When first posted this included a doctored photo at the bottom of a Down’s Syndrome child. I am making this comment here at the top so the reader comments below will still make sense. For the record, NO amount of threats or disagreements – legal or otherwise, have ever gotten me to change so much as a comma in any other post I have ever done. I am making a special exception in this case because my only targets in this post were senior executives (and their lawyers) running Bank of America’s loss mitigation division handling short sales. Not in any way an innocent child.
Bank of America is to be Highly Commended for their complete willingness to give so many intellectually challenged people jobs as executives. Sure, year in – year out, most other banks have always been willing to hire a few people who couldn’t think straight. But those other banks aren’t getting any awards for what they did for one simple reason: what they did was so darn common. Now any buzz kill who cares to can go look and find some other division of Bank of America / Countrywide that isn’t being run totally by retards (for example, their REO loss mitigation department).
But I challenge anyone to find any other bank that even comes close to Bank of America / Countrywide’s short sale loss mitigation departments for non-stop, over the top policies and procedures that make life difficult, impossible or at least a lot less profitable for the following four groups (not listed in their order of importance and there may well be others).
- All agents – either on the buyer or seller side
- All potential buyers of any property where B of A holds a 1st lien position
- All of the sellers (their borrowers) trying to work with them to avoid foreclosure
If B of A is in a 2nd lien position, oddly enough they have workable policies in place (seller IS going to sign a note prior to close to pay the bank a small part of what they owe). They don’t flex on this issue but it is a knowable and not completely unfair rule. If they are in 1st lien position their standard and unvarying behavior (if that behavior were being attributed to an individual person) is nothing short of psychotic or completely retarded – at least down at the imbecile level. No rational judgement, no possibility at all of dealing with them the same way we deal with all the other banks on short sales.
Other than limited personal – and for the most part, completely anecdotal data, most agents doing short sales on the buy or the sell side have a very odd picture of the overall scene. Loads and loads of mostly worthless gibberish. Notice how Chase and Wells Fargo are grouped in the same category as Bank of America? Wells does not ever pay any of the buyer’s closing costs and won’t pay for a home warranty. But ….. you can routinely close an escrow from start to finish with Wells in about 30 days. Actually close, it takes less then two weeks to get an approval. Same with Chase. Try that with B of A / Countrywide (who collectively have about half of all problem loans in the U.S.) It takes a minimum of 90 days to get any response back from B of A. And if you send them anything after submitting the original package (anything, even a better offer) that 90 day clock is reset. So, with B of A four to five months to actually close a transaction is not uncommon.
It gets better. Here is a charming response we received from B of A a month or so back:
“Bank of America is now requiring most sellers to contribute to the loss in order to qualify for a short sale. Please prepare your client for that probability and be ready to let me know how much cash the seller can bring to closing. If no cash is available, the alternative is a promissory note for a larger portion of the loss. this requirement is firm–no contribution from the seller will result in the short sale being declined. There are vary few exemption made to this. The approval time once the file has been submitted will depend on the size of the loss, the investor and the MI insurer, if any.”
Arizona is one of ten states that have “anti-deficiency protection” due to the nature of how foreclosure works here – it takes only 90 days from the time the lender files for a Trustee’s Sale for them to take the house back. Therefore, the anti-deficiency protection (very basic rules – there are others: The same purchase money loan is still on the property, e.g., they never took any money out of the house via a refi and it was a residential property of 2.5 acres or less).
The response from B of A above was on a transaction where our seller would have no possible liability of any kind if the bank were to foreclose. None. In this case there was precisely nothing they could legally do to go after him and yet, even after being told this and being asked to please verify it with their legal department, they were not willing to budge – forcing the seller to let them foreclose. They get a house back that they really don’t want for many reasons, a neighborhood winds up with an abandoned home that will invariably sell for less money after the bank gets it back and so it goes.
It is as though a complete division of Bank of America executives went looking and anything they found that could slow down the process, make it more difficult for everybody involved or simply thwart the actual goal completely – they carefully noted what that was and then adopted it as firm policy. I’m impressed.