BANK OF AMERICA NEW SHORT SALE CONTRACT PACKAGE

By
Title Insurance with THE ZARETSKY LAW GROUP P.A. - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY
http://actvra.in/z7s

BANK OF AMERICA NEW SHORT SALE CONTRACT PACKAGE

In the never-ending revision of lender rules for short sales, Bank of America recently released a new package of documents preliminary to considering a short sale of a mortgage held or serviced by them. This package of documents eliminates the preliminary arms length affidavit that was in use for a period of time in the late Summer 2011through Winter 2012, and essentially was preliminary to a final arms length affidavit about which I have written several blogs:

SHORT SALE ARMS LENGTH AFFIDAVIT MAJOR REVISION NEGOTIATED TODAY

STAND-OFF WITH FREDDIE MAC OVER SHORT SALE ADDENDUM - ALTA GETS INV...

Freddie Mac Short Sale Addendum - Item #13 - I DON'T THINK SO!!

Here are the individual pages with my explanation of what each says.

 

BUYERS ACKNOWLEGEMENT AND DISCLOSURE

This first page, below is the BUYERS ACKNOWLEGEMENT AND DISCLOSURE. It is signed only by the Buyer. The first part of the document deals with who cannot buy a Bank of America short sale. It has the Buyer affirming that he or she is not in any way related to Bank of America, that no close relatives of the Buyer are so related (including a dependent child that lives with a Bank of America employee or any other person that derives primary means of financial support from a Bank of America employee. [I can imagine a simple scenario – the gardener or housekeeper for a Bank of America employee would be barred from being a purchaser if that person receives primary income from that job].

The next part of this document has the Buyer certifying that there is no affiliation or relation of the Buyer to any Bank of America entity; and the Buyer and no spouse or domestic partner or dependent child and they do not obtain from Bank of America or any of its employees any primary means of financial support; and Buyer is not doing any work for Bank of America as an agent, broker, appraiser, attorney, trustee or anyone who does these things – including those that do BPO’s or property inspections. This one is pretty straight forward and it almost sounds like disqualifying winners from a sweepstakes contest.

 

 

SHORT SALE PURCHASE CONTRACT ADDENDUM

The next document is the Short Sale Purchase Contract Addendum. Essentially this is just “another” addendum to the Purchase Contract that will “amend, modify and supplement” the Purchase Contract. But look more closely. The Purchase Contract is probably already an “As Is” contract, but this addendum reasserts that condition. The addendum also states that following conditions apply to the Purchase Contract: (a) Seller may cancel without notice prior to closing; (b) the transaction is at “Arms’ Length”, meaning the Buyer and Seller are “unrelated” (not a family member, related by blood or marriage, business associate or shares of a business interest with the Seller) and the price is fair market value as well as other terms; (c) there are no oral or other written agreements between the parties OR THEIR BROKERS that will permit the Seller or any Seller family member to remain as a renter or occupier of the property or regain ownership AT ANY TIME after the closing, including any option to purchase; (d) The Seller will vacate the property by a certain date; (e) Neither Buyer nor Seller are getting proceeds from the transaction; (f) No option to purchase (even by a 3rd party, meaning a flip or beneficial trust deal), assignment or assignees may exist; (g) No transfer of the property until more than 30 days from closing; (h) There is no appraisal fraud, flipping , identity theft or straw buying involved; (i) Any mis-statement or misrepresentation of fact that Bank of America relies upon is Short Sale Fraud and may subject the responsible party to criminal and civil prosecution; (j) That this addendum and the Purchase Contract are the only documents that make up the Purchase Contract.

