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BofA Proves Its Short Sale Mantra Isn’t All Talk

March 8th, 2011 categories: Foreclosures / Short Sales, The Economy, Viewpoint

BofA SS Graphic - 2010 vs 2011A year ago, if you’d asked me who were the worst banks to negotiate a short sale with, I would have quickly put Bank of America near the top of that list.

Back then, BofA was notorious for dragging out short sales for months on end, for asking for the same documentation over and over again, and for switching negotiators in mid-stream and starting from scratch. Each time you called, you got a different story. It all depended on who answered the phone.

There was no consistency and certainly no commitment to expediting the short sale process. It was as if  the powers that be at BofA just wanted to make the homeowner’s life a little more miserable by dangling the possibility of doing a short sale in front of them before ultimately making a settlement demand so unreasonable that the owner would finally just walk away out of frustration.

A year ago, I wondered whether the acronoym BofA really stood for “Bank of Anxiety,” for that’s the state of mind most short sellers found themselves in for months and month on end.

Fast forward to the present

Well, as they say, that was then and this is now. pull quote

Last Spring, Matt Vernon, one of the top execs at BofA and the man charged with overseeing its short sale department at the time, presented a webinar to real estate agents. He acknowledged that BofA had done a very poor job with virtually every aspect of its short sale process.

He pledged to fix the process, upgrade the response times and create an avenue for “good” deals that were about to go south to be escalated to a senior level manager who could intervene and make sensible financial decision.

It all sounded great in theory.

But those of us who had worked on enough short sales with BofA borrowers took Mr. Vernon’s words with a big grain of salt.

We’d believe it when we saw it.

Well, over the last 12 months, BofA has made one of the quickest and most impressive turnarounds I’ve ever seen. Just like the Amazing Mets of 1969, who went from last to first, almost overnight, BofA has gone from one of the worst short sale banks to one of the best.

In my opinion, BofA and Wells Fargo are probably the top two banks to process a short sale through right now. Both banks give you  a fairly quick response — usually within 30-45 days, which is about half as long as it takes with most other banks’ short sale departments right now.

But the most impressive part of BofA’s turnaround is that now there really are people in high places where a savvy real estate can go when a deal that shouldn’t be turned down  is about to self-destruct.

Earlier this year, Kimberly Dawson, another high-level BofA short sale executive appeared on an industry webinar and echoed many of the same comments Matt Vernon had made a year ago. She reiterated BofA’s commitment to preventing foreclosures and said that they consider short sales the “top of the waterfall.” Preventing a future foreclosure by completing a short sale benefits everyone, she said.

Well, last week, I put that mantra to the test. Without going into too many specifics, let me say that BofA had been presented with a top-of-the-market offer on a home here in Solano County that would net the bank’s investor at least $40,000 more than if the property went to foreclosure.

Yet, BofA’s assigned negotiator had stalled the deal over $3,000. I couldn’t get the negotiator to budge. His parting comment was “if the seller wants to walk and let the home foreclose, that’s their decision.”

This was exactly the type of deal that Mr. Vernon and Ms. Dawson had talked about when they said they didn’t want to create a future foreclosure when a far better short sale alternative was out there.

So I climbed the BofA corporate ladder and within a matter of hours got several people in really, really high places to intervene. An absolutely terrific senior negotiator stepped in and in about 5-10 minutes was able to override the original negotiator and approve the sale. She saved BofA’s investor a good $40,000-plus.

AND, she prevented an unnecessary foreclosure from further gumming up our sputtering economic recovery.

A year ago, there’s no way that would’ve happened. The file would have been declined, the home would’ve sat vacant for 3-4 months (and probably fallen into disrepair) and this home ultimately would have driven home values in this neighborhood even lower.

So kudos to Bank of America. For a year now, they’ve talked the talk. But they’re one bank that also walks the walk.

At least they did this time around.

Now, if only other banks (names like US Bank, PNC, Chase quickly come to mind…) would follow BofA’s lead, we might just be able to turn the tide and work through these upside-down properties faster and with less chance of neighborhood values dropping any further.

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This entry was posted on Tuesday, March 8th, 2011 at 12:27 pm and is filed under Foreclosures / Short Sales, The Economy, Viewpoint. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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