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.