Learn how to get your Bank of America short sale approved in this Bank of America Short Sale Case Study.
Bank of America Short Sale Case Study:
Property Location: Normandy Park, WA - King County
1st Lender: Bank of America
2nd Lender: Bank of America
Hardship:
“In 2003 my wife, daughter and I were living in a 3 bedroom home in Normandy Park, when we decided to care for my wife’s mother, who had recently been diagnosed with Alzheimer’s. The house turned out to be too small, so we bought a larger house in 2004, for $385,000, with the help of $700/month from my mother-in-law to help with the increased expenses.
“In the first 60 days, we incurred a plumbing problem that cost us $3,000, which we put on a credit card. The second year, we found that the deck had been impoperly installed and was infested with carpenter ants. That bill came to $17,000, and we took out a Home Equity Line of Credit, which also allowed us to remodel the 3 small upstairs bedrooms into two larger bedrooms. This came to $20,320. We also incurred expenses of $3,000 to remove trees that were leaning on to the neighbor’s property.
“We ended up having to remodel the downstairs so that my mother-in-law could adequately use it. This remodel came to over $125,000, and we asked for and received an increase in our Home Equity Line of Credit in 2006, because at this time our house had a market value of $695,000. At that time, we were planning to sell the home for a profit and settle our debts in 2009, which is when our daughter would be leaving for college and when we were estimating that my mother-in-law would require permanent 24 hour care.
“But by 2009, my wife had lost her job, and my mother-in-law had already been moved to long-term care, so we lost the $700/month from her that helped with expenses. In addition, we now had the college expenses for our daughter. While Bank of America granted us a loan-modification for the first mortgage, they could not help with the Home Equity Line of Credit, which is interest-only. I have paid $15,000 on it in the last 4 years, but the balance owing on it has not changed.
“We have struggled to make the payments for both loans for the past three years. The house still requires more repairs, our cars have over 100,000 miles on them and are close to 10 years old. We are at our credit card limit. With the mortgages, tuition costs, and the credit cards, our debt is increasing by $10,000 a year. We want to make everything work, but we think we need to absolve ourselves from our financial burden because we don’t see any other way out of our escalating credit card debt that we got ourselves into. We need to sell our house and get our accounts settled.”
Sales Price: $345,500
1st Loan Balance: $337,197
1st Deficiency Balance: $24,472
1st Settlement: Deficiency waived!
2nd Loan Balance: $153,069
2nd Deficiency Balance: $147,069
2nd Settlement: Deficiency waived!
Timeline:
On February 11, the listing agent submitted the documents to Seattle Short Sales, Inc. The homeowner was denied HAFA, and the completed short sale package was submitted to Bank of America on February 17 - still awaiting a buyer. On May 1, Bank of America declined the short sale request since no buyer had come forward.
On June 29, a signed offer to purchase the home for $300,000 was received. The Seattle Short Sales, Inc., case manager requested updated financial documents from the listing agent and seller, and prepared a new short sale package, which was submitted to the lender on July 11. The home was to be auctioned by REDC, but the Seattle Short Sales, Inc., case manager was able to determine that REDC is not allowed to process files with offers, and had them close out the file. Through July and early August, the Seattle Short Sales, Inc., case manager continued to provide the lender with additional documentation as requested.
On July 25, BofA as second lender approved the short sale, waiving the $147,000 deficiency balance. On August 9, BofA as first lender countered with a purchase price of $360,000, allowing 6% commissions, $6,000 to the second lender (also Bank of America) and requesting a $5,000 cash contribution from the seller. The buyers countered, and on August 17 the lender countered firm at $345,000. On August 19, the buyers accepted this purchase price. The Seattle Short Sales, Inc., case manager moved to postpone the trustee sale, currently scheduled for the following week, on August 26.
On August 22, the PSA addendum reflecting the new purchase price was submitted to the lender. But the following day, the trustee sale still appeared scheduled for the 26th, and the Seattle Short Sales, Inc., case manager contacted the lender again about postponing the sale. On August 24 the lender confirmed that the trustee sale had been postponed, and that they had until September 20 to close the short sale. They issued their written approval, as first lender, of the short sale the following day, on August 25, requesting a reduced cash contribution of $4,500 in order to waive the deficiency balance.
Result:
The homeowners, who had been beset with numerous unexpected repair bills and medical bills, as well as new tuition expenses for their daughter, were able to short sale the home they could no longer afford. They were waived of having to ever repay the $24,000 deficiency balance owing on their first mortgage, and the $147,000 deficiency balance owing on their second mortgage - a total savings of $171,000 of debt written off.
This means that they are now in a position to consolidate and pay off their credit card debts, and get back on the road to financial stability.
To download a copy of the short sale 1st approval letter, click here: http://seattleshortsales.com/LiteratureRetrieve.aspx?ID=92224
To download a copy of the short sale 2nd approval letter, click here: http://seattleshortsales.com/LiteratureRetrieve.aspx?ID=92225
If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/
If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/
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