Bank of America Short Sales & Using REOTrans (Equator)

If you are working short sales with Bank of America (Countrywide) you may have recently found one of your files sent to Equator.com, formerly REOTrans.com. As of this post they are just trialing certain files but it shows some promise but some faults as well.

If you are new to Equator (REOTrans) it may seem a bit confusing and on its own like many things it will take getting used to. Personally I like it because it should eliminate the crap that happens on every file with them. You know the 'we don't have the contract, we are missing this document or that document' response. Now you will be involved with uploading those files so they can't hide behind that one anymore.

Some tools you will need to be successful with Equator (REOTrans).
> You will need a way to create PDF files of your documents. It can either be a scanner or if you use an efax service you can set the service to deliver PDF files and just fax the documents into yourself for uploading later.

> PDF management software. Most lean to Adobe PRO but I suggest something MUCH cheaper. Check out NitroPDF Pro. Much cheaper and does everything you might need to separate nested files for uploading.


Please understand the steps we summarize below are not the official instructions from Bank of America. Why are we adding them here? Quite simply because B of A seems to think we should all know some of this almost 'magically'. It is as if they assume we've received their hidden signal in the radio waves explaining what is needed. Realtors will manage their side of this through the Equator.com web site by creating an account if they on't have one already. I won't be able to go into all the details of the Equator (REOTrans) web site as it is too involved for this post. Most of this is in reference to what they want our home owner to do.

EQUATOR BORROWER STEPS (Home Owner)
> Call to Bank of America at 866-770-7961 to set up thier access.

> The home owner will supply an email address and provide an answer to a security question.

> Bank of America will email at the email address the home owner provided them with a temporary password and instructions to login to B of A. See Sample email letter HERE.

> The home owner will login with the temporary password and are required to set a new password. The new password must be 8 digits in length, contain 1 number and 1 capital letter.

> They will use the answer to the security question they provided on the phone at the bottom of this page to set and approve the new password.

> They can now return to the page and login with their new password.
See Screen Shot of Sign In Page HERE
See Screen Shot of Successful Login Page HERE

The address for the page they are going to is https://shortsale.bankofamerica.com/ (notice there is no ‘s’ at the end of ‘shortsale’)

Bank of America needs the following pages be filled out.
1. Supply Hardship Reason (See Screen Shot of Page HERE)

2. Submit Financial Information (See Screen Shot of Page HERE) Note that only the red asterisk ( * ) are required to be completed.


In the 'What Were They Thinking' column:
Why in the heck are they REQUIRING the borrower (homeowner) to create a login and upload PDF files? First of all so many have spent months avoiding all contact with the banks. Those that are communicating are just hoping this will all be over. Any and all hurdles they place in front of the home owner is just another reason for them to through up their arms and say forget it.Some do not have Internet access.

I know this sounds crazy in this day and age but many are having financial challenges and the Internet has become a luxury. Others in our area have certain cultures that seem to have very low use of the Internet. Those that do, don’t often have a scanner or what is needed to create PDF files for upload the bank is requesting.

For whatever the reason the fact that Bank of America is not allowing the Authorized 3rd Party that is on file to manage this is asinine. They need to fix this soon. Of course as an agent/negotiator you have all the details needed to call in for your client and set this up but that is not what Bank of America wants. An then of course there is the fact that this is all in English! What about all of my Spanish (as well as other) speaking clients that do not have English as their first language?

Okay so nothing is perfect.  I know of other Short Sale agents that hate this system.  I like it but just need Bank of America to see why their refusing the Authorized 3rd Party on file to manage the process for the home owner is not in anyones's best interest.

Top Five Reasons Short Sales Fail & How to Solve Them

There are some very specific reasons that short sales fail. Take a look at my Top-Five. I could easily expand this to 10, 15 maybe even 20 but that would be a bit overkill as they all often stem from the same origins.

