Free Specialist Consultation!

Short Sale Guide

Short Sale News

Connect With Us

Bank Of America To Test Cooperative Short Sale Program

Leading mortgage lender Bank of America has announced a cooperative short sale plan targeting borrowers who have been denied or fallen out of short sale and loan modification programs, and are now at real risk of foreclosure.

Bank of America short sale officer Matt Vernon says the program will test for customer responsiveness. They will start with 2,000 pre-screened homeowners who, according to Vernon, are not actively pursuing short sales but simply distressed borrowers who need an alternative.

The program's goal is to give these borrowers a program tailored to their needs, with incentives that work specifically for homeowners in real financial hardship, Vernon explain in an REO Insider interview.

Under the program, borrowers will not need to provide new documents as they have already made previous applications. The bank will also waive deficiency judgments, the difference between the mortgage owed and the final selling price.

A specialist will also be appointed at the short sale department to work with homeowners and their agents and help them market the home for a period of 120 days, Vernon added. The test clients are mostly from Arizona, California, Florida, and Nevada, some of the most heavily-hit areas in the housing crunch.

The homeowners have already been notified in writing and have to list their properties within about four months. The program itself will last about six months, according to Vernon. The bank will work with whoever is representing the homeowner, rather than selecting agents for them.

After the sale, the borrower will receive a relocation fee of $3,000 and the agent will be paid a 6% commission. If the home fails to sell, Bank of America will offer a deed-in-lieu of foreclosure agreement.

Vernon says the bank had already spoken to an investor to get approval before launching the test. In a short sale, investors with a stake in the mortgage have to approve the offer before the sale can close, a rule that greatly slowed down the short sale process.

That investor held a stake in the original mortgage that is now in default. Lenders need approval from these investors for a short a sale to go through. It has been one of the major hurdles in the short sale process.

Bank of America closed over 25,000 short sales in the second quarter, almost tripling over the year. A large majority of these sales are carried out on the bank's Equator portal, and according to Vernon, it will handle all of the bank's short sale transactions by year-end.