I got the second approval letter from Bank of America today… That’s right, we are on approval #2- same buyer! This Destin Florida short sale was cleared to close back in February. But why did that approval fail? And why is the game "over"?
Strike 1
A few months ago I wrote “Countrywide Approves Short Sale – But Won’t Finance Approved Amount”. The buyer’s mortgage lender was also Countrywide, now Bank of America. They UNDERAPPRAISED his purchase of the Destin condo by $10,000, so he could not close for the approved amount. But Bank of America, the short sale department, did not care, and would not work to change the approval despite the fact that their own company would not lend money for the contract price. They closed the file! We had to resubmit a new package with the lower contract price and start all over. Insanity, yes, but the buyer really wanted the property.
Strike 2
After three more months waiting for the “new” approval, we got down to final negotiations. The Bank of America representative offered three choices before submitting the file to the investor, Fannie Mae:
1. We cut our commission to 3%
2. The seller agrees to a promissory note for $8000
3. Or the buyer increases his purchase price by $3000.
Does that even make sense? It didn’t to me, so I repeated it twice, carefully, to be sure I heard correctly. I also told her since it was a Fannie Mae loan, I could not see how they could reduce commission to under 6%. She re-stated the three options, and I subsequently got the buyer to increase his offer by $3,000. I sent in a contract addendum and a new HUD.
Three weeks later I got the happy call. Approved! OOOPS – Not so fast!! The demand letter had the wrong net on it. NONE of the past due HOA fees were included. The net was off by $12,000.
“What?! How can this be?!”, I asked the new negotiator who was now mysteriously working the file. He told me Fannie Mae will not pay the past due HOA fees in the amount requested unless the seller agrees to a promissory note. He also said Fannie Mae was limiting seller concessions to 3%. HUHHH??? The first negotiator confused the words "COMMISSION" with "CONCESSION"? I told Negotiator Two that the previous rep misstated facts and options, and that the HUD that was submitted for approval did not come close to the approved net. Normally, a HUD does not go to the investor unless it meets criteria for approval. He did not care. He told me, again, the file will be closed if the buyer does not perform. And I would have to start all over if we wanted any changes on the approval.
But before we can even get to Strike 3, the buyer walked. Game over!
It's Wendy
Wendy Rulnick, Rulnick Realty, Inc. Destin Florida
www.shortsales-emeraldcoast.com
email itswendy@rulnickrealty.com
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Ah, short sales.
It's such a wonderful dance we do............
Oh, Mr. Bank, you dance so divinely...............
Wendy - well ya gotta wonder how many other bizarre failed transactions are out there like this. No wonder we are in the pickle we are in. How dos one explain this insanity to buyers?
Jeff
Hi Wendy: This is why I think that the government should have let BofA go under. Other smaller banks would have bought up their assets and became larger banks. Unfortunately, what we got was a bailout of BofA which is already too big for it's britches.
:)
Wendy: Not all short sales are the same. It's all about the bank and BoA is the absolute worse to deal with. It's a darn shame that great agents are willing to do whatever it takes to get their client what they want and have no control over unreasonable banks such as BoA. I'm sorry this happened to you and your client who was so willing to play ball.
Wendy, what if everyone - consumers and realtors alike - boycotted the REO's and Short Sales? This may sound crazy but banks are maiking a mess of real estate. They are bad property stewards, they refuse to follow the rules and procedures that the rest of us follow, they make bad decisions, they don't act responsibly, they do nothing to help homeowners in trouble... If everyone just let those properties sit, perhaps the banks would change their ways. First, we need a law to require the banks to take care of the routine maintenance of all the properties they own. And another to make them pay the property taxes.
Can anyone imagine how many times that scenario is repeated daily across the country?
Wendy, comming from a person who does loans, its all about the lender whe it comes to short sales. There are some Lenders that i do not even send to becuse of what you just stated. But there are others that are great to work with and get the deal colsed. You need to find a great Mortgage Loan officer that has all the options to make your business grow, not go backwards. Hope this helps.
Ralph - I think he has two left feet.
Jeff - Or explain to the sellers?
Matt - Yeah, we are financing them, what a waste.
Kathleen - I personally need to go on the DL.
Maria - You could be on to something.
Lenn - Yes, it is dumbfounding.
Use it as a learning lesson and take your business elsewhere.
This does not surprise me.. I work many short sales with BofA and they are not easy to deal with although I get them approved eventually, they do not make it easy.
I also list REO for BofA thru First Preston Management. In the past 30 days, we have 2 properties that the buyer was using BofA for the financing to "make is easier" since BofA owns the REO. These 2 buyers were denied by BofA just before closing. We closed them with a lender who actually wants to lend money. The first appraised for $350,000 and we were under contract for $363,000 and BofA agreed to sell for $350,000 when the buyer would have financed the full $363,000 but BofA refused and eventually would not finance him at all. He makes 6 figures, had $150,000 to put down and was only financing $200,000, great credit score and BofA refused him.
