Part 2 – Equator Tips for Success

If you want to be successful in short sales that require Equator make sure to employ these Tips and Traps. Part 1 can be read here

The following Equator tips and traps come from Dan Welch.  Dan Welch is the lead short sale negotiator for Home Solution Counselors and a bring ‘em on and “your next” closer.

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Dan saw the light and fled from the darkside (he used to work inside the bank – working against homeowners).   He now spends the better part of 40 hours a week with a wireless headset, three phone lines and a Batphone Hotline into The Gore Law Firm as he routinely hammers banks into accepting and approving short sales.

We asked Dan to provide us with a game plan for success with Equator.  Most agents know that Bank of America‘s short sale tool can cause a real estate agent to lose control of the short sale process.

1. Know your time frames:  The servicer and the agent both have time frames on ALL tasks assigned in Equator. Call every week, ask the servicer what the next task due for the negotiator is and ask when that task expires. If it’s beyond that deadline, bust some balls.  Don’t let up.  They promised they would meet a deadline!
2. Read the manual: When you initiate a short sale with BAC, they send you a user’s manual for Equator. Read it! Knowledge is power and power is good.
3. Stay on top of your tasks: When a task is due on 11/14, you better make sure to add a note to your calendar. When that task dies, so does your deal.  How long have you been working on this file? 6 weeks, 3 months, a year? And it was declined and closed by those haters at the bank and now you have to start over!!?? YOU (agents, or 3rd party negotiators) are responsible for completing the assigned tasks by their deadline. Helpful hint: Get your borrower’s paperwork and required docs together BEFORE they’re requested and keep updated bank statements and paystubs. Being prepared; I know it’s a novel concept.
4. It ain’t over till it’s funded! : Just because you get a counter acceptance, doesn’t necessarily mean you’re getting it approved.  Did you forget about mortgage insurance?  Don’t understand how MI works.  Read this article HERE.   This stuff can cause an extra delay of 2 weeks or MORE – after the initial SP acceptance.  So, wait to tell your seller that the deal will work until AFTER you find out what the MI company wants.  To be safe, wait until you have a demand payoff letter, in hand, from the servicer – and the numbers actually work.
   
5. Keep impeccable notes, take screenshots & record ALL calls: When your negotiator who’s working too many files drops the ball on yours; you need proof and evidence to show their supervisor or one of the upstanding gents at “TGLF”.   Nothing better than replaying their own words from a recorded call or displaying a screenshot.  If necessary bring a lawsuit with this evidence.  They’ll turn tail and run and you’ll get what you want.

Final thought: Equator and the industry in general are changing at a break-neck pace. These tips may be pertinent today and mean little tomorrow. It’s an ever-evolving business and it’s important to stay on top of the facts and evolve with the industry.  Most of us, who are still in this crazy industry and plan on eating tonight, have had to adapt greatly over the past several years.  Equator is new, but it’s not scary – just frustrating.  Good luck and try to keep a cool head.

Part 1 – Equator Traps to Avoid.

If you want to be successful in short sales that require Equator make sure to employ these Tips and Traps.

The following Equator tips and traps come from Dan Welch.  Dan Welch is the lead short sale negotiator for Home Solution Counselors.  Dan saw the light and fled from the darkside (he used to work inside the bank – working against homeowners).   He now spends the better part of 40 hours a week with a wireless headset, three phone lines and a Batphone Hotline into The Gore Law Firm as he routinely hammers banks into accepting and approving short sales.

Since the Houston area’s Houston Association of Realtors’ MLS reports that over 73% of all listed short sales never close, with most being lost to Texas’s rapid foreclosure process, we wanted to know why Dan is getting 93% of all short sales approved and closed.

We asked Dan to provide us with a game plan for success with Equator.  Most agents know that Bank of America‘s short sale tool can cause a real estate agent to lose control of the short sale process.

Here are Dan’s Traps to Avoid.  Monday I’ll post Dan’s Tips.

1. NEVER trust their counter(s): If you receive a counter in Equator, take a screenshot before you do anything else. When you accept or counter back the “counter worksheet” usually disappears for good.   BAC is known for countering the offer with “A” and then reneging on it and countering again with “B”.    SECRET TIP : A = typically a value close to the current offer which represents ACTUAL property value.    B = the price your buyer won’t pay, even in a good economy.    My view is if they don’t honor counter “A”, even if they knock a couple grand off their minimum net to make good on it, you’re closer to getting them what they need to get the deal approved by management or investor.
2. NEVER agree to a prom note or cash contribution: I stopped agreeing to prom notes and cash contributions when I was asked by BAC to “please have your seller sign a promissory note to cover some of (GENERIC INVESTOR)’s losses.” – NO!     The borrower isn’t responsible for an investor’s risky investment decision gone sour. They can either agree to a short sale or lose money on the deal in foreclosure.   This should be your attitude.
   