That is a pretty comprehensive list and it seems that this is designed to supersede and replace the Arm’s Length Affidavit that has been in use in one form or another for the past year. The significant difference is that these representations are not in affidavit form, but they would be binding none the less. Another significant issue is that this document would negate any other addenda or amendments to the Purchase Contract. Most Realtor Boards have some standard forms for short sale addenda, and of course there are the other “Comprehensive Addendum” for FHA/VA, Condominium/HOA, Mold, and such. The drafter of a Purchase Contract needs to be careful to specifically state in the Purchase Contract that these other addenda together with the Purchase Contract are the Purchase Contract, and that statement needs to be made in the Purchase Contract. In Florida, the Florida Realtors/ Florida Bar form almost covers this in paragraph 19 (The following additional terms are included in the attached addenda and incorporated into this Contract). Some of the items to be checked in that paragraph list of forms are “Riders” and some are Addenda. Taking the Bank of America language strictly, the other addenda are not part of the Purchase Contract. So should they all be called or renamed to be “Riders”? This is too new to draw an opinion. Suffice it to say that the entirety of all short sale contract documents need to be sent to the lender and they need to be acknowledged as having been received by the lender. Perhaps a statement in the next (usually “additional terms” blank to be filled in paragraph 20 should read, “This Purchase Contract along with the documents marked in paragraph 20 and the Bank of America Short Sale Purchase Contract Addendum together make up the entirety of the Purchase Contract”. If the lender accepts the contract, they accept that language as well.

SHORT SALE REAL ESTATE LICENSEE CERTIFICATION

The next form in the new Bank of America Short Sale package is the Short Sale Real Estate Licensee Certification. Here the Buyer and Seller real estate agents (called “Real Estate Licensee” make specific statements. The statements are: (a) That Bank of America is not the Seller and is not responsible for paying real estate commissions[but see when the lender can be liable -SHORT SALE LENDER CANNOT REDUCE COMMISSION TO BROKER] ; (b) the agent’s license is current and valid; (c) the Seller’s agent “certifies” that the property has been listed on MLS at “a listing price intended to generate open market competitive offers…” and “not at an artificially low or high listing price” and that the agent’s “marketing efforts” were “in spirit aimed toward maximizing the selling price… from a ready, willing and able buyer”, and agent has not engaged in any conduct that restricts or limits offers from buyers such as (without limitation) requiring cash offers, using disparaging language regarding the property or tenants or unreasonably restricting access. [An obvious problem here is that in the standard short sale addenda used by most agents and provided by most local or state boards, there may be restrictive language on the continued showing and taking offers once a contract is signed by a Buyer and the Seller. This lender required statement clearly conflicts with that standard language]; (d) The agent has not coerced Seller to accept one offer over another and Seller has been made aware of all offers; (e) The agent is not engaging in appraisal fraud, flipping (as defined by the FBI), identity theft or straw buying, and all agreements relating to the “current sale or subsequent sale of the property” which agent IS AWARE OR SHOULD BE AWARE have been disclosed, and agent has no knowledge of any agreement for resale of the property within 30 days or any option for the Seller to purchase the proprety; (f) Agent states that no compensation except as stated on the HUD-1 is being paid and Seller, Buyer, agents or other lien holders are not getting any compensation or other remuneration except as stated on the HUD-1; (g) Full disclosure has been made by the agent to Bank of America of any known relationship to Buyer and any known relationship to Seller; (h) Agent understands that misrepresentations or omissions made of material facts may subject agent to civil or criminal liability.

Summary

The Bank of American Short Sale Purchase Contract Addendum seems well intentioned and apparently is to obviate the need for the arm’s length affidavit – but this has yet to be seen as the new Addendum is so new that I have not yet gone all the way to a closing with one. We will have to see if Bank of America will then also make the Arm’s Length Affidavit (in affidavit form) a part of the closing package. Is this new documentation just a precursor to what we have been using in the past? And if so, is the purpose to button up perceived loopholes for those that seemingly make up their own rules on the meaning and effectiveness of the arms length affidavit – or maybe it is to work an improved dragnet for agents willing to “hear no evil, say no evil” regarding their investor’s or Seller’s true intentions?

