Facts about the BPO PDF template
- 1 Facts about the BPO PDF template
- 2 Why is the BPO PDF used?
- 3 Who Would Use the BPO PDF?
- 4 When Should You Use the BPO PDF?
- 5 What are the Consequences for not Using a BPO PDF?
- 6 Steps for Filling Out a BPO PDF Form
- 7 Quick Questions
Why is the BPO PDF used?
A BPO form is used to simplify the process of gathering the information Fannie Mae and others will need in order to approve the short sale or deed-in-lieu of foreclosure. The form allows recent sales and current listings of similar homes to be populated side-by-side so the comparisons are easy to make. Some of the information the BPO will require are:
- Square footage of living space
- Garage stall count
- Bedroom and bathroom count
- Three recent sales of similar properties
- Three current similar properties that are actively listed for sale
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The Loss Mitigation Department will review the BPO, and they will want to see examples of similar properties so they can make a determination of the final value of the property. If a three-bedroom home with two bathrooms is being considered for a short sale, the comparable homes should be three bedroom and two bathroom homes. The comparisons should be located within a few miles of the subject property. If there are no similar homes or properties located geographically close to the subject, the BPO form has a section to explain and make pricing adjustments for the differences.
Who Would Use the BPO PDF?
Real estate agents will use the form to help them determine the properties estimated market value. The form will allow the real estate agent to explain to Fannie Mae and mortgage lenders why the property should be considered for a short sale or deed-in-lieu of foreclosure.
Appraisers can fill out the BPO, but they will most likely complete a traditional appraisal application. Nationwide Appraisals states that appraisers must meet the Uniform Standards of Professional Appraisal Practice. A real estate appraiser can use the form to provide the estimated value to Fannie Mae also, but a BPO is not considered a true appraisal. A licensed real estate appraiser can perform BPOs and appraisals. Although they are similar, an actual appraisal requires the appraiser to physically enter the structure and measure it.
A BPO is usually completed with just a drive by visual on the property, but there are times when the person completing the BPO will need to access the interior of the home. Here is a graph by Flipping Houses that breaks down the different types of interior and exterior BPO inspections that could happen.
The Loss Mitigation Department uses the information documented on the BPO to determine value of the subject property, and it gives the loss mitigation manager the ability to determine an estimated net loss they will have since the loan is not being fulfilled. Some of the information the BPO provides to the loss mitigation manager are:
- A suggested list for sale price
- The net proceeds after the sale
- A reserve price in case of auction
When Should You Use the BPO PDF?
The BPO should be used when a homeowner cannot make the mortgage payment or will not be able to make the mortgage payment in the near future.
A homeowner who cannot continue making payments due to a hardship may qualify for a short sale or deed-in-lieu of foreclosure. Some hardships that may qualify a homeowner for the short sale or deed-in-lieu are:
- Loss of Employment
- Job Relocation
- A balloon payment
- An adjustable mortgage payment adjusting higher
- Divorce or other qualifying marital issues
- Unexpected debt
- Unexpected major repairs to the home, other structures on the property, or the land it occupies
Fannie Mae also states that it will consider homeowners who are more than 90 days late on mortgage payment and have a FICO score less than 620 for a short sale or possible deed-in-lieu of foreclosure.
A homeowner should begin the BPO process immediately when they become aware that they will not be able to continue making payments, or they should start the BPO process even if they are making payments but know they will soon not be able to keep up. Some ways to start the BPO process are by contacting your lender or a real estate agent who specializes in short sales.
What are the Consequences for not Using a BPO PDF?
The major consequence for not using a BPO form is a homeowner’s short sale or request for the deed-in-lieu will be denied. If both options are denied, the homeowner could face a complete foreclosure. The consequences of a foreclosure from Know Your Options are eviction, damaged credit, and the inability to get another mortgage for years.
The other consequences of not filling out a BPO form is wasted time and increased anxiety for the homeowners. The loss mitigation department will reject the application if the BPO is not included or incorrect. The process is lengthy enough just to get to loss mitigation, and having to correct a BPO just adds more stress to an already stressful situation. If too much time passes and the property is already in foreclosure, the homeowner may legally get foreclosed on. The loss mitigation department needs time to process the request, and they have to go through their legal channels. It takes a lot of time, and if time is wasted not using a BPO, the homeowner could be in jeopardy of foreclosure and the damages that come with that legal action.
Here is a timeline graph of the BPO and short sale process provided by Ocwen, a mortgage lender.
Steps for Filling Out a BPO PDF Form
Some steps you will need to complete in order to fill out a BPO form are:
1. For the subject property find out the living space square footage, bedroom count, bathroom count. Is there a garage? If so, how many stalls does it have. For example, is it a two or three car garage. How big is the lot or acreage? Does it have a pool or other accessories? For example, does the property have a substantial barn or other large outbuildings. Is there damage to the real estate? If so, note it.
2. Next, search recent sales. If at all possible, do not go back farther than six months. The closer the sales date to the date on the BPO means there is a better chance the BPO will be accepted. From the recent sales, select similar properties. For example, if the subject property is a condominium use other condominiums. Find homes that are within a few miles of the property. In rural areas, this may not be possible. You will have to explain that on the BPO.
3. Now search for homes for sale on the market. Again, search for similar homes to use as comparisons to support your BPO.
4. Using this data, fill out the BPO form. Make explanations and make adjustments where necessary.