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Should You Get A VA Loan with Bank of America?

Should You Get A VA Loan with Bank of America?

 

Are you aware that Bank of America’s policies deter offers written with VA financing from being accepted on short sales? They do. And because Bank of America controls so much of the REO and short sale market -- their policies have a tremendous effect. Just last month, Bank of America changed their policy to allow back up offers on their short sales. This one (long overdue) policy change should have a tremendous effect on the amount of time it will take to close a Bank of America short sale, and accordingly, it will drastically reduce days on market for short sale listings overall and hopefully change buyer perception about short sale wait time.  BofA can also have a tremendous effect on the market by changing their policy that makes it more difficult for veterans to purchase short sale homes using their earned VA home loan benefit.

 

 

Eligibility for a VA loan is a benefit earned from military service. It allows the borrower to buy a home with zero percent down and the loan is backed by the Veteran’s Administration. The main issue with Bank of America and VA financing centers on repairs. Guidelines for VA financing do not allow the buyer to pay certain costs, such as the escrow fee, and certain repairs must be paid by the seller, such as a termite clearance and any repairs identified by a VA appraiser. These are not new requirements. They have been in place for quite awhile and Bank of America is quite familiar with these requirements when they are selling a VA loan to a veteran.

 

Why then does Bank of America have policies that make it more difficult for VA buyers to buy a short sale? I don’t know. VA buyers routinely stand at the back of the line when it comes to buying foreclosures because most lenders do not want to do repairs on foreclosed properties - and VA requires them. Quite naturally, in distressed markets, VA buyers who can wait turn to short sales as their next best option. However, Bank of America’s policy is to disallow any repairs, including VA required repairs. What does this mean? Sellers in distress often turn down VA offers because they do not have the funds to pay for repairs, and VA buyers then have an even more difficult time buying a home. Take a distressed market close to a military base and the problem gets even more intensified.

 

Does every lender/servicer take this position and make this recommendation to investors on short sales? No, they don’t. But, Bank of America does and it makes the situation worse for the housing market overall, and for veterans trying to use their VA eligibility specifically. Not to mention that further limiting the pool of buyers for short sales depresses home prices further. Bank of America can roll out 15 Online Resource Centers but until they change some of these policies that are hampering the housing market and its recovery, I would say that their efforts are not sincere. For Bank of America to actively market to VA buyers while maintaining this type of policy is hypocritical, in my opinion.

 

So, if you are getting a VA loan, should you go to Bank of America? Why would you? Their policies make it harder for military service members who have earned their eligibility for VA financing to buy homes in distressed markets. Since you have a choice about where to get a VA loan, why would you go to Bank of America?

 

Tni LeBlanc is an independent Real Estate Broker, Attorney, Short Sale Agent, Certified HAFA Specialist (CHS), and Certified Distressed Property Expert (CDPE) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California.

 

* Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice and is for information purposes only. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement. Mint Properties is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.

 

Copyright © 2011 Tni LeBlanc *Should You Get A VA Loan with Bank of America?*

Tni LeBlanc, Broker
(805) 878-9879 mobile/text

tni@mintprop.com
www.MintProp.com
CalBRE #01871795

Comment balloon 35 commentsTni LeBlanc, Realtor®, J.D. • July 31 2011 10:30AM

Comments

I would not finance as much as a stick of gum from the institution you speak of.  Sorry no seo for the idiots.  Have a great Sunday.

Posted by Joe Kenny, Better Than Your Average Joe (Realty Executive Midwest) about 7 years ago

So it sounds like a VA SS offer w/ BOA is DOA? ;)   Just a little abbreviation humor. I get silly when I'm tired!

Posted by Sonja Patterson, Texas Monthly 5-Star Realtor Recipient for the Hou (Keller Williams - BV) about 7 years ago

Joe Kenny - LOL.  You are cracking me up!  You won't even utter the name?!  I completely understand where you are coming from though.  They are pretty much poison to the housing market IMO. 

Sonja - I love it!  That about sums it up!  Get some sleep!

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) about 7 years ago

Tni, Not only is the policy hypocritical ... it is shameful and un-American as you so point out with all of the flags!  Why get a VA loan with BoA when you can't buy one of their properties with it ... makes no sense at all! 