Coming in at number-FIVE: Low Sales Price. Priced too low and every short sale is going to fail. Often an issue in areas with high competition and a seller that needs an offer fast. Or when a Realtor new to short sales thinks any offer is a good offer.

number-FOUR: Bank BPO (Broker Price Opinion) came in too high. We see this a lot when the agent doing the valuation is from outside our local area. Meet the BPO agent, show your comps and defend your price. But do it all politely and from a position of contribution. Annoy the agent and the value is certainly coming in high :( (also see last paragraph below)

number-THREE: Buyer backs out after a long wait. This relates to number-ONE below. Keep the buyer agent and buyer in the loop. Even lengthy short sales can make it to closing with the initial buyer when managed correctly. I also suggest getting them vested financially into the offer as well. Get the seller to escrow money to reimburse the buyer if the sale is denied but have the buyer complete all inspections and the appraisal right away. There will be some minor timing issues with the appraisal but once done the buyer feels a bit more tied into this purchase and will often stay for the long haul.

number-TWO: Second Lien Holder Demands Un-reachable. This can be for 3 reasons. The first is again a high BPO on their end where they feel the home is being sold too low, so they ask and push for more. Secondly is when they have their own mortgage insurance and will net a higher bottom line when the home forecloses and they place their claim. Third is when they think the home owner shows that financially they can participate in offsetting their loss so they ask for it anyway. Sure the payoff to the second has to be approved by the first but don't let that make you believe they won't push back hard. The best defense here is having the certified appraisal and holding your ground. Don't get me wrong it doesn't work every time but works 80% of the time for us. The most difficult to deal with is when the second has its own mortgage insurance. the best way to combat that is to push on the first to agree to the amount needed and do all of this while referring to your appraisal if you were able to get that done. Oh and the fourth reason the second lien holders demands might be unreasonable - you have Chase as the second lien holder :)

And my NUMBER-ONE reason Short Sales do not close . . .:
Poor Communication!
Wow, I cannot say this enough. With regular communication to your seller, the buyer agent and follow ups to the banks holding the liens there is no good reason for a short sale to fall apart. I understand it's not a perfect world and things go sideways all the time. But if you are on top of your calls and follow up it is a lot harder to be caught off guard.

It actually serves the greater good of both the seller and buyer to get the appraisal prior to waiting for the bank to approve the short sale. Top Reasons, numbered 5, 4, 2 & 1 can all benefit from having a certified appraisal to negotiate from. No matter what the banks BPO, the appraisal just cannot be ignored. Also if that same appraisal is an FHA or VA it holds with the property and will cause any following buyer to end up with the same value if the banks try to ignore it.

Why I Love Bank of America & Countrywide

I just wish Valentine's Day were closer. I wait anxiously to declare my love officially for Bank of America (and Countrywide). And there is no better time than Valentine's Day to share that special moment.

If you are working with Loan Modifications or negotiating Short Sales you share my feelings I am sure. What an amazing group of people to work with. WAIT . . . you don't agree?! You say I must be crazy, driven here by long hours on hold and not getting anywhere. I beg to differ. There are some great reasons to love them. There really is some comfort in relying on their unreliability. So actually they are reliable because of their continued unreliability. Without fail, every single transaction negotiating with them has been a mess.

They do crazy things like the following . . .

• Provide approval letters that require you close in 7 days. Then conveniently after repeated calls and emails to correct this to something reasonable for all parties they don't respond. Until of course the 8th day and then tell you the file is closed due to non-compliance since we did not close per the approval letter's expiration.
  



• Conflicting answers from their customer service on follow up calls. Operator A states they have the short sale offer but no BPO is ordered. Even though we just let the BPO agent in the day prior. Operator B contacted the next day says "we have the BPO but we have no short sale package on file, please re-submit”.
  



• Weekly follow up calls are answered with 'everything is moving along, there are no new updates’. Then magically on another follow up call we are told the file was closed 3 weeks ago due to non-compliance. When asked what the issue was we find they emailed to a non-existent email address requesting documents they previously confirmed they did have and due to their typo and our ‘lack’ of response they want us to re-submit and start all over. When asked why all other updates stated it was in review and why were we not informed 3 weeks ago of the issue they had no answer.

Now I know it might sound like I am frustrated with them. But come on let us all agree that there is some real comfort in knowing from the start that none of this will run smoothly. Take hold of all your Zen-like powers and find your peace with it. Seriously if we went into our Bank of America negotiations thinking it would be organized and truly geared to the best bottom-line for the bank then we would freak when all hell broke loose. Bank of America (Countrywide) is the quintessential 'Poor Short Sale Negotiating Experience'.

