer, and negotiating the short sale on your behalf.

Once the required documentation has been uploaded, the bank will then assign a negotiator. One of the negotiator’s first task will be to order a BPO, or Broker Price Opinion of the property.  The BPO is an appraisal or assessment of the home’s current market value and is a key step in the short sale process.

Once the BPO valuation is returned the negotiator will submit the entire package for review and short sale approval. This entire process is currently averaging 30-55 days but varies depending on the type of loan, whether or not the loan is insured with a PMI policy, if there are any additional junior lien holders, the bank’s current work loads and the number of files the negotiator is currently working.  Files that are set to close before the end of any given month receive priority treatment. 

You can read about BofA Short Sales directly from their website:  Bank of America Short Sale

Bank of America Ends the Suspense

Deficiency judgments and the possibility of the bank attempting to pursue the homeowner after a short sale are a concern for many borrowers considering a short sale.  What these homeowners fail to realize is that the handling of the deficiency is part of the short sale negotiations and a real estate agent who is experienced in short sale negotiations, that is a short sale specialist, will require that the terms of the short sale approval include the lender’s agreement to accept the reduced payoff as payment in full, and not to pursue the homeowner for a deficiency.  

That said, Bank of America has decided to attempt to relieve distressed borrowers of this concern and in a recent statement made by their Senior Vice President of Credit Loss and Loss Mitigation, Mr. Jack Schakett, stated that if a borrower proves he can no longer pay the mortgage and has a few or no assets, Bank of America will waive it’s right to a deficiency judgment during the processing of the short sale deal.  But, if a borrower can afford to pay or has assets, the bank will try to negotiate a set fee for the borrower to pay at closing.  “We want to help customers who legitimately can’t afford to make payments, but we don’t want the one’s who have a bunch of money to just be able to walk away.  These individuals will have to share some of our loss.” Mr. Schakett acknowledged that short sales in which the bank agrees to accept less for the home than the balance of the loan are less expensive to process than foreclosures, and thus they want to encourage more homeowners to pursue this course by making it clear they do not intend to pursue homeowners for deficiency judgments.  While new federal programs such as HAFA actually require first mortgage holders to waive deficiency judgments for eligible homeowners and provide incentives to lenders such as Bank of America for participating in these programs, this statement by Bank of America clearly demonstrates their desire to work with homeowners to secure an option which best serves both parties.   

Have a Bank of America or Countrywide Mortgage and need to do a Short Sale?

If you have a loan with Bank of America and are considering a short sale in Columbus, Ohio or the Central Ohio vicinity  make sure you are working with a real estate agent who is a short sale specialist, while many agents claim to be proficient in these types of sales, few possess the knowledge and experience to accurately call themselves short sale specialist.  We have a working relationship with Bank of America and contacts within the bank’s executive offices whom we can call upon when we required to ensure our client’s short sales are not only being processed in an expeditious manner, but ultimately that they are approved under the conditions and terms we require.

Bank of America is participating in the Home Affordable Foreclosure Alternatives Program, or HAFA and eligible homeowners may be entitled to $3,000 in financial assistance to help with your relocation expenses. 

Please call us at 614.332.6984 to address any questions you may have and to discuss how we might assist you!

The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in;  Bexley  Columbus  Delaware  Downtown  Dublin  Gahanna  Grandview Heights  Granville  Grove City  Groveport  Hilliard  Lewis Center  New Albany  Pickerington  Polaris  Powell   Upper Arlington  Westerville  Worthington

Columbus OH Short Sales, Columbus OH Realtor, Short Sale Specialists, Short Sale Process, Ohio Foreclosure Process and your Options, Avoid Foreclosure, Short Sale vs Foreclosure, What to do when you owe more on your home than it’s worth, Loan Modification, New Albany OH Realtor, Powell OH Realtor, Dublin OH Realtor, Luxury Home Specialist, Luxury Real Estate, Buying a Short Sale or Foreclosure, How will a short sale affect your credit, Understanding Short Sales, Bank of America / Countrywide Short Sales, JP Morgan Chase Short Sales, Wells Fargo Short Sales, IndyMAC Short Sales, Citi Mortgage Short Sales, PNC Short Sales, National City Short Sales, Home Affordable Alternative Program (HAFA), What's My Home Worth?

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