There are some changes that went into effect on 1/16/13 for Bank of America short sales with some being very good but one which means that home and condo owners who are delinquent on their mortgages should not delay in taking action to resolve their situation.
The Good News
Some loans with Bank of America qualify for the Federal program called HAFA which results in Bank of America writing off any amount still owing after the short sale and up to $3000 in relocation assistance for those who are eligible.
For loans that are not eligible for HAFA, Bank of America has its own program for certain loans where they will also write off any amount still owing after the short sale and pay a relocation assistance amount of up to $30,000.
What hasn’t changed with the Bank of America program is that they will still include eligible jumbo loans and loans for investment properties. One of the positive changes is that they now have relocation assistance payments up to $45,000. There are now 3 different approaches to the short sale and, for those loans that qualify, there is one approach that pays from $3,000 to $15,000, a second that pays from $5,000 to $30,000 and a third that pays from $7,500 to $40,000.
In addition to this, Bank of America now allows your Realtor to content them even prior to putting the listing in the MLS (you don’t have to wait until it is under contract) and they will work with us to complete certain steps (including getting an approved price) so that once there is a contract the process will move much faster.
The significance of this is quite important. One of the reasons that many short sales fall through is that a buyer who has a contract on a short sale gets tired of waiting when the short sale process takes so long and they eventually end their contract before an approval can be obtained. By speeding things up and getting an approved price upfront, you will be much more likely to get the first buyer to closing.
The Bad News
Prior to January 16th, when you initiated a short sale with Bank of America they would put a hold on the foreclosure proceedings for up to 120 days. This was helpful since it takes some time to get a buyer, get the short sale approval and when the buyer is getting financing to get that completed.
With the new changes, Bank of America will no longer put a hold on the foreclosure process when a short sale request is made by a borrower. They will put it on hold or postpone it once an offer is fully approved though which means that the offer has to go through the whole short sale process and you have to get a short sale approval letter before this happens.
In the past few years, condo and home owners could just sit back for months or even years without much concern about having a foreclosure completed. I just wrote in my newsletter that this is no longer the case and that if you have fallen behind on your mortgage payments or can’t really afford them and will have to stopping paying soon – you will now need to take action to prevent your foreclosure as soon as possible. After these changes by Bank of America, this is even more important.
So, all in all, it is mostly good news but if you or someone you know owes more on your home or condo than it is worth and don’t know what to do, you should take some action now. Call me so I can go over what options you do have.