3. Email everything through Equator: You’ll almost NEVER get a call from the servicer after making a request through Equator. Most of these agents are overworked. Sometimes carrying a workload of up to 375 files. It’s all they can do to keep up.  Equator’s email messaging system is great for tracking a deal and the conversation.  Also, no more hearing “I never got the message”, because you, your client, the bank’s negotiator and their supervisor can see the proof in black and white in the Equator message archive.
4. Dispute their value: The bank won’t disclose this…. but, sometimes they skew the BPO or appraisal results to meet their own needs!!   So, call them out on it. If you’re a competent agent, you should have completed a CMA or at least run comps to make a good assumption as to property value. If the bank gives you a ridiculous number, tell them how ridiculous it is and submit comps, CMA, repair estimate or WHATEVER you have to devalue the property. I think since so much of the new process differs from the traditional short sale process, that agents or negotiators tend to forget they have the right to dispute the bank’s alleged property value. It doesn’t always work, but it’s better than rolling over and taking it! Remember, if enough of you “roll over and take it”, the bank and their investors make new policies or guidelines to make it harder for you and the rest of us to stand up and fight. So, for the sake of us all, FIGHT!
5. Don’t give in.  Sue them if needed:  Many times the negotiator on the other side is powerless or plain incompetent.  If things go south or your file is facing foreclosure you CANNOT trust that simply because the file is in review in Equator or you have accepted an offer in Equator that they won’t foreclose. Get an attorney that you can trust.  Get an attorney that has successfully filed lawsuits and WON against Bank of America.  You can look this up yourself in the Federal or District Court level in your area.  See if they have open AND closed lawsuits against Bank of America or whatever bank you are fighting.   Lawsuits will allow you to remove Equator’s power and will cause the bank to assign special staff to handle the lawsuit. If necessary get a TRO or restraining order against the bank for negligence. (This is where that screenshot you took might come in handy).

The Wall Street Journal is reporting that BofA is ready to crank up the foreclosure machine once again.

Amazing what can be done when Bank of America might take a financial hit.

BofA can’t seem to locate the submitted paperwork for a loan modification (or short sale) at least 30% of the the time.  Their vaunted Equator system can take weeks to deliver a written approval for a short sale once “approved”; but yet they now can process and replace over 100,000 affidavits and assignments of mortgages in just two weeks!!

Wow, they must have hired some new robo-signers we haven’t met yet.

Why?  Because it takes time to read through your own affidavit, much less an entire Application for Foreclosure.

The average “application for foreclosure” in Texas is 40+ pages.  They must have somehow found a ton of people with live, actual, personal knowledge of the proof of ownership and the exact amount owed on each of these 102,000 loans they are “fixing”.

Now here is the scary thing…follow me here:

At only 15 seconds a page, it would take at least 10 minutes to read each application.  Remember the person is swearing they know everything is accurate and PERFECT.

10 minutes x 102,000 loans = 1,020,000 minutes.  Assuming they have 100 people working on this, that now equates to 10,200 minutes per person or 170 hours.  At 40 hours a week that would take over a month if they worked non-stop.

So how can they be ready in two weeks?  Maybe they found 1,000 people with “knowledge” and thus it can be done more quickly.

When they finish this task maybe they can put these industrious workers on loan modification and short sale reviews.

- The Bank Slayer

Homeowners & agents nationwide are confused.  What is Equator and how does it impact my short sale?   In this blog let’s examine the negatives and then finally what to do with Equator.

Thinking about taking on a new short sale?  REALTORS take note, Equator is the new “in thing” for Bank of America and now GMAC as well.  What used to be REOTrans has been upgraded and is now the new Short Sale Equator system.  We have been testing as well as using it for months and here is what we have discovered.

The negatives?

1. Internet access required.  The homeowner must create a userid on the system and have regular access to respond and upload docs.  I guess they assume all homeowners have unlimited access to scanners and the internet, but if not they must have extra money to buy what they need, right?
2. Behind the curtain, the process is still the same.  It is really nothing more than an automated hurry up and wait system.   You knock off all the tasks (like faxing, calling, and emailing the old way) and then wait on the bank for someone to be assigned to the account and review the uploaded docs.
3. It’s very impersonal.  The negotiators hide behind Equator and/or use it as an excuse for not responding.  Before Equator, the negotiators resisted giving out their email address but sometimes would and eventually you could have a conversation with a real thinking human being.  Now, everything has to be input into Equator virtually limiting as much as possible the human to human interaction.
4. Unreasonable demands.  The bank can and does take as much time as they want but every communication in Equator concludes with “if this is not responded to within 24 hours the file will be closed.”  Remember the part about “better make sure your seller has constant access to the internet?”
5. Unilateral negotiations.  Counteroffers by the negotiator through Equator are not always “accurate” per management or the investor’s (Freddie, Fannie and others) guidelines.  This leads to acceptance of an offer or counter and then it later being reneged upon.
6. Unfair trade practices.  The negotiator will attempt to reduce the REALTOR’s commission to the “standard” 4% or 5% or refuse to pay for seller’s portion of title insurance or eliminate entirely all title company fees or make unreasonable demands of other lien holders or POAs and HOAs.
7. Escalation improbable.  Not satisfied with a response or feel you’re not being treated fairly?  Please enter your complaint in the following field, include your name, number, best time to call and exact nature of your complaint, any incomplete forms will limit our ability to respond–limit your response to 24 characters.  Ok, the 24 characters part is not true.
8. GMAC has to submit its own files in Equator versus the agent doing it and starting the process.
9. If you like Equator it is not available (currently) for FHA-insured short sales.

