Bank of America came out with a few changes to their short sale programs today. Check back to our Las Vegas Real Estate Blog as more changes from Bank of America are coming very soon with relation to incentives to short sales for sellers.
The first change mostly affects flippers. Short sales closed through Bank of America now have deed restrictions upon re-selling the property. The home cannot be resold within 30 days (aimed directly at double-closings). Furthermore, the home can only be resold for 120% of the short sale price within 90 days after the short sale closes. Many flippers use high interest, liquid funds and often want to sell the home quickly to avoid high holding costs. This will not in all likelihood stamp out flipping but the trend is clearly designed to hamper it. The banks are upset that money is being left on the table that they did not recover on the original short sale.
The other set of changes relate to seller incentives for relocation expenses from Freddie Mac and Fannie Mae if they are the institution which holds the note that Bank of America may be servicing on behalf of your mortgage. Fannie and Freddie may pay up to $3,000 on short sales except in the following cases:
- The borrower is required to contribute funds or execute a promissory note.
- The borrower has Permanent Change of Station (PCS) orders and receives a Dislocation Allowance (DLA) or other government relocation assistance.
- The servicer has knowledge that the borrower is receiving relocation assistance from another source other than the servicer.
It should be noted that if the seller is receiving incentives from another source for the short sale and it exceeds $3,000 and this is a Freddie Mac or Fannie Mae loan, then no incentive will be paid in addition to the alternative incentive payment.
There are now multiple incentive programs related to Bank of America serviced loans; some in excess of $30,000. If you know that some point your upside down mortgage is unsustainable then it is important to check out all your options that may provide a graceful exit from the situation and maybe even get some money on the way out as well.
You may call Paul Rowe at Shelter Realty for a personal assessment if a short sale is a good option you. He may be reached at 702-376-7379 or complete our contact form.