Do enough of these and you will be primed for keeping your home owner and buyer agents calm. We routinely tell our Bank of America clients to go on with their lives the best they can while we work these files. We tell them this is not only going to be a bumpy road but we are getting ready to drive into the perfect storm of short sales. So buckle up, hang on, keep your hands and head inside the moving vehicle and we’ll get to our destination eventually. Sure we’ll be beat up, bruised and exhausted but we will get there. Sadly for Bank of America, and due to this experience, not only did they lose more money by how long the process took they have guaranteed that when this home owner is back on their feet they will NEVER do business with them again, EVER. Every single client of ours has made this exact same statement. Such a shame – But I still love you Bank of America, keep up the shitty work!

UPDATE: A tear rolls down my cheek as I add this update. B of A is actually starting to use REOTrans to start managing their short sales. It’s a trial right now but this might just upset my love affair with them in the long run. But that’s okay, there is always Chase ? (Read my next article on my love for Chase ?)

Canceled Debts and what your CPA better know.

By now you all have heard of the tax concerns for homeowners in respect to short sales and foreclosures. If you are a Realtor you know that you have to stay away from offering advice in a field you have no experience in. Even if you do have experience if you are not in fact the CPA for the client you are speaking with you risk major issues down the road.

Refer your clients to a qualified CPA with any and all questions related to thier taxes. If they are experiencing a short sale or forecosure it would not be the year for them to file on their own.  If you would like to refer your clients to IRS Form 4681 that will define much of what they might need to know. Even with this knowledge I suggest they use a CPA and particularly one familiar with short sales or foreclosures.

IRS Publication 4681: Canceled Debts, Foreclosures, Repossessions, and Abandonments (For Individuals)
Download the document at Link: http://www.irs.gov/pub/irs-pdf/p4681.pdf

Loan Mods Failing - Treasury Needs a Plan-B

Here is a great read from the New York Times. Take a second to check it out. Read the complete article here http://www.nytimes.com/2009/12/06/business/economy/06gret.html

If you get a chance check out some of the other great articles from NY Times author Gretchen Morgenson by Clicking Here!

Realtors, Bankruptcy Attorneys are your friend.

It is a shame that an adversarial relationship is the norm between most Realtors and Bankruptcy Attorneys. In the world of working with distressed homeowners we all need to work together to find the best solution for the homeowner NOT for the Realtor or Bankruptcy Attorney.

It is a terrible shame that there are people that search out people in distress and take advantage of them so they may benefit financially. Realtors and Bankruptcy Attorneys are in a position of, on their own, destroy the homeowners they are supposedly working to help. The reason - they both are afraid if the other is in the mix that they might not 'get the deal'. Let's all be professional here and network with each other to help those searching for our unique skill sets.

Realtors are you aware that your marketing statements or conversations with homeowners stating that completing a short sale will be best and that if they need a bankruptcy they can do that later. Welcome to your potential lawsuit in a year or so! For some homeowners the completion of their short sale may eliminate their ability to file for bankruptcy later.

Bankruptcy Attorneys need to know that after filing for bankruptcy the long term interest of the homeowner may best be served by completing a short sale. Consultations with a FICO insider that works the modeling stated that early in 2010 adjustments will start to reflect the advantages of a short sale where the homeowners contributes to reducing the banks overall loss. Versus a homeowner that does not and allows the home to foreclose.

Now let's all be realistic and remember that no matter what our personal thoughts on loan modifications are that there are some great resources for that as well.

So network with professionals and create alliances that will support the best interest of the home owner and not your pocket book.

Introduction of Home Affordable Foreclosure Alternatives (HAFA)

I would love to share my thought on this new 43 page program. Wonderful the administration has a program approved to help home owners. Great for homeowners not so great for banks. The key word in the documentation is 'elective'. This program is not mandatory for the banks.

There is really no incentive in the new program for the bank. The mere offering of $1000 incentive to the bank to complete the sale won't create a blip on their screen. I truly do not see this having any impact on how we as agents are currently helping our neighbors in need; well except for the fact that we need to educate our home owners on all of this.

