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Another Amazing Bank of America Cooperative Short Sale
I closed another Bank of America cooperative short sale yesterday, this time in West Sacramento. The entire short sale was processed as smooth as silk. Our on market date to closing was fewer than 60 days, start to finish. This is because I prequalify my sellers whom I believe will be a good candidate for the Cooperative Short Sale. By the time we go on the market, we have the agreement in place to do a Cooperative and we have the preapproved price from Bank of America. Which in this case, was about $50,000 less than I anticipated.
There doesn’t seem to be a lot of rhyme nor reason to the valuations we receive from Bank of America. Most of the time, they are right on the nose, but sometimes the prices are too high and, every so often, they are a little too low. Even when they are low, though, it sets the stage for multiple offers, and multiple offers can push up that price.
When I sat at the dining room table with the sellers, I could see the little clouds of doubt lingering in their eyes. They were sharing with me their net worth and retirement plans, and I was explaining how Bank of America will most likely not request any financials, no tax returns, no bank statements; not even a hardship letter. It was clear that saying this was akin to telling them the Easter Bunny would hop into their yard in the early morning hours to hide Easter eggs. They nodded and looked thoughtful, but they had reservations, as any normal person would.
We went on the market, received several offers, and were in contract a few days later. The buyers absolutely loved the home. When Bank of America asked the sellers to submit a 4506T, that was the other shoe they had probably been waiting for to drop. But the 4506T was just a form, and whether the bank requested tax returns or didn’t, it had no bearing on the short sale.
The nicest part about the short sale is the fact the buyers gave the sellers permission to move at leisure, so there was no big rush at closing to get out. The sellers were able to stay current on their mortgage payments and were released from liability, plus the bank paid them a relocation incentive on top of an HIN incentive. Everybody got what they wanted, which makes for a very happy ending!
If you’re wondering whether you might qualify for a Cooperative Short Sale through Bank of America, call your Sacramento short sale agent, Elizabeth Weintraub, at 916 233 6759. I’ve closed many cooperative short sales; I know how everything works, and some sellers qualify for different types of programs. Don’t trust your future to some agent with an unproven track record. Get an expert.
What You Need to Know About The Short Sale Approval Letter
Bank of America broke out its Cooperative Short Sale program in California about 3 years ago. Since then, many short sale agents have taken advantage of the fact that they can get their sellers preapproved for the program prior to going on the market. Preapproved is probably not the right word, although, that’s pretty much what happens. Preapproved suggests that nothing can go wrong, and things can go wrong.
For example, a preapproved Cooperative Short Sale seller last year lost her chance to close on a short sale because Bank of America assigned the loan servicing in the middle of her short sale. The new lender did not participate in the cooperative short sale program, so she was denied. She was denied because under ordinary circumstances, this seller had too many assets and her disposable income was too high. There was no hardship.
Some sellers think that they when they receive the Buyer Acknowledgement of Interest that they will receive a short sale approval letter before submitting an offer, but that’s not how the program works. First a seller will receive the BAI, and then a valuation letter. The valuation letter assesses and predetermines the minimum approved listing price. If that price is reasonable, you’re in luck. If it’s not, you’re kinda hosed. Most of the time, though, unless the investor is Fannie Mae, that price is reasonable.
Then the home goes on the market at the preapproved sales price. Generally, the seller does not submit financials nor a hardship letter unless the investor specifically requests it after the offer has been submitted. The short sale approval letter arrives after Bank of America has approved the purchase offer and the buyer. The buyer is named in the short sale approval letter and generally another buyer cannot be substituted.
In California, a deficiency judgment is not permitted, and by agreeing to do the short sale, the bank waives any right to pursue a deficiency judgment. If the property is a personal residence, odds are the seller will qualify for relief from paying any taxes on the amount of the mortgage that was forgiven. Talk to your personal accountant and seek legal advice before starting a Cooperative Short Sale so you feel comfortable moving forward. Do not ask your Sacramento short sale agent for legal or tax advice.
The short sale approval letter will arrive somewhere between 10 days and 4 weeks after the offer is submitted to the bank. The letter will most likely give the seller 30 days to move, so a seller might want to start making plans to relocate when the home goes on the market, especially in our fast-moving Sacramento seller’s market. Sometimes extensions are granted but not always. Sometimes, instead of granting an extension, the bank makes the seller start over with the short sale and will order a new valuation, which could increase the value for the buyer, if the buyer elects to wait. It’s not a good idea to ask for an extension because it is risky.
Bank of America will also require that the seller have no preexisting relationship with the buyer. Can’t have done business with the buyer or know the buyer or be related to the buyer. Selling to a friend could be fraudulent if the bank doesn’t know about it. If the bank proves mortgage fraud, it could overturn the deficiency waiver, so it’s just not worth it to try to manipulate the stipulations. If you know a person whom you believe has committed mortgage fraud, you can notify the bank anonymously at 866.880.1232. There is no reason to gamble with your short sale.
If you’d like more information about a Cooperative Short Sale in the Sacramento metro area, call your Sacramento short sale agent, Elizabeth Weintraub, at 916.233.6759 for a confidential consultation by phone.
The Seller’s Hardship in a Short Sale
I can often spot a Sacramento buyer’s agent who is new to short sales. They are the guys who start firing off questions the minute they get this short sale agent on the phone. It’s like they are reading from some list of questions to ask a short sale agent, and maybe they are. There is a lot of goofy information online, written by people who are not short sale agents. You can’t blame buyer’s agents for thinking that it’s true because, after all, it’s online, man, it’s on the Internet, it must be true. A smart reader would consider the source before absorbing the data. Sometimes, it’s just an opinion and not fact. And sometimes, it’s a stupid opinion at that.
