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.
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Tni LeBlanc, Broker
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