As if the short sale process wasn’t already a set of Byzantine rules that would challenge Albert Einstein, the Bank of America FHA short sale takes the short sale process to a higher level of complexity. If your client, the short sale seller, has an FHA loan and Bank of America is their lender, there is a very specific set of guidelines that needs to be followed in order to obtain short sale approval.
10 Tips for Successful Bank of America FHA Short Sales
Here are 10 Tips for Successful FHA Short Sales (courtesy of our friends at Bank of America):
- Understand and set expectations about the process. Because the Bank of America FHA short sale has specific guidelines from the Department of Housing and Urban Development (HUD), sellers must be preapproved in order to participate in the process. This part alone could take up to 90 days.
- Read and review all documents before submission. Make sure that you and your clients have read and reviewed all required documents prior to submission. Be careful not to overlook areas that require signatures, initials, or dates.
- Pay attention to property guidelines. In these sales, the property is sold “as-is” and property preservation departments must rekey the property if it is vacant.
- Request investor approval escalations when needed. There are certain situations that may require additional investor approval outside of the authority of Bank of America, and this could add another 4 weeks to the process. If there is a pending deadline, Bank of America can escalate investor approvals.
- Be aware of expiration dates. Timelines and the documents themselves have expiration dates. Make sure to submit all documentation in a timely manner and confirm that tasks are completed within the designated timeline. Unfortunately, if you overlook a deadline, you could be back to square one on the Bank of America FHA short sale.
- Expect to work with multiple contacts. Depending upon where you are in the process, you may be working with a different employee at Bank of America. Note all of the contacts’ names, email addresses, and telephone numbers.
- Factor in the incentives. Remember that when you prepare your final settlement statement (HUD-1) for Bank of America, you must include all of the fees required for closing—including any short sale incentives or relocation assistance money.
- Learn About HUD requirements. There are certain fees that HUD will and will not pay. Check with your contact at Bank of America in order to understand which fees will be approved.
- Understand the net proceeds. There are certain situations where net proceeds on a Bank of America FHA short sale will be impacted. Carefully read the short sale contract and identify the dates when proceeds change. Contact Bank of America if you have questions or concerns.
- Watch for common delays. Common reasons for delay include inaccurate information, incomplete information, or lack of participation from one of the parties to the transaction (the agent, the seller, or even the employee at the bank). In order to be successful, every one needs to be proactive about getting the short sale approved.