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Few take advantage of Bank of America pilot short-sale program

Only about 3,000 Florida home­owners want to sell their houses in a short-sale program after Bank of America dangled cash payouts of $5,000 to $20,000 to avoid going into foreclosure.

The bank had targeted 20,000 homeowners in Florida in the pilot program. The lender services 1.1 million Florida mortgages and about 253,000 were delinquent at the end of October.

The short-sale program, announced in October, has riled some homeowners because Bank of America will not tell them how much money they will receive until the sales are nearly complete, real estate agents say.

"The bank is not putting in writing how much homeowners will get until the end," said Steve Capen, a short-sale specialist with Keller Williams Realty. "By that time, homeowners have entered into a contract to sell. We're going to have issues. Customers are going to be upset."

The deadline to apply for the program was Dec. 12.

With foreclosures taking nearly two years in Florida, delinquent homeowners might have rejected the cash offer because they could live rent free in their homes. While the bank evicts them in court, a homeowner could stash cash each month for moving expenses that would top the bank's offer.

For some delinquent homeowners, the cash offer may not be worth having to vacate the property and find another place to live.

In the program, qualified home­owners would get 5 percent of the unpaid mortgage balance as of August 2011, with a minimum payout of $5,000, Bank of America said. For instance, a homeowner who owed $100,000 as of August would get $5,000. A homeowner who owed $200,000 would get $10,000. And so on up to a maximum of $20,000. The sales price does not impact the payout.

Bank of America could not provide specific numbers for the program, but in a statement said it is "encouraged by the initial interest shown in the program."

Gunner Davis, an agent with Century 21 Beggins Enterprises in Apollo Beach, said the bank has imposed restrictions on income, employment and loan status that impact the cash payouts. Many sellers can get the $5,000 minimum payment, but he expects few to collect the maximum $20,000.

"I don't see how anyone . . . will get the $20,000," Davis said.

Currently, the program is only available in Florida but could be expanded to other states.

To sweeten the deal further, the lender said it would consider waiving the deficiency on the mortgages, which allows homeowners to sell the house for less than they owe without having to make up the difference to the bank. It can save homeowners thousands of dollars. The deals must close by Aug. 31.

Not every Florida customer is eligible for the program. Bank of America targeted homeowners who cannot afford their mortgages. The bank tested the program only in Florida because of the higher foreclosure rates here than elsewhere.

Andrew Duncan, CEO of Re/Max Dynamic in South Tampa, said the Bank of America program has been easier to navigate than other lender programs. Homeowners are getting answers quicker from the bank after receiving an offer on a home, he said.

He added: "It's not all sunshine and rainbows, but it's been pretty positive."

Mark Puente can be reached at mpuente@tampabay.com or (727) 893-8459. Follow him at Twitter at twitter.com/markpuente.

Few take advantage of Bank of America pilot short-sale program 12/28/11 [Last modified: Wednesday, December 28, 2011 8:44pm]
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