Editor: Bofa keeps tip-toeing around the short-sale problem. Their vaunted Equator platform has turned into a launching-pad-to-the-Black-Hole, and their “appraisals” are coming in a solid 10% above retail, killing every deal that comes along. Now they’re rolling out the pre-approved short sale package (that allegedly was supposed to have begun in April), and testing it with 2,000 people that they already ticked off while in loan-mod purgatory. It sounds like ploy to appear heartfelt, while wasting another six months:
From REO Insider:
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 also 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.”
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.”