Posted by Kathleen Daniels, San Jose Homes for Sale-Probate & Trust Specialist (KD Realty - 408.972.1822) about 7 years ago

Unfortunately my loan is with them - but I consider BOA to be about as American as Apple Pie - NOT.   I wish Obama would use the bully pulipit to shame the big banks into behaving better.  A conversation has to b STARTED about doing the RIGHT THING and patriotism.  As for the policy, I wish it surprised me.  Sadly it does not. And yes, it is shameful.

Posted by Ruthmarie Hicks (Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605) about 7 years ago

Tni, of course they are hypocritical. Not only do their policies need to change, but their attitude towards their customers. I wonder what their five-year plan is to stay in business? VA loans can be gotten elsewhere. Don't do business with them. 

P.S. I like Joe's comment #1, don't give them any SEO. hahaha

Posted by Pamela Seley, Residential Real Estate Agent serving SW RivCo CA (West Coast Realty Division) about 7 years ago

Tni, good information on the anti-christ of VA loans.  Brian

Posted by Brian L. Sirota, Esq., For Solutions: (714) 501-7660 (Bristar Realty (Realtor/Attorney)) about 7 years ago

Hi Tni - If you represented the seller of a home that needed work, would you allow a VA offer knowing its going nowhere?  I am not taking BofA side just being pragmatic.

Posted by Conrad Allen, Webster, Ma, Realtor (Re/Max Professional Associates) about 7 years ago

Tni, great to put out this information to sellers and buyers...as santa maria short sale agents the knowledge you share with your buyers and sellers is invaluable in the short sale process...i for one am amazed at 'this' bank's lack of forward procedures to improve the housing market...good share

Posted by Ginny Gorman, Homes for Sale in North Kingstown RI and beyond (RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate) about 7 years ago

Hi Tni,

I love your posts and your writing style.

Here, however, you ask a question and answer it within your own post.

In a short sale the seller usually has no money to pay for repairs. On a VA loan, the process is set up for the seller to do MANDATORY repairs or they will not fund the loan.

So why would you allow financing for VA buyers on properties that they almost for sure cannot close?

Just wondering?

Phil

Posted by Phil Leng, Phil Leng - Retired (Retired) about 7 years ago

Kathleen - EXACTLY!  Anyone who has tried to buy a Bank of America REO with VA financing knows that they routinely reject VA financing (or rank it as the least attractive) even though they know the buyer EARNED the benefit from military service.  It is that exact reason that VA buyers turn to short sales -- but there they find the same roadblocks.  Not every short sale lender takes the position that they won't allow even minimal repairs to be done to a property in order to sell it.  Taking that position makes short sales more difficult to sell and makes it harder for veterans to use their VA benefit.

Ruthmarie - You and me both.  They need to be shamed about this type of thing.  Why are they making things harder for veterans, especially when they want their business?  Because they are so large, their policies have a wide reaching effect.  Imagine if it were the opposite, that buyers and sellers knew that Bank of America would be reasonable when considering these repair requests for VA financing.  I think that would be a policy more respectful of veterans who have earned this benefit and also create more buyers for short sales (and REOs).  I think those looking to use their VA benefit should know the truth about Bank of America.  Not every lender/servicer has this type of policy.

Pam - I think their five year plan is to control the universe.  LOL.  It would be even funnier if it weren't so possible.  One bank should not have this much power, or if they do, they need to use their power for good not evil.  There is no way I would advise someone using VA financing to get a loan with Bank ofAmerica knowing that their policies make it harder to use VA financing in the market.

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) about 7 years ago

Brian - LOL.  You are too much!

Conrad - That is my point.  Even if you've worked up all the repair issues ahead of time and they amount to $500 or less, Bank of America won't pay them.  As a short sale listing agent, I know this.  Sellers on unemployment or who have lost their jobs can't often afford to pay even $500, so they will turn down a VA offer in a heartbeat knowing that their lender, Bank of America, will not allow even a reasonable amount of repairs to be made and taken out of the net.  So, then VA buyers get pushed even further to the back of the line.

