Sunday, December 13, 2009

Bank of America Short Sale - What Can a Sacramento Buyer or Seller Expect?

So I have gotten to the point where I have closed so many Sacramento short sales, I figured I would share my experiences with different lenders...All lenders are radically different in the manner in which they process short sales. I think it is only fitting that I start with Bank of America (formerly Countrywide in some circumstances), since I have closed numerous short sale transactions with them. There are distinct differences in the process and the contact information if your loan is a former Countrywide loan, vs. a loan that has always been with Bank of America.

The following are the documents that Bank of America will require from the seller:
  • Last 2 months of bank statements
  • Last 2 months of paystubs (or proof of unemployment)
  • Last quarter of profit and loss statements, if self-employed
  • Most recent retirement earnings statement
  • Last 2 years of tax returns
  • Completed financial worksheet
  • Hardship Letter
  • 3rd Party Authorization Letter

Along with those documents, the listing agent must forward the listing agreement, purchase agreement, buyer's pre-approval letter, copy of deposit check, and Estimated HUD-1 (summary of costs associated with the sale). 3rd Party Authorization letters should be faxed to 972-661-7800, or 805-520-5019 (old Countrywide loan). Bank of America's general short sale fax number is 866-706-7497, or 888-491-4947 (old Countrywide loan).

The 3rd Party Authorization letter should be faxed immediately once the property is listed. The rest of the documentation (seller's financial documentation and purchase documenation) should be faxed ALL AT ONCE when it is all assembled. Do not fax an incomplete file to Bank of America, as it will likely be shredded at the other end...yes your fax may be around 100 pages. Bank of America's document imaging process is long. You may find yourself faxing documents multiple times before they are imaged into their system. In my estimation, on average, it takes approximately 2 weeks for a complete short sale document package to be uploaded into their system.

Once you can confirm that the documents have been received and imaged into their system, you should call at least once or twice per week. Bank of America's Short Sale Support department telephone number is 800-846-2222, or 866-880-1232 (old Countrywide loan). When you go through their phone system, depending on call volume, you may reach another department. Generally, someone in the short sale support department will order a BPO (aka, broker price opinion) or appraisal prior to the file being assigned to a "Negotiator" for complete analysis.

There are several variables that may influence the time periods of your Bank of America short sale. The fastest Bank of America short sale approval I have received took about 60 days. The longest Bank of America short sale approval I have received took about 180 days.

The best case scenario is that Bank of America actually owns the loan, and there is no mortgage insurance. This will ultimately produce the fastest short sale approval scenario because Bank of America is able to make its own decisions regarding acceptable losses.

The worst case scenario is that Bank of America does not own the loan, and it is instead owned by a 3rd party. A 3rd party can be another bank (seems like many of their loans are owned by Bank of New York, or Deutsche Bank), a securitized investment pool, a government entity (Fannie Mae, HUD/FHA), or a mortgage insurance company. In this instance Bank of America is just the loan servicer and can not necessarily make decisions about acceptable losses. This will ultimately produce the slowest short sale approval scenario.

Unfortunately, you will not know until a mid-stage of the short sale which of these variables exists. The negotiation will go through several "phases" is not unusual for the loan to pass through several "Negotiators" and have several BPO's. Once assigned to a Negotiator, you should be able to obtain that person's direct contact information, including a direct telepone and email address.

Once approval is issued, Bank of America generally gives only 30 days to close. BE READY...sellers be ready to move out, and buyers be prepared to close asap.

Bank of America seems to be the culprit of some of the absolute weirdest short sales I have done. The approval documents have been "lost" and short sales that have shown as approved in their system have taken weeks to get to me, and then we only have had like a week or two to close escrow. They have also "misplaced" short sale payoff checks from escrow. UGH...the only thing predictable about Bank of America is that they are completely unpredictable. I have worked with them many times and pretty can guarantee you it will be a clumbsy process...having said that though - these are very doable and I close them all the time. These require patience!

Click here if you are thinking about doing a short sale of your home. Click here if you are thinking about buying a short sale home.


Anonymous said...

Buyer's perspective: BOA Short Sale Approval letter issued on November 30th. My bank is ready to close on the house but Bank of America ( according to the listing agent ) has not assigned a closing agent to the property. The approval letter indicated that we need to close by January 15th, is there anything I or my agent can do to spend up the process. By the way - we submitted our offer on June 11th 2009 and got the approval on 11-30-2009. Gives new meaning to patience. We are based in South Florida. said...

The closing agent from BofA will be listed on the approval documents. The escrow officer just needs to get confirmation from BofA that the final HUD is correct and can close the escrow...

Scott said...

Question from a buyer. Our offer was submitted to BofA on 8/1 (90% of payoff, dead-center in the middle of neighborhood comps, pre-approval with credit score 800+). In system as of 9/18, negotiator assigned, BPO completed (full inside appraisal). On 11/1 new negotiator assigned, 11/23 went to mortgage insurer and Fannie for approval (according to customer service), said to take 30 days. On 1/10 BofA requested closing extension from us, and updated financials on seller. Now nothing. I believe seller's agent is overwhelmed. Feb 1 will be 6 months, and seller's agent does not know where the file is. Any thoughts? said...

If Fannie Mae is involved, you are fortunate it has ONLY been 6 months. My fastest BofA Fannie Mae short sale was 6.5 months, and I have three of them that are pushing the 8 month mark. Stay patient.

Scott said...

Thanks for replying, Erin...If I could get the agent who stands to make a lot on this deal to respond remotely as often as those who don't, I'd be the smartest guy around.

What's your experience with how long Fannie usually takes once they get the file? BofA told seller's agent 30 days for both insurer and Fannie, but given the holidays, I doubled it...missed that timeframe too.

Best wishes

Scott said...

Thanks for the reply, Erin. I am continually amazed at the number of people who, having no vested interest in my transaction, will communicate their opinions while me seller's agent, who stands to make a good deal of money, won't answer an e-mail or return a phone call.

Have you found any cosnsitency in the time that Fannie takes once they have the file?

Anonymous said...

Great blog! We are buyers waiting since Sept 09. We went to escrow without bank approval on the short sale. They mentioned this week that they assigned a closing negotiator and will do another appraisal. How much longer will this take? said...

Scott - the only consistent thing with a BofA/FNMA short sale is that they take a LONG time. =(

Anonymous - there are so many variables, it is difficult to say. Do you know who the "investor" is for the loan?

Anonymous said...

I'm a buyer of a shortsale property. Escrow is set to close FEB 15, 2010. The seller requested a 30 day extension and was granted his request! How can that happen when we are in contract and paid escrow fees that includes a non transferable appraisal?

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