--------------------------------------

Copyright 2012 by Richard P. Zaretsky, Esq.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader. Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com New Website www.Florida-Counsel.com

See our easy to find articles at TABLE OF CONTENTS - SHORT SALE AND LOAN MODIFICATION ARTICLES

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  1. Maya Thomas LLC, Broker 04/23/2012 08:32 PM
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PALM BEACH COUNTY SHORT SALES
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Show All Comments
Rainmaker
30,143
Mark Corbett
The Buyer's Choice

I'm dealling with a BoA short sale as the buyer's agent, its been since July, the last update they gave the seller's attorney was that they moved it up as high as they could go, and the ssot emailed saying that they are waiting for the investos. Any suggestions? Do you have any contact person at BoA that could get this moving for my client?

April 22, 2012 03:24 PM
Rainmaker
572,968
Janis Borgueta
LIC R.E Salesperson - Homes for Sale Newburgh NY
Key Properties of the Hudson Valley ~ 845-527-7115

Basically what i am reading here ... Bank of America.... torture... one and the same. 

April 22, 2012 04:11 PM
Rainmaker
190,139
Gregory Bain
Mezzina Real Estate & Insurance

It really doesn't matter what new steps, forms, or, other rules they make. If the bank is unwilling to accept that they are selling goods (homes) with a stigmatized reputation and tries to get a "fair market value" based on their appraiser they are not going to sell in a timely manner. My guess is they have too many people at the top and none of them can make a decision. Good Luck.

April 22, 2012 04:40 PM
Rainer
61,870
Virginia (Ginger) Schott
Assoc. Broker, CBR, CHMS
Century 21 Geba Realty Assoc.

BofA,  Bank of Annoyance,

April 22, 2012 05:19 PM
Rainer
124,785
Laurie Clark CRB Angel Realty LLC Your Monument Realtor 719-502-6572
Angel Realty, LLC
CRB-CCSS-ASD-HBS-RSD-Denver Short Sale Agents

Wonderful news from B of A. Wonder how long it takes before they wind up in court..Again?!?!? Thanks for the updated information. Have a great week.

April 22, 2012 08:26 PM
Ambassador
502,015
Lynn B. Friedman
REALTOR ATL BuckheadMidtownWestside 404.939.2727
- - - Concierge Real Estate Services for YOU - - - Providing SERVICE for Sellers & Buyers is our BUSINESS

Dear Richard,

Thanks for the interesting update. I was told that all existing contracts had to be re-done on these forms. Do you know if that is true?

Have a happy day -
Lynn

April 22, 2012 10:42 PM
Rainer
234,262
Doug Bullwinkel
NMLS #281609
Vitek Mortgage Group

Thanks for getting the word out about these changes.  Please let us all know the answer to Lynn's question about having to redo existing contracts.

April 23, 2012 01:12 AM
Rainer
181,055
Keith Lawrence
ABR, CDPE, SFR, 203K Specialist
RE/MAX Properties

Thank you for the post,   If you have any short sale with BOA you have to get these forms signed in order for BOA to continue with the short sale.  They went into effect on April 14, 2012.

April 23, 2012 05:34 AM
Rainmaker
573,888
Neal Bloom
Realtor CRS-Weston FL Real Estate
Keller Williams Properties, Weston FL

I think they purposely do anything to add a smoke screen to every short sale. Sometimes I wonder if they really want the short to go through. Maybe if they follow other banks and their formula..they would be more successful in closing them instead of stalling them.

April 23, 2012 05:51 AM
Rainmaker
210,253
Richard Zaretsky
Florida Real Estate Attorney
THE ZARETSKY LAW GROUP P.A. - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY

Lyn and Keith and other -

As for going back on exiting files, our experience so far is it depends where theare are on the file.  For some an Equator task will be generated to upload the new forms.  We have not experienced a blanket request for our existing files.  New files all require these forms upon INITIATION - not later on.

April 23, 2012 06:15 AM
Rainmaker
1,194,476
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Put 40 years of experience to work for you
Lyon Real Estate

I love Bank of America short sales and close more of them than any other kind of short sale in Sacramento. Bank of America is one of the few lenders that has worked hard to streamline the short sale process and consistenty attempts to improve its own internal processes -- which is a far cry from where this bank stood 7 years ago on short sales.

