Bank of America has developed quite a reputation for being hard to work with on Short Sales and foreclosure properties they are trying to sell. They seem to be trying to clean up their act and tighten up their procedures to make things happen. We want to discuss one positive decision recently that will help many underwater home owners.
The good news recently is that Bank of America announced recently that it has sent notices to certain borrowers that they are forgiving second mortgage loans and issuing releases of those liens.
One colleague recently introduced me to one deal where that happened. He called me about a deal he was working out with a homeowner who had two loans on his home for a total higher than the home is worth on the current market, if in top market condition.
With a lot of deferred maintenance that need to be done, the value of the home at Fair Market Value is very low. By the time you figured the repairs and costs to resell the home, it was a woeful and daunting figure.
This homeowner recently did get one of those forgiveness letters from Bank of America, who owned both loans on his home. So his second lien was cancelled and he was left with only the first lien mortgage with Bank of America.
Sadly, even this amount has him underwater. My colleague worked with a Realtor to process the papers required for Bank of America to approve a short sale. The bank has agreed to take less than now owed on the remaining first-lien mortgage. How much less remains yet to be seen.
Like many homes, this one is way underwater, and needs lots of maintenance and updating to become a viable home for current buyers. So after figuring repair estimates and costs for closing and reselling, we made a fair offer on the property.
We’ll see what Bank of America says. It still takes quite a while sometimes to get a response to an offer on a Short Sale. The banks are still stacked up with Short Sales and properties they now own after foreclosing (Real Estate Owned, or REO).
We commend you, Bank of America, for considering these beleaguered homeowners with two mortgages their home values can never cover. Thanks for helping us move towards recovery. Keep working on the weak links in the system like the puzzling example Phill Grove tells us about On the other hand, BoA makes some stupid decisions that hurt them as well as some of their customers, and the economy in general. Real Estate investor and analyst Phill Grove tells of where a qualified case was turned down by BoA one recent instance.
If you are looking for a home for yourself, you cannot count on a Short Sale unless you are under no pressure to move quickly. Be prepared to wait. But prices on Short sales are more reasonable now, though still too high to allow for adequate repairs needed in most cases.
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