Wendy, send Ken Lewis an email and let him know how much money his loss mitigation department is losing his share holders every single day. Ken.lewis@bankofamerica.com he is the CEO........ We should all send him emails every time we run into these issues
Wendy, I have recently become aware that the big bank in america has changed many policies and IMHO their short sales are becoming impossible to close. I don't want to start a rant, but I'm not likely to accept a listing for one of their short sales right now.
Kevin - Thank you. We even had branch manager intercede on this one.
Monika - I have issues with BOFA, but this is the worst one... I can deal with them, although they have a poor system, in this case, we had a negotiator who could apparently not understand English,
Jeff- Thank you for the email address, awesome idea!
Vickie - I try to hold back rants, but in this case, it had to be said.
Wendy - I'm feeling your pain. Been there, done that. I stopped sending my clients loans to BofA (as well as the other big national banks that received billions of bailout money) earlier this year for this exact problem. For most of the year, I have been using my smaller, local lenders for my clients loans and having much better luck.
Furthermore, whenever one of my clients is forced to pre-approve with BofA in order to make an offer on one of their REO's and the BofA rep attempts to pilfer my client (after my clients make it very clear to them that they have their own lender), I simply remind my clients of why I don't use BofA anymore and what kind of service they can expect from me. I have yet to lose a client to BofA.
Wendy,
Sorry to hear about this, but it is something we all are dealing with now with short sales and unfortunately many buyers won't hang around more than 3 months to buy a home. Thankfully, some will though.
I had BOA turn down a solid Cash offer on one of my listings recently as they want more $$. I think they made a bad choice, but hey, hopefully I can find another buyer soon.
On short sales, some banks do act faster than BOA, such as Litton, but each short sale usually presents a different challenge.
If they continue down this road and if they survive, if will take years if not decades for BofA to recover from their tarnished image. For now.... those of us in the short sale business will continue to pick ourselves up, dust ourselves off and go on helping our clients. Many times we win and sometimes we lose.... for just the dumbest of reasons. You keep going Wendy!
Donne - I don't know if the problem was BOFA as "buyer's" lender vs BOFA as "short sale mortgage holder". In any event, not good!
Dawn - Thanks for listening :)
Cathy - I agree about the tarnished image. I think many companies in our country will suffer after the economy recovers, people don't forget how they are treated.
Wendy, How do they come up with this stuff? And confusing "concessions" with "commissions" would be comical if it didn't cost the buyer a property and place your seller one step clsoer to foreclsoure.
I just don't know why things have to be so difficult.
Wendy I wish I could find a picture I saw before to post here. It shows a guy with his head up his ass. I would let you mail it to the short sale department:)
second time at bat focus keep your eye on the ball and knowing you you will hit it out of the park
I don't know what's up with Countrywide lately. We negotiate the HUD and the approval letter is off a few thousand. Once it gets to the closer, it's hard to get a hold of the negotiator. So we sit there and play this game of "What did they not cover on the HUD" and do whatever it takes to meet the net.
This file looks like it is from the Plano, TX location as their negotiators are the most ignorant of the three locations.
Countrywide negotiators get reviewed by the number of closed files. That's why they are in a hurry to close them. They also have this little trick where you call short sale support and short sale support asks you who is the buyer and how much is the purchase price. If your answer differs from what you faxed in (even on a mistake) you will get an e-mail from the negotiator (the same one that ignores you) stating that they have closed the file due to change of terms.
Thanks for sharing. I always enjoy reading your blogs as they are the most accurate as to what we experience with the lenders you mention.
By the way, if you lowballed Countrywide, you would have hit a homerun instead of getting a first strike. ;)
BOA on a recently closed short sale after first asking us to have the buyer INCREASE their offer later did an appraisal and had then DECREASE it to what was originally submitted and verified by our BPO.....it's closed...everyone wins....at the bank's expense of not updating their own BPO or appraisal earlier...gotta love it !
Wendy, I am with Marie, lets boycott! CountryWide / BOA seem to be the banks creating the most posts from frustrated agents, and I am with them!. I am sitting with 3 offers in and getting very little cooperation. So far my buyers are hanging in there (one since April). Sorry your people walked, it sounds like you worked hard for them.
Bryant - The negotiator obviously did not know how to spell.
Bill - I'll email it to Ken.lewis@bankofamerica.com , President of BOFA, per Jeff Payne's suggestion!
Eric - I am hopinng for a "save" (where are you Mariano Rivera?)
Satar - Thank you, I do have a couple of strategies planned, but probably for the next buyer!
Sally & David - There is no consistency with them.
Lois - I am exhausted
Wendy, geeze....it's just incredible what is going on at these Lenders. I like Jeff Payne's idea: Get to the CEO and let him know how his employees are ruining his reputation that will result in Wall Street trauma for BOA
And you became Destin's ultimate short sale expert because....?
If it wasn't for this, what would we write about?...approvals won't fill the space.
Erik - I have not given up!
Sidney - I usually do write about approvals, but this infuriated me.