The clock is ticking on homeowners who want to take advantage of Bank of America's recently announced short-sale incentive program.
To collect up to $20,000, qualified sellers must get their homes listed for sale by the end of November.
The bank, which services 1.1 million Florida mortgages, says it is not limiting the offer to delinquent borrowers. Homeowners with good payment histories could also qualify, said Christina Beyer Toth, a Tampa-based Bank of America spokeswoman.
When the nation's largest lender announced the program offer last week, it didn't specify which homeowners would qualify or whether the bank wanted to only dump toxic loans it acquired from Countrywide Financial in 2008.
The program will save the bank attorney fees, court costs and property taxes by avoiding foreclosure. It also speeds the process of getting bad loans off its books and gets the properties back on the market faster.
Here's what else Bank of America mortgage holders need to know about the program:
How will homeowners know if they qualify?
Bank of America will send them a solicitation mailer. Homeowners can also call the bank to see if they qualify, and real estate agents will notify eligible homeowners already listed for short sale. Either the homeowner or agent can call the short-sale specialists for further information and to determine eligibility. Government-backed loans and lot loans are excluded.
When do the homes have to be listed for sale?
Between Sept. 26 and Nov. 30. The deal must close by Aug. 31, 2012. Sales already under contract are not eligible for the cash assistance.
Can homeowners with good payment histories qualify if their loans are under water?
Yes. Bank of America selected Florida for the test-and-learn program to determine whether the additional incentive increases the use of short sales instead of other more expensive, and perhaps less dignified, transitions like foreclosure. If it works in Florida, the bank might roll it out in other parts of the country.
How will the payouts be determined?
Qualified homeowners will get 5 percent of the unpaid balance as of August 2011, with a minimum payout of $5,000, Bank of America says. For instance, a homeowner who owes $100,000 as of August would get $5,000 (5 percent of $100,000). A homeowner who owes $200,000 would get $10,000. And so on up to a maximum of $20,000. The sales price does not impact the payout.
To sweeten the deal further, Bank of America will consider waiving the deficiency on the loan, which allows homeowners to sell the house for less then they owe without having to make up the difference to the bank. That can save homeowners thousands of dollars and enable them to buy another home quicker.
Will the program impact a homeowner's credit rating?
It depends on whether the loan is delinquent or current when the home is sold. The short sale will be reported as any other short sale is reported, in line with national credit reporting standards, Bank of America says. If "short sale" is listed on a credit report, the score will drop by at least 100 points, experts said. But some short sales are being listed as "paid in full," which wouldn't have the same detrimental impact on a credit rating.
Are the cash payouts government funded?
No. Bank of America will pay all incentives.
How much money does Bank of America plan to spend on the cash assistance?
"We cannot provide an answer," Toth said.
Short sale specialist Steve Capen of Keller Williams Realty in St. Petersburg cautioned that homeowners shouldn't get overly excited because many of these plans have restrictions.
Two of his clients applied for the program, and each learned immediately that they qualify for more than $12,000 if the homes sold. Both clients have been delinquent on their mortgages for more than a year, Capen said.
On the other hand, the banks told two other clients, who are current on their loans, to apply for the offer but did not specify if they would get any money, he said.
"They're not giving any answers on the payout," he said.
How can homeowners get more information?
Bank of America has set up a dedicated team of short-sale specialists to answer questions related to this test-and-learn program. The number is (877) 459-2852.
Mark Puente can be reached at firstname.lastname@example.org or (727) 893-8459. Follow him on Twitter at twitter.com/markpuente.