If you are trying to short sell your home and have a mortgage with Bank of America (BofA) there is a pretty good chance that you will get an offer from an investor doing business as a Limited Liability Company (LLC). Large, well-funded LLCs are everywhere now and they are buying up properties quickly and paying cash.
A couple of LLCs that buy a lot of properties in Illinois are Waypoint LLC and IH2 Property Illinois.
If you are doing a short sale with BofA, I would not suggest accepting an offer from one of these LLCs because you will not be able to close. BofA will reject the LLC as a buyer and spike your short sale. Why would BofA do this? I was told that it’s …. cough, cough … “company policy” which means someone just made it up, and there really is no reason for this restriction.
BofA’s short sale rules are as follows:
1. LLC Buyer. If you have an LLC buyer you have to submit the articles of organization for the LLC and the operating agreement for the LLC. Most of the LLCs will give you this.
2. Members of LLC must be individuals. BofA will allow an LLC as a Buyer, but only if the operating agreement of the LLC shows that an individual or individuals, and no entities, as members of the LLC– they will not approve a short sale where a trust, corporation or another LLC is the member of the LLC. The problem is that with large LLCs like those named above, there are no individual members. The members of the main LLC are always other LLCs or corporations. BofA will kill your short sale when they see an entity buyer within the LLC.
This only applies to BofA short sales, not to short sales in general. So don’t panic if you have a short sale lender other than BofA. Wisely, none of the other lenders look inside the Buyer’s LLC.