- The Bank Slayer

This is an update on Equator.  We now have the top Tips and Trap to be sucessesful versus failure.  CLICK HERE FOR BANK INSIDERS TIPS & TRAPS.

Homeowners & agents nationwide are confused.  What is Equator and how does it impact my short sale?   In this blog let’s examine the positives…up next the negatives and then finally what to do with Equator.

PART 1

Thinking about taking on a new short sale?  REALTORS take note, Equator is the new “in thing” for Bank of America and now GMAC as well.  What used to be REOTrans has been upgraded and is now the new Short Sale Equator system.  We have been testing as well as using it for months and here is what we have discovered.

Let’s start with the positives, in theory.

1. No more long hold times and mysterious disconnects.  In a nutshell, they are pushing the loss mitigation work out of the bank and down to the homeowner, attorney, REALTORS, loss mitigation counselors and anyone else in the loop.  If you have the time, a good scanner and fast internet connection AND the homeowner does as well AND you are really on top of your game this could be reason enough to celebrate.
2. BYE, BYE fax machine and “we never got your fax”.  We used to hear this often during negotiations of short sale and loan mods with Bank O’ UnAmerica.    Their theory is an “upload” of the docs instead of faxing 90+ pages and then waiting for the bank to “scan and file” will streamline the process.
3. The system is online and thus always available.  Provided there are no scheduled, or unscheduled, maintenance windows.  Recall how the old system was always “slow” or “unavailable” at the end of the month?
4. Faster access to decision makers.  The negotiators should be assigned more quickly than before Equator.  This could be a real bonus since the front-line customer service processors  can’t do anything.
5. Faster response time.  Since the bank has less responsibility because they have pushed all the tasks out to you, they should be able to respond more quickly.  Sounds nice doesn’t it.
6. Costs less.  More automation, fewer people and less human-customer interaction are all good for the bottom line, Bank of America’s bottom line that is.
7. Tastes great.  Giving the customer access to the “system” makes them feel more involved and more empowered.  Fake silk feels just as nice as real silk, only it’s not.
8. Since Equator requires the internet, you and the homeowner can surf the net or play online poker while at work and not get in trouble for goofing off since you need to “check Equator” for your next task.
9. If you hate Equator, currently FHA-insured short sales are not permitted to go through Equator.

- The Bank Slayer

For those who are about to launch a short sale BofA’s way please take note of their love for what used to be REOTrans and now is the new Equator system.  We have been testing this with them for quite some time.

In a nutshell they are pushing the work out to the loss mitigation counselors and the homeowners.  In theory this will streamline the process and prevent the “uh, we never got your faxed short sale package” from bank reps.  We hear this a lot as our office does a ton of short sale and loan mods with Bank O’ UnAmerica.    Fun, fun!

Faster and more streamlined remains to be seen as from our experience there are two other serious problems:

1. It requires the homeowner to access the system and upload docs.   HELLO – some sellers are BROKE and don’t have internet access much less a scanner.
2. It seems like nothing more than an automated hurry up and wait system.  i.e. We knock off all the tasks (just like faxing, calling, and emailing the old way) and then wait on the bank to get around for someone to be assigned to the account and review the upload docs.

We’re still crossing our fingers this will help homeowners.  BofA is the worst bank at getting quick resolution for short sales.

I’ve posted below the email they sent to us yesterday.

- The Bank Slayer

From: Equator [mailto:NoReply@Equator.com]
Sent: Monday, April 12, 2010 11:13 PM
To: ron glaser
Subject: Bank of America Short Sale Agent Communication

Bank of America Home Loans will now be using Equator as the primary tool for short sales.  It is a self service portal that automates the short sale process.  This will streamline the process and improve the experience for both customer and real estate agents.

As a result, Bank of America will no longer be accepting faxed short sale documents, effective immediately you will need to upload those documents through Equator. Information to assist you with the Equator system can be found at www.bankofamerica.reo.com/shortsaletraining.