April 23, 2012 06:22 AM
Ambassador
1,637,958
Fernando Herboso - Broker for Maxus Realty Group
301-246-0001 Serving Maryland, DC and Northern VA
Maxus Realty Group - Broker 301-246-0001

I wish they would have this policy

  • Approve hardship
  • Pay for a PROFESSIONAL APPRAISAL not a BPO!
  • Allow the Realtor to sell it as a normal sale. . with the exception of an Arms Length. .stay out of the sale between the LEGAL OWNER(s) and the BUYER(s)

 

Hire one person with 3 assistants to accept or deny hardships. 

then hire one person to hire an appraisal. .get the results and tell the Realtor how much they want to net!

for that consideration. .no need for equator or CYA forms.

 

I could aprove or deny 1000 short sales in one week!

April 23, 2012 07:46 AM
Rainmaker
173,878
Maya Thomas LLC, Broker
Key West FL Historic Old Town Estates, Bungalows
Key West, Key Haven, Geiger, Sugarloaf, Cudjoe, Summerland

Richard,

Thank you so much for keeping us informed and up to date.  Although the red tape gets thicker I'm almost (gasp) happy that the bank is looking closely at what is going on.  It's the Wild Wild West out there. 

There is an agent in my area who is selling all the property for his family as short sales to his friends.  He got paid on the initial buy at peak market prices, the short sale list side and on the short sale buy side on many of the transactions.  He puts the property on the market and marks it contingent immediately for a friend and then it closes the sale a few months later. 

On a recent transaction, although we were under contract, this agent signed a new contract with a new buyer so the date on the contract would allow his family member to get $20,000 from BoA.  The agent submitted the new contract to BoA and the first time home buyer is now in shock that his contract has been set aside. 

It's frustrating for buyers who want to buy a property when they deal with slimy agents who are unethical and engaging in fraud. 

Thank you for all that you do.  I am very grateful.

Maya

April 23, 2012 08:29 PM
Anonymous #20
Anonymous
George Baim

I have actually had very good results from B of A in regards to short sales.

July 17, 2012 03:19 PM
Anonymous #21
Anonymous
Sharon

I am a buyer on a property where BofA is the lien holder. Since the Short Sale Purchase Contract Addendum states that the house is sold "as is", and when I am applying for a mortgage loan with another bank, am I going to have a difficult time getting approved (assuming my credit history and all else is good)? I thought that most lenders want the property to be in good/undamaged condition prior to giving out the loan. Doesn't the underwriter/appraiser require the damages to be fixed, whether by seller or buyer, prior to closing? Is short sale an exception?

August 29, 2012 09:44 PM
Rainmaker
210,253
Richard Zaretsky
Florida Real Estate Attorney
THE ZARETSKY LAW GROUP P.A. - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY

It won't be a problem. Your lender will have the house appraised, which appraisal will note any damage that obviously requires repair.  That will affect the value, but not necessarily require the repair to be made.  If your loan is a VA/FHA loan, then repairs must be made and you should have a VA/FHA addendum to your contract, which will have language in it to reflect that requirement.

August 30, 2012 06:00 AM
Anonymous #23
Anonymous
Laura Astle

Hi Richard,

I really appreciate the post.

Thanks for sharing the forms. 

Laura Astle

Ski Homes in Utah

801.209.8956

www.lauraastlerealestate.com

 

September 26, 2012 10:10 PM
Anonymous #24
Anonymous
Candis Pressley

Where did you find these? I've been trying to locate these on their oh so user-friendly website.

 

October 19, 2012 01:28 PM
Rainer
166,869
Dave Sullivan
The Real Story on Your Credit Score - TheCreditGuy
www.TheCreditGuy.TV

 

Excelent information I will forward it if that is ok? thank you!!!

November 01, 2012 06:52 PM
Rainer
30,137
Kenny Williams
Kenny Williams
Shimmering sands Realty

thanks for the informative update maybe it will be an improvement

February 13, 2013 12:44 PM
Anonymous
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Rainmaker
210,253

Richard Zaretsky

Florida Real Estate Attorney
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