More drama on the Verdugo short sale, or why is BofA still selling toxic junk?

Just when I thought the short sale on 2012 W. Verdugo, Burbank was finally going to close, we had another crisis this week.

Backstory: Lender Dana Dukelow had told me the following story: he had funded a loan on a short sale, and it was about to close, when the title company discovered that the lien/loan was no longer owned by the bank that had approved the short sale on the property.  That bank was BofA.

Why is this important? Because there is no longer a valid short sale approval since the original approving bank has nothing to do with it anymore.  The transaction can’t close until – and if – the new bank approves it.  People are trying to move, their cash is tied up, etc, etc.

Dana’s story alarmed me and I decided to check on Verdugo’s BofA loan.  (Citimortgage owns the second loan; it too has been approved for short sale.)

Sure enough, it showed that BofA sold this non-performing loan to HSBC on November 4, 2011, several days before BofA issued the short sale approval – on a loan they no longer owned.

We all were running around with our hair on fire.  I spent several hours on the phone, and so did the short sale negotiator and escrow officer.  There was no record of the loan at HSBC (just so you know, HSBC’s customer service is very spotty).  BofA had no record of the loan being sold, although it had recorded as such at the county recorders.

The story has a happy ending due to a series of coincidences.  Turns out that BofA is the servicer of HSBC/Merrill Lynch loans.  So their guidelines meet HSBC’s guidelines, and the original approval still stands. 

We are some of the lucky ones.  Other Realtors that I’ve talked with are in limbo/hell on their BofA transactions.  One was told by BofA, “We sold 9000 Freddie Mac loans and are behind on our coding.” Great, just great.  So while the bank processes paperwork, buyers and sellers are sitting on boxes, holidays are ruined, foreclosures are proceeding, etc.

Okay, I’m not so savvy on the inner workings of high finance, but this brings up another question: why are the banks selling these toxic assets underperforming loans to other banks?  Who benefits?


And yes, we're on for a 12/23 closing.  Please cross your fingers and hold your breath.

BofA called to help on my short sale, but didn't

BofA's social media team has been monitoring their online reputation, because after I last bashed them online, they contacted me to ask if they could help with the short sale on Verdugo.

Short answer: they didn't help at all.

Back story: I have used a third-party negotiating company on this transaction.  That's not uncommon.  The 3rd party company is listed as the authorized contact.

So the first thing the nice BofA lady told me was that she had indeed looked up the transaction -- and I wasn't authorized to talk about the sale because I wasn't the listing agent.  I tried to correct that, but she wasn't having any.  She said that the real listing agent should contact them through Twitter, and perhaps then BofA could escalate the short sale.  When I explained this to the 3rd party negotiator -- he's the listing agent according to BofA -- his jaw dropped in astonishment (he's only had about a bajillion live-person conversations with BofA staff about this).  So he's contacted @BofAhelp, but has not received a response.  And they are not answering their phone either.

So much for managing your online reputation, eh? I wish BofA would devote as much manpower to getting their short sales wrapped up as they do to social media.

How my short sale is going, chapter whatever, or BofA is the bitchenest bank of all time!

We've been in escrow for three months now on 2012 W. Verdugo in Burbank and our stalwart buyer is hanging in there.  BofA and Chase, the lenders, verbally approved the deal about a month ago. But we still need their approval letter.  What's the hold-up? Our outside negotiator learned this week that his cohort at BofA had been fired, and now there's a new person to deal with there.  O BofA, I love you so.  The latest is that the file is with the investor for approval, and once that happens, we'll get our approval letter.  Short sales are being streamlined? Not in my world.

From today's L.A. Times: What it's like to lose your house

L.A. Times runs a regular "Postcards from the Recession" column.  Today, the column has a terrific, first-person article about what it's like to lose your home to foreclosure/short sale.  The title should link; if not, click here.  The writer, Kathy Gosnell Seiler, is a copy editor at the LAT.

Luxe resort -- at private home in Encino?

Here's the fanciest house I saw this week -- and it's in the flatter part of Encino.  Looks like a resort, no? It's at 17941 Rancho and is listed for $1,299,000 (It's a short sale and according to listing agent, the gap between what's owed and the current value is $500,000.  Yikes!). It has 5 beds, 3 baths and 4172 square feet and currently is being used as a rental.  Of course, the house is lovely, it has a big built-out kitchen with high end appliances, etc. It also has a built-in many-thousand-dollar espresso machine.  Really? Do people like espresso that much? But anyway...

The really special feature is the backyard and pool.  It looks just like a  resort pool -- seriously, you'd think you were in Puerto Vallarta or at least Scottsdale.  As you can see, it has a waterfall.  And a big water slide.  And a swim-up bar.  There are 3 built-in barbecues, a regulation-something sports court, a backyard powder room, and a separate, private shower.  If you owned this house, it would almost be criminal NOT to entertain ALL THE TIME.  Too bad the city won't allow "day" resorts.  That certainly seems like it would be the highest and best use of this property.

Short sale gossip! This is on my Facebook page, too

Note for 5/13, 11:00 a.m.: I'm having problems with Blogger.  It has lost a couple of posts.  I'll put 'em back up soon.  This is also on my Facebook page Judy Graff, Broker Realtor.

I have short sale gossip! A few weeks ago, I heard that the Bank of America short sale system, Equator, had "lost" 30,000 files. One of them was a transaction file that I was working on for buyers.

Now, here's the latest:

Our office’s short sale experts told us the following on Tuesday: Bank of America has okayed overtime for its short sale staff and has also begun to outsource some of its short sale files.  Apparently, they are expecting many more short sales in the coming months.  Also, for BofA customers that are behind in their mortgage payments, the bank is apparently going to begin requesting that those owners list their home for sale as a short sale.  Don’t quote me on this, but also don’t say I didn’t warn you.