One of the nation's biggest mortgage lenders, Bank of America, has said it is loosening its policies on short sales.  This announcement came as a response to the U.S. Treasury Department'sannouncement last week that is would increase incentives for lenders to work out short sale deals.  With the number of short sales in Florida and especially the Tampa Bay real estate market, this is a very good step in the right direction to reduce the number of houses on the market that are subject to foreclosure.

David Sunline, a Bank of America real estate management executive, says this action is a boon to banks because it provides guidance when there are multiple liens, which is a potentially litigious issue for lenders.

In the past, the bank followed Fannie Mae's policy of giving second lien holders about 10 percent of the second mortgage in a short sale.  Now, when it holds the second lien, BofA will accept 5 percent of the net proceeds of the short sale, Sunline says.  When BofA is the first lien holder, it will offer 5 percent to the holder of the second lien.

Mr. Sunline says homeowners considering short sales should contact the bank within five days of getting an offer on the home and expect its cooperation as long as the offer is within the range of other sales in the area and the borrower can demonstrate financial hardship.

Article Source: The New York Times.  Bob Tedeschi.  5/15/2009