Thanks Ginny - Yes, that is part of my larger point.  Bank of America needs to fix this type of policy.  It really does hurt the housing market.  The pool of qualified buyers is small enough -- by making it impossible for VA buyers to purchase certain properties they are making the market for those homes less competitive and further depressing home values.

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) about 7 years ago

Phil - Well you are right.  And that is the exact thinking of sellers when they look at a VA offer and Bank of America is their short sale lender.  Not every short sale lender/servicer will refuse to pay for a reasonable amount of repairs and a termite clearance.  So my question is -- why does Bank of America refuse to pay and give advice to its investors not to pay even in the case of VA financing?  Sellers in distress often do not want VA financed offers because they cannot pay the VA required repairs.  These repairs could simply be subtracted off the net, but Bank of America thinks that is a bad idea even though they know the repairs are mandatory for VA financing, and the person using VA has served the country and earned the benefit.  It is a ridculous and unpatriotic policy that further hampers the housing recovery.

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) about 7 years ago

Well done and well said Tni. BOA is saying "no" to veterans.

Posted by Joe Manausa, Tallahassee Real Estate (Joe Manausa Real Estate) about 7 years ago

They have just been allowed to get too big in my opinion.  They have a ton of power and flex their muscle every chance they get. 

Posted by Bob Jakowinicz, Michigan Real Estate Agent-- MI RE Adventures (National Realty Centers Livonia--Bob Jakowinicz) about 7 years ago

Good Morning, Tni. I can tell this new policy with BOA will not set well with many veterans or military members. I am sure many of our veterans groups will take action against BOA for these new policies. If fact, it doesn't set well with me too.

Posted by Jerry Newman, Texas REALTOR, San Antonio Military Relocation (Brown Realty, 210-789-4216,www.JeremiahNewman.com) about 7 years ago

Amazing, and the have the word America as part of their company name. 

Posted by Richard Weeks, REALTOR®, Broker about 7 years ago

I would go homeless before I would ever allow BOA to finance a mortgage for me...so with that, this does not surprise me one bit.  Massive FAIL for BOA on this one.

Posted by Susan Haughton, Susan & Mindy Team...Honesty. Integrity. Results. (Long and Foster REALTORS (703) 470-4545) about 7 years ago

Yet another reason to dislike Bank of America.  And in Northern Virginia, where we have tons of their Short Sale and Foreclosure inventory, we also see tons of VA Buyers. 

Posted by Chris Ann Cleland, Associate Broker, Bristow, VA (Long and Foster REALTORS®, Gainesville, VA) about 7 years ago

I bet most VA buyers don't know this so it's good that you brought it to light.  Somehow it doesn't surprise me.

Posted by Christine Smith, Exclusive Buyer Agent & Attorney, Canton, MA (Buyers Brokers Only LLC - www.BuyersBrokersOnly.com) about 7 years ago

It is so sad...VA buyers really do have it hard in this market...short sales and REO's rarely do repairs in my area....and even if they do the other criteria involved make it very difficult to get financing.  Luckily we are getting a few more "equity" homes on the market....

Posted by Deborah Byron Leffler BzyBee Real Estate Lady! (Keller Williams Realty Boise) about 7 years ago

Century 21 - I agree and they don't have to.

Bob - Yes they do.  Here is an example where they could truly be a leader in the industry and they have adopted a policy that makes home buying harder for veterans. 

Jerry - it doesn't set well with me either.  If only it were a new policy though -- they have been doing this for quite awhile.  And, it is time for that to change.  Why pay for a fancy PR campaign designed to make people think you are doing whatever you can for the market when behind it you have policies like this which are very destructive to real estate markets near military bases?  There is image and there is reality.

Richard - I know.  They need to do some reading on the contribution of the military to America.

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) about 7 years ago

Susan - You and me both.  Those parks benches look more attractive than a BofA financed home.  LOL.

Chris Ann - We have a ton here as well. It makes no sense that they be left at the absolute back of the home buying pack due to policies like these.  BofA will refuse allow even $500 of repairs which many times will tank a deal for a VA buyer.  Short sale sellers know this in advance and don't want to touch VA offfers.

Christine - No I don't think they do.  And, I just don't see why anyone would go to them for a VA loan when they have policiies like this in their back pocket.

