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.

More drama on the Verdugo short sale, or why is BofA still selling toxic junk? Rating: 4.5 Diposkan Oleh: jembe