Short Sale Blog

This Bellevue, WA, homeowner avoided foreclosure through a short sale. He owed $687,000 on his first mortgage with Chase, and another $72,000 on his Chase second mortgage - a total of three quarters of a million in debt! But his home was valued at only $350,000.

Chase has just issued their short sale approval letter for the first mortgage, accepting $313,000 net proceeds on the $687,000 mortgage balance owing - a discount of $374,000.

And the best news is that Chase’s short sale approval letter waived the Bellevue homeowner of ever having to repay that $374,000 deficiency!

You can read the Chase short sale approval letter here: 5.9.12_Chase_1st_Lien_374k_Deficiency_Debt_Settled_Short_Sale_Approval.pdf

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

These Snohomish, WA, homeowners avoided foreclosure through a short sale. They owed over $460,000 on their Bank of America first mortgage, and $108,000 on their Bank of America second mortgage - a total of $568,000 of debt. But the purchase offer they received for their home was for only $425,000.

BofA has just issued their approval letter for the short sale. Since both mortgages were with the same lender, the mortgages were processed together. BofA accepted net proceeds of $366,000 on the $568,000 debt, for a discount of nearly $203,000.

Since the short sale was processed through HAFA, the Snohomish homeowners were waived of ever having to repay that deficiency.

You can read the BofA short sale approval letter here: 3.13.12_Bank_of_America_1st_and_2nd_Lien_203k_Deficiency_Debt_Settled_Short_Sale_Approval.pdf

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

Here is one more step in the continuing trend of both lenders and government working to streamline the short sale process: Bank of America will now allow the substitution of a new buyer to a short sale request.

Previously, if a buyer rescinded their offer to purchase, the seller (along with their real estate agent and short sale negotiator) would have to resubmit an entirely new short sale request, listing the new buyer. An original buyer might walk away from the deal for a number of reasons, such as:

• not being able to obtain financing
• not being satisfied with the home inspection
• becoming frustrated if the short sale application is taking too long.

In many cases, however, the seller does have a back-up offer from another interested purchaser ready to go. Under the old rules, the short sale application would have to be restarted from scratch, causing further delays to the process. With this new policy, the new buyer can be substituted in the same application package.

This change from Bank of America applies only to cases where there already is a back-up offer to purchase on file. If there is no available back-up offer when the buyer walks, the property will have to be relisted for sale, and a new short sale application initiated when a new purchase offer is received.

Bank of America’s initiative here is great news for homeowners, and yet another sign that lenders have realized that short sales are in their own best interest as well.

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/

My, how things have changed in a year or two!

It was not so long ago that struggling homeowners had to beg lenders to approve them for a short sale. But now, some of the major lenders are making the first move - contacting the sellers themselves to propose a short sale, and even offering cash incentives to homeowners!

These short sale incentive programs are not widely publicized, and they are considered to be “by invitation.” As banks realize that they may recover more of their losses by allowing a short sale than by pushing to foreclosure, they are targeting homeowners who are at risk of defaulting - often, before they are even in mortgage trouble.

The lenders proactively contact these homeowners, suggesting that they undertake a short sale, and often offering a hefty cash payment to the homeowner upon completion of the short sale. These cash payments are reported to range from a few thousand dollars to up to $35,000.

Some of the lenders implementing these incentive programs, and the reported incentives, are:

Bank of America Cooperative Sale Program - upon completion of the short sale, the homeowner receives a $2,500 to $3,000 relocation payment, and the real estate agents receives a 6% commission.

Citi Proactive Short Sale Program - according to the HousingWire, the average cash payment to sellers this year was $12,000

Chase - offers cash payments up to $30-$35,000 to sellers

GMAC - there are reports of cash incentive payments to sellers of up to $1,600

Litton - reportedly offers cash incentives to sellers of $3,000 to $5,000

Wachovia/Wells Fargo - offers cash payments of 1% of the sales price (minimum $2,500) for sellers.

Although these programs are considered “invitation only” - meaning that the lenders contact the homeowners, rather than homeowners applying for them - there are some reports of short sales negotiators successfully requesting that the homeowners they represent be considered for incentive programs.

But the big take-away from this story is that lenders no longer merely consider short sale requests - but that they are now proactively initiating short sales. This means that they are far more likely to consider and approve any short sale offer put to them than they were a year or two ago.

As Citi’s senior vice president of loss mitigation told the HousingWire, "We're not going to turn anybody away if the short sale meets the net requirement we're looking for." This means that the lenders are no longer looking for stories of exceptional hardship in order to approve a short sale. As long as the short sale represents the best way for the lender to maximize their recovery on a distressed asset, they will approve it.

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/

As reported by the HousingWire, Bank of America has split its mortgage servicing department into two: one for performing loans, and one for loans that are in default.

The home loan division, headed by Barbara Desoer, will service performing loans as well as originate new loans. The new “Legacy Asset Servicing” department will be led by Terry Laughlin, and will oversee loan modification programs and foreclosure programs.

Many regulators and industry players have been pushing servicers to divide their mortgage departments into separate sections that deal with performing and nonperforming loans. Bank of America’s move to do so may be seen as a move towards a new national servicing standard, which would work towards standardizing payment structures between loan servicers such as Bank of America and GSEs Freddie Mac and Fannie Mae.

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/

Seattle Short Sales has just wound up negotiations with Bank of America (as both 1st and 2nd lender) that have resulted in the lender waiving all deficiency rights.

This means that the borrowers are not required to pay back all of the money they borrowed when the house sells at a loss. But, even more significantly, in this case the lender has agreed not to pursue the borrowers at a later date for the loss, or “deficiency.”

In this case, the couple who owned the home ran into trouble because of falling house prices, which resulted in the value of their home being less than the amount of money they owed on it. When the wife was laid off work, the couple could no longer afford to pay their mortgage payments, and were forced to sell the home at a loss.

Seattle Short Sales assisted in the negotiations. Both first and second mortgages were held with Bank of America. The total that the couple owed was $284,000, but they were only able to sell the home for $179,200. After closing costs and commissions, the amount paid back to Bank of America on the two loans was $159,000.

The remainder owing on the two mortgages was $119,000 - $45,000 of that deficiency being on the second mortgage, which the lender could choose to pursue. Seattle Short Sales helped the couple reach a no-deficiency agreement with the bank, where they paid the bank a total of $10,000 to forever relieve them of having to pay back the money owing - saving them over $35,000. This is the first time that Bank of America has ever completely released a deficiency.

Read this complete Case Study: Bank of America Case Study: No-deficiency judgment relieves sellers of loss