RISMEDIA, September 7, 2010—The housing market is showing signs of life. Historically low interest rates and greater home affordability in many areas are beginning to attract prospective home buyers to the market. And with a slow yet steady economic recovery, consumers and real estate professionals are positive about opportunities for today’s first-time and repeat buyers.
With the changing economy and regulations surrounding lending standards, today’s home buyers have questions. They often look to real estate professionals to help them understand the various purchase opportunities, what kinds of loan options are available, and whether now may be the right time to buy. Providing resources and tools for real estate firms to help their clients remains a primary goal for Bank of America Home Loans.
One such tool that can help real estate professionals educate their clients on the home loan process is the Bank of America home loan guide, available at www.bankofamerica.com/myhome. Since the site was introduced in April 2009, more than 660,000 consumers have used it to gain insights into the home loan process and determine what they can comfortably afford. The site was revised in April 2010 and now includes interactive tools and calculators, the ability to save worksheets and information for use at a later date, and a new local mortgage loan officer finder.
“The Bank of America home loan guide offers clear, objective information that will allow consumers to navigate the home-buying process with confidence,” says Todd Dal Porto, Bank of America Home Loans enterprise sales executive.
Some of Bank of America’s alliance partners have begun recommending the home loan guide as a resource for their agents and clients.
Coleen Bush, home loans manager at Bank of America, works closely with agents at Century 21 Town and Country in Detroit. “We’ve held training sessions on the home loan guide for agents in our office,” says Bush. “It gets everyone to the site and provides answers on the home loan process, encouraging our agents to follow-up with their clients.”
Bank of America also offers the Clarity Commitment® loan summary. This one-page document shows home buyers in simple language what they will pay each month, tells them their interest rate, explains closing costs, and includes rate-lock information.
The Clarity Commitment is available for most Bank of America home loans, including first mortgages, home equity loans and reverse mortgages. Since April 2009, more than 1.3 million consumers have received a first mortgage Clarity Commitment, and more than 90,000 consumers have received a home equity Clarity Commitment.
Leveraging Today’s Market
According to the May 2010 Bank of America Mortgage Index Study, seven in 10 consumers believe buying a home in today’s market is a good investment.
“The basic values of homeownership haven’t changed. Buying a home makes sense for individuals and families who are ready to settle, make a house their own and experience a sense of community,” says Carter Murdoch, senior vice president, Bank of America. “Buying a home can mean the monthly payment is going toward something that could eventually build equity and contribute to long-term wealth, and it also may provide some income tax benefits.”
Today’s market presents qualified buyers opportunities through increased inventory and affordability. Lower housing prices in many areas of the country allow buyers who may have been cautious about housing values in the past to find homes that are now within their price range and meet their needs. Combined with buyer assistance programs and Bank of America’s mortgage products for all types of buyers, these circumstances could mean now is the right time to buy for many potential homeowners.
Short Sales and REOs: Opportunities for Home Buyers
Short sales make up a good number of the homes on the market today. However, a common misperception by consumers and some agents is that these homes sell at a discount. While short sale properties do offer buyers increased opportunity through the number of available homes, buyers have a greater chance of getting their offer approved by the seller’s bank or lien-holder when it is close to market value and free from as many contingencies as possible.
In addition, these types of transactions are paperwork-intensive, and can take 60 to 90 days or more to finalize, due to the need for additional documentation by the seller and approvals from third parties that have a financial interest in the loan. Agents should make their clients aware that short sale transactions can be complicated and buyers need to be patient and flexible.
To help streamline the short sale process with Bank of America transactions, the bank uses the Equator platform to help agents and sellers track progress on short sale transactions. Selling agents have online access to the seller’s file and can log in to check the status. With the recent addition of new automatic status alerts to Bank of America’s Equator system, agents now receive e-mail notifications in phases as the short sale reaches valuation, analysis and decision. Agents can feel assured that the short sale is moving forward and they can inform the buyer’s agent and buyer as to the status of a transaction.
“The recent webinar trainings on short sale transactions that Bank of America has offered have been very helpful in understanding the Equator program and using it as a smart solution for our Realtors,” says Amanda Jones, a sales agent with Vanguard Realty.
