Bank of America: E-Signatures

E-Signatures for Bank of America

Bank of America recently (Monday, November 19th) issued an update to all Real Estate Agents with "Pre-Approved" Short Sales, saying that electronic signatures are accepted on most documents. Bank of America considers a "Pre-Approved" Short Sale to include HAFA (Home Affordable Foreclosure Alternatives) and/or BoA's in-house CO-OP (Cooperative Short Sale). In addition to participating in one of these "Pre-Approved" programs, the Short Sale must be initiated without an Offer.

This is great news, but arguably worthless. 

Bank of America is a ginormous company, with hundreds of thousands of loans.  With so many loans & mortgages, it is inevitable that a certain percentage of these will go delinquent.  Adding to this inherent "risk," is the servicing of defunct Countrywide loans, as well as other miscellaneous factors ("robo-signing," interest-only loans, ARM loans, etc).  Needless to say then, that Bank of America is inundated with non-performing loans, and as a correlation, their "Loss Mitigation" departments are significantly strained. BofA also has a high turn-over rate, which means more files (& consequently less motivation) per worker.

In an effort to increase Loss Mitigation productivity, Bank of America has steadily been updating & streamlining their processes.  One very fruitful change, for example, has been the implementation of the http://www.equator.com system.  This most recent press release about accepting electronic signatures is the latest enhancement to the Short Sale process.

The "problem" that arises from these numerous Bank issues (# of delinquent loans, # of workers, Loan/Investor types, etc), is that it forces Bank of America to seek help from 3rd party processors, such as ServiceLink, LPS, DTS, LRC, AMS, Promise, REDC, etc.  Of course, there is nothing inherently problematic about a 3rd party processor; actually quite the opposite! The issue is running into conflicting processes & procedures between the different companies. 

For example, once initiated, a "Pre-Approved, sans-offer Cooperative" will most likely be assigned to & processed by REDC, not Bank of America; so one must adhere & comply with 2 separate company policies. Not only will the Homeowner need to verify their Short Sale wishes with BofA's Short Sale department, but also with REDC's Short Sale department.  Bank of America & REDC do not share notes, act relatively independent of each other, and have different rules & procedures.   

One of the biggest & most significant servicing discrepancies between Bank of America & their 3rd party processors (such as REDC), is policy regarding electronic signatures:  BofA accepts them, REDC does not! **At least as of 11/20**  Bank of America's new "E-Sig" policy then, is pointless in this scenario, as they are not the ones actually servicing the loan.  Since REDC does not accept electronic signatures, it does not matter if BofA does.

If one assumes Bank of America policy supersedes their processors', they would be making a grave error in judgment, and will lose weeks of processing time, waiting for clarification and re-signing documents.  In the event that both BofA's and their processor's electronic signature policies coincide, the Agent must submit a fully executed "E-Transaction Consent Disclosure" form, which can be found on Bank of America's website.

All in all, it's great that Bank of America accepts electronic signatures, but it really doesn't matter if their 3rd party processors don't!  

Given the amount of 3rd party companies Bank of America works with, and all their servicing & policy discrepancies, "wet" ink signatures are still the most time effective.  After all, it's better safe than sorry!



**Bank of America, Press Release, Nov. 19:  https://agentresources.bankofamerica.com/ss_news_12NOV19

Short Sale Myths

Short Sale Myths

In the Short Sale business, there are a lot of myths and pre-conceived notions floating around about how they work, or how/why someone will or will not qualify.  A lot of industry professionals will say one thing, while other industry professionals will say the opposite! Generally speaking however, there are no easy answers, and there are NEVER any guarantees. Just like snow flakes, each Short Sale is different & unique! 

Throughout the course of our business, we continually encounter similar questions and/or myths from Homeowners and Agents alike; So we figure we might as well publish a few of the more common myths, to help assist with anyone in a similar situation! After all, these keep coming up, so they must be somewhat common assumptions...

Myth #1: Banks would rather Foreclose on the property than pursue a Short Sale.  

NOT TRUE:   Foreclosure auctions are very costly to the Banks, due to Lawyer fees & Court Costs. In addition to this, there is a good chance the Banks will end up buying the property back at auction (since they are working with bogus values), and so they incur additional “winterization” fees, property security fees (boarding windows, etc), & REO agent Fees. So just looking at costs involved for the Bank, a Short Sale is much more desirable, financially speaking, than a Foreclosure auction.

Myth #2: Once an official "Notice of Election and Demand" (NED) is served, the Short Sale is no longer an option.  

NOT TRUE:  So long as there is a valid Short Sale in place, Banks will most likely postpone any looming Foreclosure auction date, in order to allow sufficient time to complete the Short Sale review.  Combine this with Bank’s preference for the Short Sale over Foreclosure auction, most Short Sales actually end up being worked while there is an active Foreclosure in process.  **Foreclosure Auction postponement is NEVER a guarantee.

Myth #3: A Homeowner must be behind in payments for the Bank to even consider the Short Sale.  ONLY true for FHA Loans:  In order to allow a Short Sale, The Federal Housing Administration requires their loan to be at least 30 days delinquent, prior to date of closing.  No other Loan types have this kind of stipulation; so by and large, this myth is FALSE. In fact, one of the main qualifiers for a Short Sale is the borrower's hardship.  So long as there is sufficient evidence to support the future inability to make mortgage payments, the Bank will entertain the Short Sale.

Myth #4: Financial obligations to the property end at Foreclosure Auction.

May or may not be True: Banks are not in the Real Estate business, and so their main concern is the Loan, and their $$. The Bank does not want the property, and they certainly don't want to deal with the additional costs of Auction.  Because of this, it is fairly common to see the Bank sell the property for less than what they’re owed, and pursue the Homeowner for the difference/remainder.  This is also known as a deficiency judgment. Therefore, It’s absolutely pertinent to contact an Attorney, who specializes in the field, to determine any remaining financial liability, after the Foreclosure Auction takes place.

Myth #5: A Short Sale will automatically be denied if the Homeowner was previously denied for a Loan Modification. 

NOT TRUE:  If for no other reason, this myth isn't true because the Short Sale department is completely separate from the Loan Modification department.  They do not have access to each other's systems, and they do not share notes with each other. Furthermore, a Short Sale is fundamentally different than a Loan Modification:  A Short Sale deals with selling the property, while a Loan Modification deals with keeping the property.  These 2 separate departments have separate notes, and each have their own specific review & qualification process. So if a Homeowner was denied for a Loan Modification, they can still apply for a Short Sale.

Of course this list is no where near exhaustive, and as I mentioned earlier, each Short Sale is different & unique. For any specific questions or concerns, please contact us:  noequitynoprob@gmail.com, or 303.359.4731.