San Jose Real Estate * Santa Clara County * Richard Gonzalez * Real Estate Silicon Valley Broker Blog – News, Views, and Opinions

Wachovia has announced they will no longer postpone a foreclosure sale date once it has been set. This directly affects our ability to assist our clients if they decide to short sale in lieu of foreclosure.

What this means to sellers

Procrastination will have dire consequences on sellers who wait until the last minute(less than two weeks) to put their house on the market as a short sale. We obviously understand that sellers want to exhaust all options before considering a short sale including a modification. Sellers should make a decision to sell no later than the filing of a notice of default on their home if the want to have the best chance of a successful short sale.

What this means to buyers

Buyers must be ready to close fast. In a recent listing I had ten offers on a home, a third of the offers were using a loan product that required a forty five day escrow. On the other hand there were other offers that were all cash or conventional(5% down payment or more). If you are considering buying a short sale you should look at the possibility that you may be asked to close in less than thirty days otherwise your chances of the seller accepting your offer are slim. Sellers are under extreme pressure to perform and as such are looking for a quick close from a committed buyer.

Other lenders are following this trend

My sources tell me we are seeing a trend and there is rumor that Bank of America is considering eliminating short sale extensions. I experienced this with Household Finance(HFC), my negotiator emphasised that there would be no extension on a short sale approval and that a sale date was set for the day after the expiration of the sort sale approval. Our seller decided to accept an offer form a buyer who was able to close in twenty one days.

Adjust your expectations or they will be adjusted for you

Short sales continue to evolve and we continue to see changes to the way servicers and investors manage properties in default. It’s clear we are witnessing a shift  in the flexibility we will receive when it comes to negotiating with servicers and investors and it appears as though they are now willing to cut there losses and move on.

Today the banks who signed on for HAMP in 2009 have agreed to increase their participation in HAFA(Housing Affordable Foreclosure Alternatives) an extension of HAMP that provides incentives for banks and servicers to streamline the Short Sale process.

Banks and HAFA

Bank of America for instance partnered with equator.com in November  to decrease the short sale approval timelines from 6 months to 45 days  to conform to the HAFA guidelines. Other lenders Like Wells Fargo are able to approve  23% of the Short Sales they service in 10 days.

What is HAFA?

HAFA will continue to evolve as banks and servicers adopt and implement HAFA rules and guidelines. In the mean time home owners can visit www.whatishafa.org to determine if they qualify for HAFA.

I week ago I attended the California Association of REALTOR meetings in Indian Wells and attended an open committee meeting with high level managers from Bank of America and Wells Fargo. I added a video describing these changes to my Youtube Channel.

Click on the video below to see my report from the Indian Wells Resort.

Until November of 2009 Bank of America / Countrywide short sales were difficult to navigate and a communication challenge to say the least. Our average time to receive an approval ranged from four to six months. As a result Bank of America created a partnership with equator.com thus reducing the short sale approval timeline from 6 months to 45 days.  For this reason and because there continues to be confusion with the process I decided to provide 3 steps to successfully initiate a B of A short sale and navigate through this new system.

One small task at a time

Step 1 . Listing agent must Register on equator.com  once your REALTOR has informed B or A that you are short selling your home. B of A will then assign the short sale to your REALTOR in the equator.com system. Your REALTOR will then upload a laundry list of documents one task at a time. Tasks are the basic process initiated by B of A to ask for the necessary documents needed to start the short sale. Your REALTOR will be asked to upload the following:

• Purchase contract
• MLS information
• Buyer Pre-qualification including social security numbers
• Picture of home
• Authorization from seller to allow REALTOR to talk to B of A

Step 2. Seller needs to notify B of A that they want to start a short sale. equator.com will provide a password to the seller and the seller must have an email address of their own to access the system.

Step 3. Seller must upload independent of each other (one task at a time) the following documents.

• 2 yrs tax returns
• 2 months bank statements
• Pay stubs for the last 30 days
• Hardship letter
• Financial statement

Challenges:

• There are still many people who don’t have an email address or are not comfortable uploading documents into the system.
• Sellers will get blocked out of the system if they have too many failed attempts at accessing with an incorrect password(it happens all the time).
• Sellers must respond as quickly as possible when given tasks. Failure to do so will slow the process down and may stall the process until requested documents are uploaded.

Goal:

Once B of A receives the information they will begin processing your short sale. 2010 is primarily expected to be a short sale year as banks begin to develop new processes to handle the paperwork involved.  Knowing what to expect and being prepared is key when navigating the B of A short sale system.

Bank of America Short Sale Approval Process May Improve.

Today I had a conversation with a short sale negotiator from Bank of America and was informed that Bank of America is implementing changes to there approval process for short sales waiting to be approved.

This new fast track process (as I refer to it ) applies to loans that do not have to be approved by an outside investor.  For example if you have a loan that does not require an outside investor approval the negotiator simply runs the numbers in the computer and approves it if the computer shows a favorable calculation.

Hopefully this will shorted the horrid time lines we are experiencing when  working with Bank of America short sales.