The Ins and Outs of Bank of America and Equator

Posted on 02. Dec, 2010 by ctlms in Foreclosures, My Blog, News, Real Estate, Short Sale, foreclosure

Some Hate it and others Love it!

Anyone that has dealt with Bank of America this year during a short sale has heard of Equator.com.  In fact some other lenders such as GMAC us this online platform as well.  But Bank of America has fully incorporated this system into their short sale process.  Let's talk about the system and how to use it properly.

Some people I have talked to just Love Equator because it is more hands off and requires fewer phone calls and no faxing to the lenders.  Others Hate it for the same reasons.

I myself just use it to the best of my ability and try my best to avoid it's negatives.

Eqautor.com, formerly REOTrans.com is an online interface used by Bank of America and others to facilitate communication and document collection between the seller's representative and the bank.  The system was designed assuming that the seller's representative who would be communicating with the bank would be their real estate agent.  This created some challenges for anyone that was not a licensed real estate agent to negotiate the short sale, such as an attorney or short sale negotiator.  Recently they have added access for attorney's but there is still no clear way to get an account if you are not an attorney or licensed real estate agent.  Good thing I have that license also.  We have been using Equator since Feb. 2010.

The key feature that many people love about this system is that you can initiate a short sale without calling the bank or faxing anything in.  You just enter in some information about the loan and once the file is opened, you upload your 3rd Party Authorization form into the system to be reviewed.

Once that authorization is accepted, tasks are assigned to you to upload short sale documents and enter the offer information.  You will need to have already prepared an estimated HUD-1 for this and gathered the buyer's name and address along with the contact information for their agent and lender.

There are some fields that are asked for that we usually do not enter the correct information and have never had an issue.  The system asks for the buyers first 5 digits of their social security number.  This is none of their business to start with and that limited information is useless anyway so we just enter 000-00.  Same goes for their birth date.  Just pick a random date.  We also use the area code and 555-5555 for any of the requested phone numbers except that of the buyers lender.  The person processing the short sale on behalf of the seller should be the only point of contact for any requests for information or documentation from the lender.  This avoids delays and confusion down the line.

After the offer is fully submitted a value is ordered and after that value comes back to the lender a counter offer is usually issued.  This is common and is a way for them to see if the buyer will come up any.

After the counter offer phase, and if the offer meets the investor's (who owns the loan) minimum net proceeds the offer is submitted for approval.

If approved the file moves to a closing officer and the short sale approval is issued.

This all sounds pretty simple and straight forward but there are things that can totally blow up your transaction.  All the hype that  Bank of America has put behind this system has lulled many into forgetting that you actually need to know what you are doing.  If you let the lender guide you through the short sale the way THEY want you to do things, you may not be protecting your client fully.

Here are some tips.

  1. If possible, use the services of someone who is very familiar with the system and the lender.
  2. Fax your authorization into the lender before initiating the short sale on Equator.  Call to verify it is on file and make sure the loan is to be processed through Equator.  FHA and VA loans along with some HELOC loans do not go through Equator.
  3. Call Short Sale Customer Support if you aren't getting updates through Equator or responses to requests for updates.
  4. Be sure to have everything you will need for the short sale before you initiate on Equator.  Equator tasks have expiration dates and if you fail to complete them in time, the file will be closed automatically.
  5. If you know what closing costs the lender never agrees to pay, you can save a lot of time with the offer-counter offer process.

These are just a few tips of the many ins and outs it takes to successfully navigate this system on a regular basis.

Equator can be a great tool for speeding up the short sale process if you know how to use to its best.  We have had short sales approved using it in as little as 3 weeks.  But I have seen many agents get completely frustrated and huge delays caused due to inexperience with the system and the knowledge to work around some of it's challenges.  This is especially true of "unique" transactions where the developers of the system could not have foreseen your issues.

Hope these tips help shed a little light on this system.

Sean Wilder

Owner, Loss Mit Services

Call us with your short sale needs 860-265-3727

Short Sale Tip 7-5-10

Posted on 05. Jul, 2010 by ctlms in Blog, Foreclosures, My Blog, News, Real Estate, Short Sale, foreclosure

Does the seller sign the contract before bank approval?

I have heard this question a ton of times and have seen agents argue over it.

The answer is always YES!

Let's look at the issue.

1. There is no Contract until the Offer is signed.  So if the buyer's offer is never signed, there is no binding contract holding the buyer to the purchase or the seller to the sale.  This means the buyer has not deposited an earnest money check and can walk at any point.  This also means the seller is free to accept any other offers that come in without first having to be released from the original buyer.  Not a smart thing for either party.

2. More importantly, most lenders will not accept an offer.  There must be a fully executed contract.  Many of the larger lenders such as Wells Fargo and Bank of America even require closing date extensions and other addenda to the contract and the dates must always be current.  So if something expires, it must be updated with an addendum or the short sale review stops.  Going even further, some lenders even want to see a copy of the earnest money check.  The requirements are getting more and more thorough.

In summary, Yes the contract must be signed.  It makes sense for both the seller and the buyer and with very few exceptions, the lender will require it anyway.

Sean Wilder

Short Sale Update 7-2-10

Posted on 02. Jul, 2010 by ctlms in Foreclosures, My Blog, News, Real Estate, Short Sale

The Good the Bad and the Holiday

In this issue I have a few industry updates.

The Good

1. President Obama today signed into law the extension to the closing deadline for the first time home buyer tax credit extending the deadline to the end of Sept that were under contract by 4/31/10.  According to NAR this will save nearly 180,000 buyers from the losing the credit due to financing and short sale review delays.

1. Short sales still prove to be a better alternative to foreclosure for the lenders bottom line.  According to a resent RealtyTrac report Short Sales net and average 19% higher return to the lender than foreclosure.  Short sales averaged sales prices of 15% below market value while foreclosures net 34% below market value usually due to the deteriorated condition of the property after it has been foreclosed and vacant for some time.

The Bad

1. Pending home sale tumble 30% in May.  That's right, in the month after the first time home buyer credit expired, pending home sales dropped 30%.  This shows just how important this incentive has been to the real estate market.  Keep in mind though that some of May's sales we stolen by April by buyers trying to meet the deadline.

2. So far we have seen virtually no change from the implementation of the HAFA short sale process.  In fact of the 70 short sales we are current negotiating, only 2 qualify for HAFA.  The biggest reason is that FHA, VA and until just a couple weeks ago, Fannie Mae and Freddie Mac loans did not qualify.  Fannie and Freddie do now participate in their own version of the HAFA program but their servicers do not have to begin accepting those applications until 8/1/10.  Also the 2 short sales that we are working through this program have already shown to be taking longer than that lenders normal short sale review process.  One of the biggest selling features of this new program was supposed to be the reduced review time they take.  NOT!

The Holiday

Enjoy it.  Take a break.  Relax.  I have no choice in the matter, as Bank Holidays are my holidays, for the most part.  I have some paperwork to do on Monday to prepare for the short week.

Remember to thank your service members.

Have a great Independence Day!

Sean Wilder

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