BoA Changes Policy on 'Short Sales'

Trying to cut its losses, Bank of America has changed its policy on "short sales," making it easier for borrowers to sell their homes instead of going into foreclosure, according to a report in American Banker. Until a month ago, BoA's mortgage unit (which includes the old Countrywide franchise) had required that 10% of a home's sale price go toward paying off home-equity lines of credit before they would agree to a short sale. But Terry Francisco, a spokesman for the Charlotte-based lender, confirmed that the bank changed its policy last month, agreeing to accept 5% of the sale price when there is no equity available to holders of the first or second liens. The new policy "is based on the assumption that it is in the best interest of all parties involved to accept a short sale, as opposed to proceeding to a foreclosure," Mr. Francisco said. "We believed that the previous policies set an arbitrary amount that did not take into account the savings derived from proceeding with a short sale." The bank expects the change to increase the number of short sales.