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Bank of America to get it's act together

In 2009 Bank of America was one of the worst of the worst lenders to do a short sale with.  No professional  wanted to work a short sale with them because if you were lucky you could get a short sale done in 6 months and that only with a lot of follow up and sending and resending and resending paperwork that they lost.  Then you would have to resend again because the original paperwork expired while they were delaying things for arbitrary reasons.

In November of 2009 Bank of America adopted the Equator (formerly REOtrans) online short sale management system which was intended to streamline the short sale process and drastically reduce the time to get short sale acceptance.   Since the equator system has been started most people have found short processing times for Bank of America to have dropped to 45 to 90 days.  Which is a good thing.

However with the new system seems to have come the standardized acceptance letter that specifically reserves the right to collect any remaining deficiency after the short sale is closed.   Borrowers who had worked a short sale received that letter and were faced with a dilemma.   Either they can face certain foreclosure or they can do the short sale and wonder for the next few years whether the debt will be forgiven at some point later or if Bank of America was going to actually come after them for all that loss.    That of course significantly lowers the incentive of a borrower to even sell on a short sale.

Recently Bank of America made the following announcement.  Specifically they are saying that at the time of short sale acceptance they will agree in writing to waive any right to a deficiency if the borrower can prove that they have little or no assets and they will likely not have future income that is collectible.  This is definitely a step in the right direction.  They did however say that if a borrower has assets or substantial income that they simply won’t be waiving the right to a deficiency.

Their willingness to communicate their intentions up front is a huge step in the right direction.  That way a borrower has some sense of certainty when evaluating his or her options.

And of course being the skeptical person that I am have to discount anything the big evil Bank of America would say based on their track record.  I will believe it when I see it.  I think likely the trick is that they are going to decide that most folks have the money to pay the deficiency and will just not waive it.  I really don’t apologize for my skepticism in this area.   Bank of America along with the government loves to create wonderful programs that sound good.  They work for do a good job of creating positive public relations. But they don’t work practically for the borrowers they are supposed to help.

For instance there ability to simply process modifications under the HAMP program has been abysmal.  They recently came out with this program which is supposed to include balance write downs on their loan modifications.  Sounds great however only about 10,000 of their 14,000,000 serviced loans even qualify which of course is useless practically.

Like I said “Bank of America to get it’s act together.”  I hope it does before it mishandles more of it’s investors loans and causes more financial wreckage from unnecessary foreclosures and non performing assets.

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Andy Morris is an Ohio real estate broker with an expertise in selling homes on a short sale. If your Ohio home is heading towards foreclosure or you owe more than your property is worth, please call Andy at 888-4-STOP-IT to see if you qualify for a short sale with your lender.  Are you not in my area?  His foreclosure answer service is free to you as well.

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