Although short sale properties don’t offer as much opportunity for buyers looking for deep discounts, real estate owned (REO) properties can be a good option for some potential homeowners. But buyers need to be aware that many bank-owned homes priced below market value are priced that way because they need some level of repair or upgrade, and are usually sold as-is. Although lenders work to maintain functionality and curb appeal of the property, buyers of lower-priced REO homes should be prepared to incur some repair or upgrade costs in addition to the purchase price of the home.
For anyone looking to purchase an as-is property, including an REO, fixer-upper or older home that may need work, Bank of America is one of the few lenders that offers a Federal Housing Administration (FHA) 203(k) loan, which provides funds for the purchase of the home (or refinancing) as well as certain repairs. As with other FHA loans, the required downpayment is only 3.5%, measured against the total cost to acquire and renovate the home. While the borrower may close with the property as-is, the loan amount is based on what the property will be worth after the repairs are complete.
Bank of America recently launched the Buy and Renovate Home Financing Program and an alliance with The Home Depot’s (THD) Home Renovation Services. Home buyers that qualify for a FHA 203(k) loan through this program have access to pre-screened contractors that offer a complete-satisfaction guarantee of their renovation work. In addition, the construction bid is created and managed by a single project manager who submits reports directly to the bank, saving the homeowner time and paperwork.
According to Jim Ragan, relationship manager for Bank of America’s National Builder Division, “The 203(k) purchase option is great for both real estate professionals and homeowners. It helps real estate professionals promote those hard-to-move, fixer-upper listings, and it opens up greater buying options to a larger population of home buyers—those looking for renovations, repairs, remodels or rebuilds.”
“Our agents have been actively promoting the Buy and Renovate Program since early 2010 and we’ve had clients interested in working with us because of the opportunities provided through the 203(k) loans,” says Ken Baris, president, Jordan Baris, Inc. Realtors. “A buyer can finance his or her home and add the money needed for renovations right into the life of the mortgage. This streamlines the process for the buyer; and both home buyers and sellers have told us that it was a deciding factor for working with our company.”
In any home-purchase situation it helps to get pre-qualified for a loan, but when buying an REO or short-sale property, being pre-qualified can help buyers make quick escrow deadlines.
“Short sale and REO transactions are complicated, but by working with Bank of America, we have been able to get loans closed in a timely manner to meet escrow deadlines,” says Vanguard Realty’s Jones. “In this competitive market, it’s nice to have the extra help and assistance from our Bank of America mortgage loan officers.”
Opportunity through the Right Mortgage Product
With greater opportunities for home buyers comes greater opportunity for the real estate professional. A Bank of America Home Loans’ Strategic Business Alliance can create a direct way for brokers and agents to provide assistance to their clients to provide a smooth and rewarding home-buying experience.
“The Bank of America name is a selling point that we didn’t have before our alliance,” says Frank Nolan, director of development sales, Vanguard Realty. “We get more of our loans closed in a timely manner because of our partnership.” Among the several alliance types offered by Bank of America are Marketing Services Agreement, and Marketing Alliance Plus™. The Bank also offers Space Rental Agreements.
With a Marketing Services Agreement, the brokerage receives a flat marketing fee to market Bank of America as a mortgage lender of choice, distribute marketing materials and advertisements and display Bank of America signage in the office.
A Marketing Alliance Plus™ agreement is similar to a Marketing Services Agreement, but the firm performs more extensive marketing services for a larger flat monthly fee. A dedicated account management team from the Bank helps develop a custom marketing plan.
The Space Rental Agreement allows for a Bank of America mortgage loan officer to sit and work side-by-side with agents in the firm’s offices. This gives the firm’s clients direct access to learn about loan options and provides a one-stop shop feel.
“Our partnership with Bank of America has truly impacted our business,” says Baris. “It has made our associates more productive and helped them reach their full potential faster.”
In 2009, Bank of America mortgage business was the No. 1 servicer and the No. 2 originator, as reported by Inside Mortgage Finance. The company maintains a strong position by differentiating with products, quality and service. Through Strategic Business Alliances, firms of all sizes are offered a variety of mortgage alliance solutions. Through these actions, Bank of America Home Loans is dedicated to helping real estate professionals strengthen their business and create successful homeowners.
For more information, visit www.bankofamerica.com/homeloans.