Deborah - We are too.  I was thinking of writing a blog article about that as well.  We are seeing a return of equity sellers to the market and it is making things much easier.  But, we still have plenty of short sales to go.

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) about 7 years ago

As an expert Santa Maria Short Sale Agents, its great to share these information to your homebuyers and sellers. Excellent post Tni!

Posted by Bob Hertzog, Designated Broker (Summit Home Consultants) about 7 years ago

Great post Tni! Sharing your advice as Santa Maria Short Sale Agents will be very helpful to many homebuyers and sellers in your area. Thanks for sharing this!

Posted by Katerina Gasset, Get It Done For Me Virtual Services (Get It Done For Me Virtual Services ) about 7 years ago

Hey, Tni!  I included this post in Last Week's Favorites.   Have a great Sunday!

Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) about 7 years ago

Thank you Bob!

Thanks Katerina!

Hi Pat - thanks for the feature!

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) about 7 years ago

I wouldn't do any business with Bank of America if it could be helped.  I was bummed to learn my new brokerage uses BoA for all their banking ect.  Grrrrrrrrrr.

Posted by Justin Dibbs, REALTOR® - Ashburn Virginia Homes for Sale (Pearson Smith Realty) about 7 years ago

You've got the same problem with HUD and an FHA short sale. Ever try to get the buyer's 3% closing costs approved on an FHA short sale? Yet, when buying anything but a short sale with FHA financing, HUD will let the buyer add the 3% to the sales price. Of course, FHA is getting squeezed on all sides. From the down payment, to the MI upfront premium, to the loan limit cap. I would not be surprised to see FHA and VA eliminated in the not too distanct future.

Posted by Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents, Put 40 years of experience to work for you (Lyon Real Estate) about 7 years ago

Wonder if they will allow an escrow?  On B of A FHA insured loans, we can do an escrow of up to $5,000 to repair appraiser required items post closing.

Posted by Daniel H. Fisher, MCRP - Charlotte Real Estate, NC or SC (www.FisherHermanRealty.com (704) 617-3544) about 7 years ago

I was just stopping by because I notice that you have not posted for awhile. Hope all is well. And, I do agree with Elizabeth (on just about everything) ;-)

Posted by Melissa Zavala, Broker, Escondido Real Estate, San Diego County (Broadpoint Properties) about 7 years ago

Tni - My area in Northwest Florida has lots of VA buyers.  We are home to large military bases.  I haven't noticed any issues with my VA buyers on BOFA short sales. They typically allow a 3% credit for their closing costs.  Perhaps it's an "area" thing, and you are getting negotiators that just service your part of the country?

Posted by Wendy Rulnick, "It's Wendy... It's Sold!" (Rulnick Realty, Inc.) about 7 years ago

Justin - Yes, I'm not a fan either.

Elizabeth - How ridiculous!  That would be awful if they went away. But yes you are right FHA and VA are doing overtime in distressed markets.

Hi Daniel - Sounds like a great solution for FHA.  Do you do the same for VA?

Hi Melissa - Well I had some laptop issues in August.  I bought a Mac awhile back.  It is still in the shop and I finally had to break down and buy an HP.  I should be back up to speed soon.

Hi Wendy - No their position is that they will not pay for repairs and that buyer credits cannot be used for repairs either.  I'm sure people have closed deals using credits -- but their policy is no repairs and credits are not to be used either.  It really puts VA buyers at a disadvantage in distressed markets.

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) about 7 years ago

Hello Tni,what more can I say this post is defintely a top notch here.Detailed and informative to everyone.Keep up the good work as number one Santa Maria Short Sale Agent. 

Posted by Katerina Gasset, Get It Done For Me Virtual Services (Get It Done For Me Virtual Services ) about 6 years ago

Every borrow should shop around and choose who offers the best rates.

Usually, VA-guaranteed loans come with terms that few other financing sources can match: zero down payment; flexible and generous credit underwriting that emphasizes the individual applicant rather than the algorithm-driven computer programs that dominate conventional lending. Also, VA interest rates are competitive and maximum loan amounts are the jumbo range in some areas.

Posted by Inna Ivchenko, Realtor® • Green • GRI • HAFA • PSC Calabasas CA (Barcode Properties) almost 4 years ago

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