The program officially starts in April 2010 and requires the 'participating' bank release the deficiency. In my state of Virginia they do retain the right to collect the deficient balance. I see no reason any bank would waive this right for a $1000 incentive, unless the deficiency value was very low. Add to this anyone with a 2nd lien and forget it. The program only allows for $3000 to them on the HUD and then the $1000 incentive. And they too would have to release the deficiency. Umm, I don't think so. If you are actively negotiating short sales in my market you already know that loans generated from 2006 or newer almost all have mortgage insurance. The second lien would in fact be better off allowing the foreclosure in order to improve their bottom line.

According to the program any bank using the 'Making Home Affordable Program' that is unable to approve the home owner for a loan modification then has 30 days to finalize a listing price for the sale and must follow the new HAFA program. The weak link in all that will be the second lien holder as most often they will not be participating in a loan modification at the time, nor using the Making Home Affordable Program.

Also did everyone conveniently forget about contract law? I am not an attorney but recently I was reminded that all the good intentions of this does not wipe out the contract law the mortgage industry and investors are relying on to back their notes.

So don't panic if you are a Real Estate Agent as it most likely will have little impact for now. As for home owners I hate to say it but it's just a bunch of smoke and mirrors. Sure some will be helped by the new system but the way it is written now it falls short of having any significant incentive to drive the banks to jump on board. Sounds great but unlikely to help us much at all.

Download the 43 page Home Affordable Foreclosure Alternatives (HAFA) document here.

Bank of America Short Sales - Smarter than a 5th Grader?

This post falls into the 'Are you smarter than a 5th grader' category. Here are three recent examples of a broken system that needs some attention. I am certain the higher ups truly want a solution of sorts to protect their bottom line.


But the painful truth is the system many of the banks are following just blows. I know that sounds so unprofessional to say it that way but all too often lately the arrogance, ignorance and complete disregard for the fact that we are working with people, families and some in such despair they have lost all hope.

Example 1: Recently after months of negotiating, files being lost by the bank, resent, lost again, BPOs (Broker Price Opinions) ordered multiple times we finally get an approval letter delivered to us from the bank. It allowed exactly 6 business days to close the sale. Absolutely impossible so we tried contacting them immediately assuming it was an error. For the days prior to the expiration of their short approval the negotiator never responded to our voice or emails. The day after it expired finally someone responds. They tell us the file was closed due to non-compliance since we missed the close date they required and we would have to resubmit all over again. When we noted we made over 15 calls and emails to them about this the negotiator said sorry that is just the way it is.

Example 2: Another file in review almost 7 months after no responses to any of our requests for updates we finally get an email from the assigned negotiator. She asks for changes to the offer and terms that require we speak with all parties to the contract. The rub here is that after 7 months of our waiting and their ignoring our requests for updates the negotiator states 'you have 72 hours to respond and 'agree' or the file will be closed'. Now how at all is that productive? I understand they need to manage turnaround times but it is completely unacceptable for them to take over 7 months to respond and then expect everyone else to move at light speed.

Example 3: The bank responds to our offer and requests an additional $5,000. We ask if the buyer will agree to pay $5,000 more and the appraisal allows it will they accept that? The negotiators response was that she did not believe it was the buyer's responsibility to make up the short sale shortfall and she would not allow it. Our response to her is the bottom line should be the only important factor here. The seller does not have the cash and the buyer is willing so what is the problem? She holds her ground but now she is no longer looking at the bottom line in my opinion she is allowing her ego into the picture. The truth is the bottom line should be the only focus not that some 'point' be made by pushing on the seller when it's not needed.

All three of these examples are from Bank of America. I believe if the supervisors had any real understanding of what was going on they would be more available to help solve these. But sadly we only see these issues on the rise. Good luck out there and be patient as often that patience will get you through and help you help the homeowner(s).

Negotiating Short Sales: Class 200

There are some gentle nuances to negotiating short sales that I would like to share with everyone now. These negotiating tactics are basic in principle but powerful when used consistently and correctly. First is related to negotiating the 'Terms' and the second related to negotiating the 'Approval'.

