Short Sale Process Improved by Bank of America
Today, Bank of America Short Sale executives Bob Hora and Stephanie Lowe gave a one hour webinar to the real estate agents who do Short Sales with Bank of America. The most exciting improvement is that the structure of the review that delayed the processing in their former system has been removed.
Bank of America uses Equator to process Short Sales. The Equator system was originally developed to be the interface between real estate agents who handle bank owned properties (REOs) and the asset managers for the lenders who need to get these properties sold. The original name for the system was ReoTrans . This kind of work involves a series of sequential tasks where one task follows another and you have to work through them in order. For example, the agent would first go out to the property to determine its occupancy before changing the locks and cleaning it up.
Chris Saitta, CEO of Equator, is very cleaver. ReoTrans changed to Equator when the potential for Short Sales came up. Now, Equator processes three times as many Short Sales as REOs. However, the system for Short Sales was still sequential i.e. outdated because it was designed for REOs. For example, you had to upload certain documents and get the tasks associated with the Short Sale package complete before the negotiator could open the task for ordering the Broker Price Opinion (BPO) or appraisal to establish the value of the property.
The new improvements change the Equator system from being sequential to being simultaneous. The Bank of America reviewers can order the BPO early, so they can be working on the file while they wait the five to ten days that it takes to get the BPO done. I have had files where Bank of America erroneously closed the file, sending me back to square one. With the sequential system, you had to walk through all those steps in the same order so that the process could not be expedited. Now, you can do many steps at the same time. That was the good news.
The less than wonderful news is that there is a standard third party authorization i.e. the document that allows Bank of America to talk to someone other than the borrower. In the past, all the members of a Realtor’s team could be authorized to be in touch with Bank of America. Now, the only people who can be authorized are licensed real estate agents and attorneys. This will slow down the process, as an assistant cannot call the help desk to find out what to do about any of the odd things that Bank of America does. That call will have to wait until the Realtor is available to make it.
The new procedure states that there are five documents that must be submitted at the beginning of the process. These are (1) the Bank of America third party authorization form (2) the IRS form 4506T to get information on tax returns (3) the HUD-1 closing statement, typically for a closing that is 60 days out (4) the signed purchase contract including the Bank of America Buyer Acknowledgement & Disclosure form and (5) the Bank of Aamerica Short Sale Purchase Contract Addendum. Since many of these are Bank of America forms, smart listing agents will upload those forms to the MLS with their listings, so any buyer making an offer will also sign the required forms.
The transition to this new system will happen on Friday the Thirteenth of April. If you have a Short Sale open with Bank of America, you need to have certain tasks complete. If you have a task to (1) submit short sale offer (2) upload the offer or (3) upload supporting documents, you have to complete that task by April 13. Otherwise, you will have an abundance of tasks to re-do and you risk having Bank of America close your file if there has not been any activity for a while.
I found it interesting that the real estate agents are supposed to comply with this new system by April 13. There is going to be training on how to comply with it on April 19th. Don’t you think the training should come before the compliance date?
The webinar discussed how to get the attention of your negotiator to straighten out problems. All of the communication has to go through the Message system in Equator. The justification is that it would keep the confidential information protected, so that sensative information would not be emailed. To the uninitiated, that sounds like a good idea because it is more secure and it leaves a record of the communication. However, Bank of America outsources many of its Short Sales to AMS, LRC and REDC. If the file is assigned to any of these outsourcers, the message system does not work. You enter a new message, hit send, and an error message shows up in your email telling you to call the outsource company. I sent two questions pointing this out during the webinar, one with the contact information for the Equator VP who is working on this problem, but there was no response.
The way the communication system is supposed to work is that you contact your negotiator through the Equator Message system. They have two business days to respond. If that does not work, you contact the team lead through the same system. Again, the response is supposed to occur in two business days. Stephanie Lowe said that they monitor this preformance, and their negotiators complinance is in the range of 87% to 93%. If the problem is not resolved, you contact the Short Sale Customer Care center at 866-880-1232 and the 800+ people who work there are supposed to straighten it out. I applaud the idea, but I have made many calls to the Customer Care center. The most frequent response is an appology that things went wrong followed by an explanation that they are powerless to fix it.
If you have a problem with one of the files that are outsourced to AMS, LRC or REDC, the system to resolve the issue is to complain to the outsource negotiator. If that does not resolve it, complain to the Customer Care center. If that does not resolve it, go back to the Customer Care center and they will put you into he Bank of America escalation system. Again, an appealing idea, but I have gone through that system with the only result being that an incorrectly closed file could not be re-opened, so I had to go back to square one.
There were a lot of questions about Bank of America referring Short Sales to real estate agents, similar to how they send their REOs to certain Realtors. Bob Hora said they would not be doing that. However, they are going to have a system where a borrower can look up a Short Sale agent in their area who has experience getting Short Sales approved with Bank of America. In other words, if you are an agent with a good track record on Equator with Bank of America Short Sales, you will be put into this system where a borrower can find you by putting in their address. Mr. Hora had to emphasize that this does not constitute an endorsement by Bank of America.
Bob Hora went over the leading reasons why Short Sales do not succeed. There were three leaders, each with about 15% of the failures. The buyer walks away. This is normally a function of how long the review takes, so the new expedited procedure should help that. The second reason is that Bank of America does not get the required documents. This is normally a situation where the investor gets picky e.g. the seller has most of his documents showing the first, middle and last names and some of the documents are only first and last name. The third reason is that the investor refuses to postpone the foreclosure sale. There are legendary stories about Bank of America giving a Short Sale approval and saying the buyer has to close the next day to beat the foreclosure sale. The faster system and standard documents should help the first two issues, so that there will be less times when a foreclosure postponement is necessary.
Stephanie Lowe answered a question about disputes over values i.e. the Broker Price Opinion (BPO) is wrong. She said the real estate agent can upload their own BPO or comps to dispute the value. If the property has repair issues, repair bids can be provided by the real estate agent. One interesting point is that they did not want an appraisal done by the buyer, claiming that Bank of America can only consider a value done by an unbiased third party. However, Ms. Lowe said you could upload the comps used by that appraiser to show that the valuation was wrong.
I appreciate all the effort to expedite the process, educate the real estate agents and provide online resources. Bank of America has come a long way. I enjoyed a comment by one of their executives at a recent conference that when you start from that far behind, you can improve dramatically. I think is comment was humorous, but they appear to be making more effort than any of the other lenders. I hope the new system works as well as expected.