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Bank of America Steps Up Short Sales over REOs

Leading mortgage lender Bank of America has adopted a new policy that will prioritize short sales over repossessions, allowing it to liquidate more of its defaulted assets and help more of its clients avoid foreclosure, according to bank REO executive Matt Vernon.

Vernon had first taken the pro-short sale stance back in February, announcing plans to boost its short sale staff by about 1,000 employees. During an interview at the REO Expo in Dallas this week, he said the bank will continue to put short sales before foreclosures.

He added that REOs will still be available, although the bank will do everything it can to make short sales possible first. The goal, he said, is to get properties sold as close as possible or even above the fair market value, and not to make short sales an investment tool for getting discount home.

Bank of America has helped over 600,000 homeowners keep their homes through the Home Affordable Modification Program (HAMP) and its private modification plan, and holds another 477,000 mortgages eligible for government aid.

For short sales, the bank will work through the Home Affordable Foreclosure Alternative (HAFA) program, a sister project to HAMP that offers short sales to borrowers who do not qualify for loan modification. The program was launched in April and provides incentives to both lenders and borrowers for every completed short sale.

Vernon says that the bank has learned a lot from HAMP, which has so far fallen short of its goal of helping up to 4 million homeowners avoid foreclosure. By pushing for short sales, he said, major lenders can learn from past mistakes and work more efficiently to help struggling borrowers.

 

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