Bank of America (BofA) recently announced more changes to its shortsale procedures, effective April 14, 2012. New standardized forms and companywide timelines will be implemented. The goal: reduce the bank’s processing time from 45 days to just 20.
Under the new, “streamlined” process, sellers negotiating a short payoff with BofA are required to submit:
- a copy of the signed purchase agreement, including BofA’s Buyer’s Acknowledgement and Disclosure;
- A Settlement Statement (HUD-1) [See first tuesday Form 402];
- Internal Revenue Service Request for Transcript of Tax Return (IRS Form 4506-T) [See first tuesday Form 215];
- BofA’s Short Sale Addendum with the Agent Certification Form; and
- BofA’s Third Party Authorization Form.
Previously, BofA did not use a standardized Third Party Authorization Form, but accepted comparable forms from other sources. Under the revised process, BofA will only accept its own standardized version of this form claiming it will expedite the process.
The lender’s window for sellers to submit backup offers (should the first buyer rescind his offer) will be shortened from 14 days to five days, and the number of backup offers will be limited to two. BofA’s new guidelines call for their response to backup offers with a decision within three days of the offer’s submission.
For more information on the revised shortsale process, agents may visit the Agent Resource Center on BofA’s website.
first tuesday take
Forgive us if we fail to swallow the fantastic prospect of a 20-day shortsale decision timeline.
BofA is streamlining their short sale process? Wonderful! But the creation of a BofA-issued Third Party Authorization Form is supposed to hack 25-plus days off processing time? Are non-standard versions of this form written in Sanskrit? What next, a proprietary purchase agreement with fixed brokerage fees on which the buyer and seller are to submit their sale to BofA for approval?
Whether or not these recent revisions to BofA’s shortsale process will make it any speedier, its increased reliance on proprietary forms confirms shortsale transactions as a specialty area. This solidifies the shortsale negotiator’s place in today’s real estate market.
Most often, the regimented timetable accompanying shortsale negotiations with lenders is ill-fit for conventional brokers’ schedules. Shortsale negotiators then become necessary as additional agents to act as go-betweens for borrowers and lenders. Now, these negotiators must become versed in the endless varieties of forms, increasingly proprietary to each lender, related to the shortsale process.
A shortsale negotiator is often hired by the seller’s broker as a specialist, to facilitate negotiations leading up to the final shortsale transaction. It is his job to acquire the following documents from the seller or seller’s broker:
- authorization for the lender to release information to an agent [See first tuesday Form 124];
- a hardship letter, explaining the homeowner’s inability to meet the obligations of the loan [See first tuesday Form 217-1];
- proof of income (i.e. pay stubs, income tax returns, bank statements); and
- proof that the seller occupies the home.
If the would-be seller meets eligibility requirements for a shortsale — in other words, they are not qualified to borrow the current loan amount — then the shortsale negotiator may proceed to work on behalf of the seller’s agent to submit offers to the lender and close the deal.
With shortsales forming a significant portion of all real estate transactions, agents choosing to make the most of the depressed market by offering their services to other brokers and agents as shortsale negotiators will have little trouble mustering-up a list of clients.