I currently have several files in my office where buyers with cash or with solid financing have made solid offers on properties that are in foreclosure. By solid I mean offers that will net the mortgage lender something like 75-80% of the balance of the mortgage on the home. It is absolutely maddening that I cannot get an approval from the mortgage holders for any of these properties.
Bank of America- The Evil Wizard Behind Them All?
I had some hope that Bank of America’s new short sale processing interface, called “Equator” was going to be a more efficient processor of short sale transactions, but my hope is starting to fade. While the system does seem to more efficiently process the paperwork (at least now BofA acknowledges receipt of paperwork), the problem is the same old bad decision making is in the system, (“Our appraisal says the home is worth $500,000.”) Problem is your appraisal is just dead wrong, oh and by the way your appraiser didn’t even make it in the neighborhood to inspect the home.
After waiting months for an approval on a second mortgage payoff from Bank of America, we were pounding the phones at CitiMortgage trying desperately to get approval on a first mortgage held by Citi. After weeks of frustration, the monsters at Citi informed us that they were waiting approval from their investor….Bank of America. We finally got an answer back…after three months and after we had already brought a higher contract in…BofA changed the terms, refused to pay fees and is now demanding a higher payoff price? Why, because the market’s gotten better?
The irony about this particular file is neither Bank of America or Citi have a good mortgage on the property. Both used the wrong legal description when they closed and fixing the mistake will take at least a year. Like their mortgages, the entire system is broken down in a big, big way. It will undoubtedly take years to fix….if ever?
Think a Short Sale Or Deed in Lieu Will Work? The Numbers Do Not Look Good.
The State Foreclosure Prevention Working Group consists of 12 state attorneys general (Arizona, California, Colorado, Florida, Illinois, Iowa, Massachusetts, Nevada, North Carolina, Ohio, Texas and Washington), bank regulators for New York, North Carolina, and Maryland, and the Conference of State Bank Supervisors. Their report, issued just this January and which can be found here confirms that the short sale process is broken as the numbers of filed foreclosures continues to rise, and the number of “stalled” foreclosures continues to increase. Put simply a “stalled” foreclosure is one that has not been completed in a timely basis. The report indicates that short sales account for just 12% of foreclosure resolutions while deed in lieu’s account for less than one percent.