Looking For Government Guidelines?
Bank America Must Master The Short Sale!
After Bank America bought out Countrywide, it immediately became the giant of the mortgage world and now services way over 1/3 of all U.S Mortgages.
It only makes sense then, that they will be a major player in the evolution of the short sale… Short Sales are quickly becoming a more mainstream and popular foreclosure alternative, giving huge benefits to both homeowner and banks/servicers.
Bank of America is one of the major banks to begin using a new system; Equator, to process short sales. Equator is an on-line portal that allows the agent and the banks negotiator communicate short sale offer details, valuations and will systematically expedite the short sale file to approval. Tasks are processed, time lines communicated and the process is absolutely transparent to all the parties involved in the proces. No more;
Negotiator: “well; we must not have gotten your fax, can you fax it again?”
Agent: “I have sent it eight times now and you acknowledged receipt twice last week!”
Negotiator: “I’m sorry sir I can only tell you what’s on my screen; we have no such document in our system…”
With equator, tasks and timelines are set and updated, everything is entered by the agent and then accepted by the negotiator.
And Bank of America, has more than doubled the number of short sales it processed in recent months.
Add the fact that the government is throwing money at the banks and servicers and even homeowners to use the short sale as a foreclosure alternative.
(Some say it may be 20 years until this market rises to 2005, 2006 levels!)
How will the HAFA $3,000 homeowner incentive short sale government payment work? Well it has already proven to be enough of an incentive to stop some homeowners from looking forward to foreclosure’s cash for keys…
Here at wereheretohelp we now have eight active short sales on the Equator system, (by the way, I have heard from industry insiders that BofA owns a major stake inEquator, although I have not found anything to verify that) and we have closed many short sales with Bank Of America. We have also had much success with Countrywide, Wachovia, Wells Fargo, Chase, Homeq, Citibank, and many others, including local credit unions and even private lenders !
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Here is an article I found on the subject by Robert Hyder of Total Mortgage Services:
Foreclosure versus Short Sale: The Lesser of Two Evils
As home values continue to deteriorate and homes sink deeper and deeper underwater, short sale transactions are quickly becoming the latest trend in the housing market. A short sale is when a mortgage lender permits a homeowner to sell a property for less than the principal balance owed on the mortgage loan. As prevalent as short sales have been on distressed properties recently, they are about to become much more common. The Obama administration is set to implement a new plan that will pay an incentive mortgage lenders and borrowers to complete short-sale transactions. The new program, tabbed Home Affordable Foreclosure Alternatives (HAFA), is scheduled to take effect on Monday, April 5 and will alleviate the unfortunate setback for distressed homeowners.
Some details surrounding the new HAFA program include:
• $3,000 for borrowers to assist in relocation
• $1,500 for mortgage services to pay for associated costs of processing the short sale
• Up to $2,000 to investors that permit up to $6,000 in proceeds from a short sale to be allocated to subordinate lien holders
• Mortgage lenders must inform distressed homeowners of the lowest price they are prepared to accept
• Homeowners must present the mortgage lenders with a valid offer, and the mortgage lender must respond within 10 days
In light of the recent developments on the government’s proposal to encourage a short sale as an alternative to foreclosure, mortgage lenders are in a hiring mode to handle the anticipated influx of business directly related to short sales. It will undoubtedly be a challenge for the mortgage lenders to handle the dramatic anticipated increase in short sale volume in such a short period of time. To put it into perspective, short sales represented nearly 20% of home sales in February, while the percentage was closer to 10% as recently as last November. HAFA certainly expects to generate a significant increase in short sales very quickly.
One of the nation’s largest mortgage servicers, Bank of America, has more than doubled the number of short sales it has originated since the beginning of the year. This is an extraordinary turn of events since short sales pressure mortgage lenders to accept a discounted portion as payment in full. Previously reluctant to originate a short sale, mortgage lenders are now changing their views for two reasons.
First, mortgage lenders are making less money on a foreclosed property than they would on a short sale. While unemployment figures remain high and purchase applications continue to wane, it is far more costly for a mortgage lender to maintain a foreclosed property over time than to allow a homeowner to sell it for less than is owed. The other reason is fairly obvious. If the government is willing to pay a mortgage lender as an incentive to complete a short sale, that payment, however minor, will further cut into any loss the lender incurs.
It is estimated that mortgage lenders stand to lose approximately 50% on a foreclosure, while they lose approximately 30% on a short sale. Additionally, short sales are wiped from a mortgage lender’s portfolio, while a foreclosure can remain for an extended period of time. It is the hope that HAFA may facilitate the conclusion to the foreclosure crisis too many homeowners have endured.
On the surface, HAFA appears to be just what the doctor ordered.
Bank of America now services more than 30% of America’s mortgages.