Negotiating the TERMS.
As listing agents or short sale negotiators we all tend to have a very common trait and that is wanting to control everything from the start. Well let me tell you when negotiating there are times where that will work against you. For example do not waste your time negotiating the 'Terms' of the short sale when the negotiator first speaks with you. You know this conversation, "Our guidelines will only allow for 4% commission, we cannot allow Admin or Inspection Fees, etc.". Most agents stand up right away and pound their proverbial chest stating I want 6% and well you know the rest. This is not really the time to set up an adversarial relationship and there is nothing in writing in which any party can defend. So let that initial rhetoric from the negotiator slide past you and wait to negotiate the 'Terms' when you have an approval letter in hand.

Negotiating the APPROVAL LETTER.
If you do have issues of contention with the approval letter avoid confronting them as the 'Realtor'. Come at them as though you are a 3rd party negotiator and make polite understanding references to the issues. Something like, 'yes, I completely understand and agree that for the bank to do better on the offer that a reduction to 5% commission is needed and your 'guidelines'. The road block I am hitting from my side is that the seller's attorney has stated the Seller cannot move forward at 5% since they would then have to pay the 1% difference out of their pocket. Is there anything we can do to move this forward?"

Working from a 3rd party approach to negotiating the approval letter reduces the confrontation you often face when the negotiator feels you and he/she are battling this through.

Chase Wants 20% as the 2nd Lien Holder

I wanted to use this post to share an example of how we all as Realtors can easily get caught up with what we think are changes across the board with some of the banks we are negotiating with short sales.

Recently while negotiating a file with 2 liens, Chase sat as the 2nd lien holder. Imagine my complete shock when the Chase negotiator stated they wanted no less than 20% of their balance to release the lien. He went on to say that anything less would close the file. I've heard that 'we'll close the file' remark more than enough to know it is 90% smoke and 100% crap. Sure they might at some point close a file but who the heck cares. A closed or denied file is just permission to step pasted them to someone above them.

But the point of this post is that unchecked and without previous experience of being lied to and manhandled by a negotiator I may have believed that 'oh my, Chase needs 20% to clear the second'! After doing some homework and calling to some passed negotiators I've worked with they confirmed that 10% will usually clear the lien and in tight offers they will accept as low as 5%. Additionally I found that my current file was in Tampa and that the negotiation team boasts the highest recovery rate of the Chase teams out there. So just in case you catch yourself in a similar scenario just remember when in doubt revert to the numbers. Is your offer better than the amount they would see if the property forecloses?

By the way when you hear them say it's okay if it goes to foreclosure that they have 'other means' to collect. Please don't panic or fall into this trap. There is nothing secret to worry about. They are most often referring to their right in certain states to go after the deficiency after foreclosure.

BankUnited Sold, Another one Bites the Dust!

And the hits just keep on coming. BankUnited was SOLD to a private equity firm. Not a huge shocker I guess. Whether you were keeping an eye on BankUnited themselves or just the banking industry in general, we all know it's not over.

So how does all of this and events like this effect us Short Sale Agents day to day? Well as I think of most of my short sale listing appointments the first thing that comes to my mind are the home owners in stress with loans from a bank like BankUnited. To most it is a big unknown and a huge addition to their stress. For now I don't see these sales having a huge impact on my short sale clients or even the negotiations. But I would suggest you do your best to stay current on these events as they will most likely pop up as questions as you meet new clients.

Avoid the knee-jerk reaction to give answers you don't have. Too many of us Realtors really want to help but completely forget about the legal ramifications to dispensing advice on subject matter outside of our real estate licenses. If you have a client stressed about their bank going through a similar issue, encourage them to contact the bank or do a bit of research themselves. They'll get the information they need and you get to keep your license for one more year. :o)

For more information on BankUnited's sale check out the article on Bloomberg.com at http://www.bloomberg.com/apps/news?pid=newsarchive&sid=azOHOtxuEFJY

Second Lien Wants More Money!

Month by month the issues related to negotiating short sales grow and evolve. One month it all seems to make sense and then crazy stuff starts to happen. So what can you do to get your deal through when you are having some challenges with the 2nd lien?

It all goes back to setting your seller expectations. Over a year ago most 2nd liens wanted at least 20% to release the lien. Six months ago they seemed to work through with 10% or less and now we are seeing a turn back towards the 20%. And the 1st lien of course only wants them to get $2k for everything. I always like to fight and negotiate the heck out of the deal. But there are times when, as the negotiator/Realtor, that it might make sense to let the deal move to close even if it might cost someone in the transaction some money. (I don't even like typing this, feels like giving in but . . . sometimes it will make more sense based on your seller's needs and desires).

