Short Sale - Week 2

This is Part 2 of an on-going series documenting my most recent experience attempting to use Bank of America's Equator system to complete a short sale. You can find earlier posts in this series at:

Short Sale - Week 1

November 19, 2010:

• Equator sends me a message acknowledging receipt of the offer. It also tells me the file has been sent to their Valuation Department. This department will be contacting me for access to the property. Until an appraisal has been completed, the file can not move forward.
• Equator sends me a message from Merna, the negotiator assigned to this file. In this email, Merna requests I send copies of the seller's hardship letter, last 2 pay stubs, and 2008 and 2009 tax returns. I assume Merna will use this information to decide if B of A should allow the seller to move forward with the short sale. I know the seller already submitted these documents to B of A and asked Merna to check the bank's file. She explains that she can only see documents submitted through Equator.
• I contact the seller to let her know I need to resubmit the documents.

November 20, 2010

• I meet with the seller, get the documents requested by Merna, and scan them into Equator.
• I email Merna to let her know the documents are now in her system.

November 22, 2010

• Merna calls to let me know she has received the documents but has not yet reviewed them. She repeats that nothing can be done until the property is appraised by the valuation team. I tell her that I have not been contacted by the valuation team for access to the property. She seems surprised, since her system says the valuation is in process. She assures me I will hear from them shortly.

November 24, 2010

• I receive a call from the Valuation Department to schedule an appraisal on November 29.
• I email Merna to let her know the appraisal has been scheduled.
• I prepare a list of comparable sales for the appraiser.

Analysis - Days 8-14:

The first glitch surfaces - because Equator does not cross reference files with B of A, it means extra work for the seller and agent, since documentation requested by B of A needs to be resubmitted to Equator. Equator should be able to automatically download these documents into their file.

On the plus side, communication with the negotiator is much easier than in the past. Prior to Equator, there was never a single contact person for the file. Every time you called the short sale department, you spoke with a different person who was looking at your file on their screen for the first time.

In contrast, I have Merna's direct phone number and email. She is extremely polite and friendly and she is completely familiar with the file.

I was impressed that, even though she can't do anything with the file until the appraisal is completed, Merna asked for documentation now so I can work on getting it to her while she works on getting the appraisal scheduled. I am impressed that she is "planning ahead".

In the past, negotiators were harried and rushed because they were overloaded with files. I have the feeling B of A has hired more negotiators.

Hint:

Ask your negotiator what documents you will be required to provide in the future so you can start getting the paperwork together now. That way, when they are requested, you can submit them immediately, thus speeding up the approval process.

Short Sale - Week 1

Trying to close a short sale can be an agonizingly long and frustrating process for the buyer, the seller, and the Realtor. Banks realize this and have been experimenting with systems to speed things up.

What follows is a record of my most recent short-sale experience. I will post updates as the deal progresses so together we can discover if these changes have, in fact, helped.

Fortunately, the owner has only one loan on the home (if there is more than one, the process is much more complicated). Her loan is with Bank of America. B of A has instituted a new system for short sales. Offers must be processed through an on-line site called Equator.

Here's how Equator works. Once the seller has accepted an offer on the home, the Realtor opens a file on Equator's website. From this moment forward, everything is submitted on line and through this site. The Realtor can not submit any offers, files, etc. until Equator specifically asks for them.

November 12, 2010:

• The homeowner accepts the offer;
• I open a file on Equator;
• I contact escrow and asked them to prepare a closing cost estimate sheet based on this offer. Though this is not requested by Equator, I know from experience that I will eventually need these numbers so I want to be ready;
• Equator acknowledges my file;
• Equator requires a Third Party Authorization Form. This form gives me permission to act as the seller's agent. I knew this would be required so I had the seller complete this form earlier in the week;
• I submit the Third Party Authorization form to Equator.

November 15, 2010

• Equator authorizes me to submit the offer on their form;
• I begin the offer submission form but can not complete it since I have not received the cost estimate from escrow;
• I contact escrow and ask when the cost estimate will be completed;
• I inform the buyer that the offer is being prepared for submission. Because we have no idea how long it will take to get an approval, the buyer and I discuss plans to have closing funds readily available.

November 16, 2010

• I am still waiting to receive the closing cost estimate from escrow. I can not move forward until I receive these numbers. I contact them again and ask for the numbers.

November 17, 2010

• Escrow contacts me to let me know they are really backed up but promise to have the numbers to me today;
• Escrow provides numbers. I complete the offer form and submit it;
• Equator requests a signed copy of the offer, which I submit;
• Equator requests supporting documents, such as photos, MLS information, etc., which I submit.

Analysis Days 1-7:

So far I am impressed. Working through Equator is so much better than the usual set-up, submitting via fax. Invariably, things are"lost" so agents have to resubmit, sometimes two and three times. This really slows things down.

With Equator, everything is visible on the website. You can not progress to the next step until B of A accepts what you've done. And if there is any question about submission, the proof is right in the file which can be seen on the computer screen.

I am also pleased with the speed (so far) that documents are acknowledged and processed. It's been 6 days since the offer was first signed by the seller, and we already have an offer in the lender's hands, along with all supporting documentation. Of course, many of these documents I already had. Since I knew, from past experience, that these would be required, I did not wait for Equator to ask for them. I got them ahead of time so that when they were requested, I could immediately upload them into Equator.

Hint:

Use a Realtor familiar with the short sale process. That way s/he will gather documentation before it is requested. This will substantially cut down on the submission time.

We Just Spent $2 Billion on Foreclosures

At the end of September, Freddie Mac and Fannie Mae owned 240,000 homes that were taken back in foreclosure. That's about 25% of all lender-owned homes in the US.

As the new owners, Freddie and Fannie are responsible to pay the taxes, insurance, cleaning, maintenance, even lawn care. The cost to maintain these homes so far this year? $2 billion.

And where does the money come from to pay these bills? From you - the US taxpayer.

Since taking them over 2 years ago, we've already invested $148 billion in preferred stock in Freddie and Fannie. We've received about $17 billion in dividends. But the longer the real estate crises continues, the more money we'll need to invest to keep them afloat. And with the recent questions about the legality of some of the foreclosures, this could drag on a long time.