Do you think your 401K is safe? Attorneys have told me in the past that short sale lenders won’t touch your retirement money. Guess what? FALSE! Today a Bank of America negotiator asked me to have my seller liquidate HALF his retirement account to get his short sale approved.
The seller has a $400,000 loss on a property in Santa Rosa Beach, Florida. We have been in the short sale process for four months. Today the negotiator said the file will not be approved unless he liquidates half his IRA for a $70,000 contribution. She said he has “some” income, although he has lost most of it because he is in sales…. His wife was laid off last week. There are no other funds. That is irrelevent to Bank of America. His wife's name is not on the loan.
I asked the negotiator, “Why would someone agree to give up half their retirement? They could refuse, then your company will have to pursue a deficiency judgment to try to get the $70,000 after a foreclosure .” She could not answer me, and I have yet to figure out the logic. $10,000, $20,000? OK, that makes sense. But half of someone’s retirement account? I can see how a seller might “roll the dice” and say “no” to the short sale, not give up $70,000, then wait and fight after a foreclosure. It might cost them $20,000 in attorney’s fees, but they might also save $40,000, not too shabby in this economy. I say if this is a trend, many sellers will take their chances with foreclosure.
What do you think?
It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Sign up for "SHORT SALE BASICS FOR REALTORS" Webinar
Destin Short Sales & Pre Foreclosure Help.
Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204
Email Wendy to sell your home or buy a home: itswendy@rulnickrealty.com
Call Wendy Rulnick, Destin real estate agent, to list and sell your home or condo on the Emerald Coast of Florida in Walton, Okaloosa and Santa Rosa County- Destin, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Crestview, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field. Wendy is a short sale and pre-foreclosure specialist and has been featured in "Kiplinger Personal Finance Magazine" and "Florida Realtor Magazine".
And people wonder why sellers walk away from their property . . . and let it go to foreclosure. That's a TON of money for the bank to request. Especially, since no one was putting a gun to THEIR (BofA)heads on the government BAIL-OUT!
Wendy- Bank of America gets TARP bail out money, takes over Countrywide and who knows what else, then plays hard ball. I would rather deal with the old countrywide any day. BofA now has their own forms to fill out and they now require an interview with the homeowner!!!!! This is for any file going to BofA dept.
Go above her head and explain Florida asset protection! A judgment in FL can not touch their 401K! So if they say no to the offer than BofA will get nothing on a foreclosure from this couple. They can not even garnish his wages as the bread earner and since his wife is not on the loan, they can not garner hers either. There is nothing for them to take as long as this couples lives in Florida.
Wendy,
I have seen BoA get more and more aggressive. I thankfully do not have any short sales with them right now. I am working one with Wells Fargo and just did one with PHH though.
If they want it so bad, they can have the house. Just turn in the keys, let the deal die and move on. Wow. I'm so sorry you have to hear that. It's pretty shameless and blunt - what they request.
Hi Wendy,
I like Nestor's comment above. I'd have the sellers offer BofA $5K from their 401K. It would be worth that just to get the ball rolling again and move towards a sale.
By the way, that BofA negotiater can't be hurting too bad..........he has a really nice shotgun!
Rudy
Carla - Good bullet point,
Katerina - I wish the couple lived in Florida. They do not... However, I will advise that they seek legal advice, it is absurd!
Larry - Over half of my short sales are BOFA.
Loreena - I could not reach the seller tonight. Tomorrow, we'll see what happens.
Rudy - BOFA raised their request from 18,000 to 70,000 after they got a copy of the IRA... Glad you like the shotgun.
The nuance of short sale's changes daily. Thanks for the heads up Wendy.
Hey Wendy, is this a BofA loan or a Countrywide-now-turned-BofA loan?
BofA is starting new short sale policies that will kill so many short sales. For example, the senior vice president for the loss mitigation group of Countrywide's Arizona office is now asking for promissory notes on first position non-recourse loans in California. We have to move our file to the loss mitigation department in California or Texas to get past this requirement.
We are headed for more difficult and interesting times. I'm glad there are soldiers like you in the trenches giving us the heads up.
Cathy- This is a frightening new trend.
Satar - Countrywide. I am glad I do not sell in California! These new policies are probably going to lose a lot of short sales.
We have had the same experience...not limited to one lender...they can ask...but they have not gotten any retirement money from any of our sellers. I would not be quick to listen to comments that may be isolated incidents...or people who pretend they do negotiation and we know do not. Blog on my Dear....
Now that these companies are becoming profitable and they are returning the TARP money it seems they will try and gouge your eyes out. It won't be too far off when they tell the homeowner to sell their kidneys and forward the proceeds.
It's a shame how quickly the govt acted with the auto industry only to see them seemingly sit idly by and letting the greedy get more in their pockets. The Russians and the Chinese fear their governments...in America we need to fear Wall St.
Sally & David - I have confirmed with Attorney Richard Zaretksy that they can"ask" but they cannot take retirement money in Florida and MOST other states.
Sidney - You might be right. This is the second "incident" I've had with Bank of America in one day.... They are comparing credit card payments to exactly match credit reports, too...
Wendy, these banks are grasping at straws. They are so far in the mass of ruins that they're trying to overcome their own inefficiencies....incredible, really!
It's scary Wendy what you went through. I've got a couple of files with BofA and I am now seeing their application and the Seller interview. They scared the pants off of one of my Sellers with the "we can come after you for the deficiency" threat.
The banks can ask for anything they want it when sellers say yes that they get the courage to ask for more and more and an untrained sellers agent would tell them to say yes just to get the deal done.. good thing they have you as their agent
Wendy this is an eye opener but when you think about it is not that suprising. Banks for getting tougher and tougher and don't want to absord the entire loss anymore.
Lynn - They are definitely getting worse.
Sergio - I just had to save one because of the "deficiency" threat... If they start trying to collect on all of these, it is serious bad news.
Eric - You are right... However, I leave it to the seller :) BTW you have a referral check coming next week !!
Bill - Tougher and tougher and meaner and meaner!
Scary news Wendy...as some of the others said, this is bound to encourage people to just walk away. Thanks for the info.
BOA just posted $2.42 BILLION in profit...in the SECOND QUARTER of a WEAK economy!
I'm not saying they should not be protecting their assets but playing hardball with people isn't really a business model that works over time!
Hi Wendy, I think that this is absolutely unheard of! I think they are making their own rules as they go... and not necessarily complying with Florida law. Unbelievable!
GUYS,
We all need to take a step back...realize what they can actually demand as opposed to just ask for. We can ask for them to take a low ball offer and hope, when they don't then we can raise the offer to meet more of the market price. They do the same...if they ask, how many people do you think will give it up thinking they have no choice.
This makes these posts worth their weight in GOLD.....Thanks Wendy and thanks to Richard.
I have buyers on a CW/BofA Short Sale. They really want/need this house, and the sellers really want/need to sell. The selling agent is responsive, knows the system, and is working hard. Buyers and Sellers are just your average families, struggling to get along. These banks ... these institutions ... have no heart. They are affecting good people and instilling fear into everybody. The madness has to stop.
I'm doing my first BoA short sale now. Thanks for all these "heads ups". It helps to know what to look out for.