Bank of America has launched their new pilot Short Sale Program. This is a new step toward speeding up the short sale process. I applaud banks like Bank of America for their efforts in working through the foreclosure crisis. It take time but in working through “Short Sales” every day we see positive changes and the process taking less time and getting easier. If you know someone who may need help with a Short Sale or loan modification please have them give us a call 303-996-2501
Bank of America tests new co-op short sale program
- by Jon Prior
- 5:23 AM August 13, 2010
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Bank of America is launching a new cooperative short sale program that will target 2,000 pre-screened homeowners, said Matt Vernon, the REO and short sale executive at BofA.
In an exclusive interview with REO Insider, Vernon said the bank pre-screened these borrowers who have been considered for a modification under the Home Affordable Modification Program (HAMP) and a short sale under the Home Affordable Foreclosure Alternatives (HAFA) program. They have either fallen out of both programs or failed to qualify.
“The big question we’re looking to answer is customer responsiveness,” Vernon said. “These are not customers who are seeking short sales but rather distressed customers who are on the road to foreclosure, and we want to provide them an alternative. Our goal is to provide a tailored program with incentives that are attractive to homeowners experiencing a true hardship.”
Under this “test umbrella” for future programs, no new documents are needed from the seller since they already submitted their financial information to the bank. BofA is waiving deficiencies, or the difference between what the home sells for and how much is left on the mortgage. Vernon said his department will assign a short sale specialist to work with the real estate agent and the homeowner to market the property for 120 days.
Letters have already gone out to the homeowners, and they have 120 days to list the property. Vernon said they are looking at a six month program. The bank will be working with the homeowners’ real estate agents, meaning the bank will not be selecting agents to work with the homeowners.
Once sold, the former homeowner receives a $3,000 relocation fee, and the real estate agent gets a 6% commission. If it doesn’t sell, BofA will accept a deed-in-lieu of foreclosure in order to satisfy the mortgage.
Vernon said the homeowners targeted are heavily concentrated in the sand states California, Florida, Nevada and Arizona.
“It’s a small test of customers who have been pre-screened,” Vernon said. “We’ve also worked with an investor to get their approval in the program before hand. This allows us to test and learn. Our hope and desire of this is that this pilot and others will help us design expansion of these programs in the future.”
That investor held a stake in the original mortgage that is now in default. Lenders need approval from these investors for a short a sale to go through. It has been one of the major hurdles in the short sale process.
The industry is beginning to recognize short sales as a serious alternative to foreclosure. According to the real estate data and service provider CoreLogic, short sales in the US have tripled since 2008. Freddie Mac recently reported that its short sale figures were up 600% from two years ago and said in its Q210 financial statement that it completed 22,117 short sales in the first half of 2010, up nearly 180% from 7,914 in the first half of 2009.
In Q210, BofA completed more than 25,000 short sales, almost three times the amount done in the same quarter last year. Roughly 90% of the short sales are performed on the Equator platform, and Vernon said by the end of the year, the entire short sale business will be.
“Bank of America is committed to constantly improving the short sale process for our customers and our real estate business partners,” Vernon said. “We continue to test new ways of completing short sales to provide customers with a dignified exit and help avoid foreclosure.”
Write to Jon Prior.
Steve Melnick
Realty World Colorado Homes
4 W. Dry Creek Cir Suite 260
Littleton, Co 80120
303-996-2501 Office
303-478-4125 Cell
steve.melnick@realtyworldcoloradohomes.com
www.realtyworldcoloradohomes.com
Home Affordable Foreclosure Alternative (Video) http://www.youtube.com/user/MakingHomeAffordable#p/u/0/XbPaLHFHL7A
