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New Policy on Short Sales Could Reduce Foreclosures

American Banker.com-- Trying to cut its losses, Bank of America Corp. has changed its policy on short sales, making it easier for borrowers to sell their homes instead of going into foreclosure.

Until a month ago, B of A and its Countrywide Financial Corp. 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 company, said Monday that it 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.

...Norm Miller, a professor of real estate at the University of San Diego's Burnham-Moores Center for Real Estate, said 77% of foreclosures in California have second mortgages, most of them HELOCs, which often scuttle short sales. (Full Story)