We solve this problem by setting our seller's expectations. During our listing appointments we advise the seller that we will work towards a closing that will not require them to bring any money to the closing table. We explain how hard we work towards this end but that they need to prepare for the possibility from the start that some money may be needed. I always suggest they try to save 3% of what the sales price might be. This seems to be the magic number for us at least. During our most difficult negotiations with the 2nd lien this amount would almost always make up the difference the 2nd lien wants with what the 1st lien is going to give them.

As for someone suggesting 'well the problem is they have no money' I suggest you stop assuming some of this. If an owner knows from day 1 they might need a small amount of money and for 3% of the sales price they can clear a hefty debt from their backs, it all starts to make sense to them. And given enough time most owners can find a solution to getting some of that money.

But still fight the fight, nothing is cooler when all seems lost and you pull it all out because of your great negotiating skills, contract knowledge, sparkling wit and amazingly good looks ;-)

Bankruptcy, Loan Modification, Short Sale

It's a bit like Paper-Rock-Scissors. You need to keep in mind what one does to the other if you are going to work with short sales. Initiating one might just stop the other.

So here's what I suggest you keep in mind; Bankruptcy trumps both Loan Modification and Short Sale and Loan Modification trumps Short Sale. Simply put if you get one of these in motions it may impact something else you are trying to do so when in doubt - check it out. For example most banks in the process of reviewing a short sale will stop and cancel the short sale if they receive a loan modification request from your seller. This can be a huge problem if your seller is not communicating with you and they initiate a Loan Modification request while you are working your butt off on a short sale.

It can be different from bank to bank so play it safe. Make sure you instruct your seller to communicate with you prior to doing something that contradicts your actions. But be very careful here not to step in the middle and tell them to stop all together. You might be walking yourself towards a lawsuit by telling them not to do something because it potentially conflicts with 'your' preferences.

Arrogant SOB & "Guidelines"

Going for a little shock value with the title of the post but I'm a bit rev'd up today. It's very frustrating to deal with some of these negotiators. The urge to attack them verbally, with phrases like 'you're rubber and I'm glue . . .' come to mind.

It's an absolute trial of your Zen mastery skills communicating with some negotiators. But when all is said and done they are just trying to do their job. Right? Umm, sure, let's call it that for now. But the ignorance of some of them is beyond my imagination. But no matter, it's only self-serving to attack back. But don't get pushed around either.

You might find that some of them 'threaten' to close the file while you are trying to work the deal. They will tell you things like 'well the investor guidelines' or 'the bank guidelines' won't allow for it. Don't panic, let them and then escalate it around them. Keep in mind any pending auction/foreclosure date. But if you have some room then their denial is your go ahead. The tough part is keeping the other parties in the transaction calm while you push this through. The knee-jerk reaction is to give in and accept their bully tactics, asking for reduced commissions, no seller concessions and anything else completely out of line. They are counting on this from you. Closing the file is no big deal at all. Try to look at it as the next step towards your approval.

Why Would any Bank Deny a Short Sale?

Let's get past the obvious one first here. If the initial offer is way too low then forget about it. Some banks don't counter back at all in these situations. Well maybe with a 'give us a better offer' but often with no details on the actual price the want. There are always exceptions but be prepared for some crazy responses.

A big issue is the second. We all understand or believe that if the 2nd lien holder doesn't take the measly pennies offered from the first they won't get a dime. So as Realtors we pound our all-knowing chests and spout out 'you're crazy it's this or nothing'. Well not if the 2nd lien has purchased their own PMI (Private Mortgage Insurance). Some lenders have done this on their loans. So if you are dealing with a second trust that is fighting hard, not necessarily a HELOC, then ask the question - Do you have PMI on this? If they say yes you can see why they are sticking to their guns. If it forecloses they will still get 20% back from the PMI insurer.

If this is the case and the 1st lien holder is holding tight on the amount then get on the phone/fax/email and explain the situation and that if they don't allow the amount to the 2nd they are looking for that they will not release the lien for sale.