My absolute favorite question to get from a buyer’s agent is: What is the seller’s hardship? Even if I gave them that information — which I won’t — they wouldn’t know what to do with it. It’s like asking who is the lender; they don’t know what that means, either. They might hear it’s Bank of America and then cringe, because years ago Bank of America had received pretty bad press. However, nowadays, Bank of America short sales are, for the most part, pretty straight forward. So, unless that agent has closed a bunch of short sales herself, she would most likely be clueless about what’s involved or what she could expect to gain from obtaining that knowledge.
It’s none of the buyer’s business what kind of hardship the seller is enduring. That’s personal and private information. Any sensitive information shared by a seller with this Sacramento short sale agent remains confidential. In fact, it’s my fiduciary relationship with the seller that prevents me from disclosing information, apart from ethical reasons. The only thing a buyer or her agent needs to know about my short sales is whether I believe the short sale will close. They don’t get to see the hardship letter.
I’m not disclosing even if there is a hardship in a short sale because not every short sale requires a hardship. Some of my Bank of America Cooperative Short Sales have no hardship whatsoever but they close. If a buyer’s agent wants to know whether a Notice of Default has been filed, the agent can find that information in the property data available online to agents, right alongside the number of loans and identity of the original lenders.
A buyer’s agent is not squeezing the sellers’ personal and confidential information out of this Sacramento short sale agent.
Major Bank Settlements Pay Cash for Short Sale
Can you get money for doing a short sale with Bank of America, Chase, Wells Fargo or Citimortgage? That’s most likely the question in the minds this morning of many past, present and future short sale sellers. You might get enough cash to take a French Polynesia vacation, you never know. The New York Times reports payments as much as $125,000 to reduce principal balances could be offered as a result of these bank settlements. And the bank I see paying out the most in Sacramento is Bank of America on those Cooperative Short Sales. Yup, banks will pay cash for short sale.
Remember way back when, when this Sacramento short sale agent suggested that Bank of America was actively dumping those old Countrywide loans? It seems I was right on the money with that call. If I spotted a Countrywide loan in a short sale, on that hunch alone, I routinely directed the seller to a Cooperative Short Sale. Never had a Cooperative that way rejected. I have probably initiated more Cooperative Short Sales on my own through Bank of America than any other short sale agent in town.
I recall one instance in particular. I was dealing with a third-party vendor, either REDC or DTS, don’t recall, there are so many. This particular third-party vendor was telling me we had to do a HAFA, and I insisted, no, it needed to be a Cooperative Short Sale, even though I was going out on the limb a little with that demand.
I was driving through Midtown Sacramento with the top down on my car, so it was hard to hear the caller on my Jawbone, but we argued for a good 14 blocks, all the way from J Street to Broadway. Finally, I suggested she call her supervisor to discuss because I didn’t want to hear from her again about a HAFA when this short sale was destined to be a Cooperative. Sure enough, a day or so later, the bank switched to a Cooperative despite the negotiator’s initial objections. That seller received more than $10,000 to do the short sale and no documentation was required. It can pay to disagree with an individual’s assessment. Because individuals aren’t always right.
For months, Bank of America has been releasing servicing. Sometimes, the service release happens smack dab in the middle of a short sale, which is a rude awakening. The bank needs to pay Fannie Mae $11 billion and needs to get that money somewhere, so it’s dumping its loan portfolios. Part of the problem with that is it’s reducing competition among lenders if Bank of America withdraws from the mortgage market. When competition is reduced, it hurts consumers.
It will be interesting to see how this all plays out. If you’re looking to see if you could be a lucky recipient of cash for a short sale, call this Sacramento short sale agent and I’ll check it into for you.
Photo: Flower of Tahiti, by Elizabeth Weintraub
An Exception for a Dying Man
I am presently working on a short sale for a seller who is dying from terminal cancer. This short sale seller is trying to get financial affairs in order so his wife is not burdened with more than a broken heart and shattered spirit. After months of negotiation, we are down to the wire. We finally have agreement on terms, conditions and are ready to close between the two short sale lenders. The second lender, CCO through RBS Citizens Bank, says it cannot give a dying man an extra 10 days to close escrow. RBS Citizens Bank says: Merry Christmas and don’t let the casket door hit you.
You might think I am a soft touch who runs around hugging trees and waving the give-my-client-an-exception flag, and you might be partially right, but I am stronger than you might think. As a Sacramento short sale agent, I believe that sometimes rules need to be broken. I don’t always cross the street at the corner — sometimes I jaywalk — but I don’t run through red lights. I am not asking RBS Citizens to do anything against the law, we’re asking to give a dying guy and his family a break and let them close by New Year’s Eve.
The negotiator wants to start over with the short sale. Starting over means a new BPO and all new paperwork. RBS Citizens Bank has been working on this file since July. It took the bank 3 months just to get the first BPO, which was completed in September. The BPO makes no difference in this situation, really, because RBS Citizens Bank is getting the maximum that Fannie Mae will allow. The BPO is just a technicality.
We had this once approved as a Bank of America Cooperative Short Sale, but RBS Citizens Bank fought with us for 5 months. By then, the Cooperative Short Sale had expired. Bank of America refused to renew or extend the Cooperative Short Sale status. That’s why it took us another 2 months to go the traditional route, but we finally got approval from Bank of America . . . and now . . . now RBS Citizens Bank will not give the buyer the extra 10 days the buyer needs to close her loan. RBS says the approval expires on the 20th and they need to start over. By the time they redo the short sale and all of the paperwork, the seller, quite literally, could be dead.
I don’t know about you, but my heart hurts.