Once a short sale is initiated on a Bank of America loan, you can also access the educational guide within Equator.  It can be found within the “Upload 3^rd Party Authorization” task.  This guide provides tips for avoiding delays and navigating system functionality.

To start a short sale today, go to www.Equator.com/

REMINDER: The federal government recently announced the short sale program guidelines for the Home Affordable Foreclosure Alternatives (HAFA) program which will go into effect on Monday, April 5, 2010.  Bank of America Home Loans is implementing HAFA, the program designed to help those customers who were not eligible for the Home Affordable Modification Program (HAMP) or any other modification.  For more detailed information on the HAFA program, go to the National Association of Realtors site at www.realtor.org/government_affairs/short_sales_hafa.

For homeowners the choice is VERY CLEAR; short sales do less damage to credit, allow the homeowner to satisfy a large portion of the debt and in many cases allow for the homeowner (who has fallen behind on payments) to live “rent free” while the sale is negotiated.

The following article on CNNMoney highlights what hopefully is a positive trend in lenders considering short sales not only as a better alternative to foreclosures but reducing the time it takes for a short sale to be approved.   As a side note, I take issue with the Equator “software guy” as his system has flaws and is an obstacle versus a helpful tool at the homeowner level (at least right now).

- The Bank Slayer

Don’t foreclose! Do a short sale

NEW YORK (CNNMoney.com) — Short sales are the hottest thing going in the distressed-property market, and the trend is expected to get even hotter in coming weeks, when the government starts handing out cash to encourage lenders to close these deals.

“Banks have ramped up short sale approvals,” said Duane Legate of House Buyer Network, which connects short sellers with buyers. “They’re hiring a lot of the people who once worked in the mortgage-lending industry and moved them over to short sales.”

These transactions, where lenders allow homeowners to sell their houses for less than they owe, accounted for 17% of all residential real estate sales in February, up from nearly 13% in November, according to a monthly real estate market survey by Campbell/Inside Mortgage Finance.

And Bank of America (BAC, Fortune 500), the country’s largest mortgage servicer, has more than doubled the number of short sales it processed in recent months.

Elizabeth Weintraub, a Sacramento, Calif.-area real estate agent who handles many short sales, was amazed at how quickly a recent deal went through. “Bank of America approved it in 24 days,” she said. “That flipped me out.”

This is a huge change from even just six months ago when the short-sale market was stalled and most people would describe the process has real estate hell. Because lenders stand to lose so much on these transactions, they have been reluctant to make short sales happen, often waiting months before getting back to potential buyers.

Beware: You lost your house but still have to pay

In the past, many short sales would never come to fruition and the ones that did averaged over half a year to complete,” said Chris Saitta, CEO of Equator, which produces short sale software.

“Things would just fall into a black hole and not come out again,” added Weintraub.

And even when banks did agree to the sale, the process could be further complicated if the original owner had a second mortgage.

In most cases, the first lender is repaid in full before any money flows to a second-lein holder. And because most distressed borrowers are severely underwater, there’s usually nothing left to send on. As a result, second-lein holders are left holding the bag and have been killing many deals.

But that has been changing. For one thing, banks realize that they make out far better financially with a short sale than a foreclosure. “The lenders lose 50% on a foreclosure and only 30% on a short sale,” said Glenn Kelman, founder of the real estate Web site Redfin. “And short sales offer a way to get distressed properties off their books quickly.”

And on April 5, lenders and mortgage investors will have even more incentives to offer troubled borrowers short sales instead of foreclosing.

Under the new Home Affordable Foreclosure Alternatives program, borrowers will earn a $3,000 “relocation incentive” and servicers will get $1,500 for handling a short sale.

The investors who actually own the mortgage notes will get $2,000 in exchange for sharing proceeds of the short sales with any second-lien holders. And, finally, those second lien holders will receive up to $6,000 for releasing their claims.

Lenders participating in the program must also determine the market values of properties early on and inform the owners of just what price they’re willing to accept. Then, if owners come back to the lenders with bonafide offers, they have to be accepted within 10 days.

Equator’s Saiita anticipates a short sale explosion in response to the new program. “The challenge will be handling all the volume,” he said.

The company has already tweaked its software, which 58 servicers use, to handle the new HAFA rules. And that should help reduce the time it takes to execute a sale, which currently averages 88 days.

The boom in short sales may accelerate the end to the foreclosure crisis by cleaning out the overhang of borrowers in distress and replacing them with more stable homeowners.

Plus, these sales are better for distressed borrowers because their credit scores suffer less. Going through a foreclosure can knock 200 points off a FICO score, twice as much as the penalty for a short sale.

By Les Christie, staff writer – March 29, 2010: 3:46 AM ET