About Clay County, IL

NEW BofA Processing Policy for Short-sales
This update regarding BofA's process pertains particularly to their Jr. lien / HELOC processing dept. the Home Retention Team. What I noticed as a pattern developing a while ago was that all our offers for release of lien were being declined, and I do mean ALL OF THEM. Frustrated, I reached out to a BofA V.P. I know within Loss Mit. She was able to confirm for me what I had suspected; a policy shift whereas all short-pay offers are to be declined unless the offer is equal to or greater than 10% of the remaining balance.

That's right, BofA is seeking no less than 10% CASH recovery. Its important to note the key word (CASH) is not negotiable; and that's cash at closing. Important also to note that the 10% figure is not automatic, meaning this is a MINIMUM starting point. They are now also requiring the verbiage on the HUD, line # 505, to not include the word "settlement"; it must say offer.

IF, the cash offer to BofA for release of lien is equal to or greater than 85%, they will consider that a "settlement" and the balance forgiveable.

On average, in our market these Jr. liens / HELOCs range from $50k to $180k. That translates to a cash at closing necessity from your client of $5k to $18k to satisfy BofA and secure release of lien.

You might ask; do they realize that in the Jr. lien position, they will achieve $0.00 cash recovery at C.O.E. if the Sr. forecloses? The answer is yes, of course they do. I suppose for them its "risk vs. reward". Whereas they are banking on their ability to collect on the debt down the road as their primary means of loss mitigation.

At this point, we will no longer accept short-sale listings with a BofA Jr., and that's pretty much, that. What are your thoughts?