Posts Tagged ‘HAFA’

Warning for Short Sale Sellers Who Don’t Qualify for HAFA

Wednesday, August 8th, 2012

Experience pays off, especially with short sales. If you are trying to short sell your home, but were denied money back under the HAFA program, be advised of this warning to avoid problems down the road when you are ready to close: your agent needs to make sure that the bank negotiator changes the status of your short sale from a HAFA short sale to a traditional short sale.

Here is what should happen: the bank will need to issue you a denial letter, decline the short sale, and then your agent will need to re-initiate your short sale with the bank as a traditional short sale. You will want to make sure this is taken care of as soon as HAFA funds are denied, otherwise you could possibly end up going to foreclosure.

I had a short sale listing that was scheduled to close this Friday. I submitted the final HUD yesterday. I then received a call from the bank closing agent telling me that we need to deny the short sale and re-initiate it as a traditional short sale, as the bank negotiator did not do that when she should have. This essentially means that the short sale process starts ALL over again! After months of awaiting approval, no one wants that to happen.

I was on the phone yesterday calling all my contacts at the bank, trying to get help from whomever I could…it worked. I was contacted today by a short sale manager, who humbly apologized for the bank’s mistake. She has the new negotiator fervently working our file now to get everything approved as quickly as possible. I was so grateful to her and to the new negotiator, and also to the short sale closer who has been very helpful.

It is so important with these short sales to make sure that all the stars are aligned. Sometimes, as a short sale agent, you need to do the work of other people as well as your own (including that of the bank, in some cases). I learned an important lesson today, from a situation I have never seen nor heard of. Luckily I was able to work it out, but if I had been inexperienced that would likely not be the case.

If you are short selling your home, please make sure you have a very experienced short sale agent on your side, one who knows how to communicate with the lender and how to handle crazy situations, should they arise.

For more information on HAFA click here.

 

Image courtesy of Dreamstime.

Share
RSS Feed

Get Paid to Short Sale Your Home

Tuesday, November 29th, 2011

Short sales are a big part of our real estate reality, and they are not going anywhere anytime soon. Although the relief of getting out of a mortgage that can no longer be maintained is usually a blessing for sellers, there is also an added benefit in some cases, of getting  a check from the bank at closing.

There are several current programs that offer to pay sellers at the close of escrow on a short sale:

HAFA. The Home Affordable Foreclosure Alternatives program (HAFA) gives qualified sellers up to $3000 at closing. This program applies to both short sales and deeds in lieu of foreclosure. Click here for more information on HAFA and to see the requirements.

Transition Assistance Program (TAP). This is a Calfornia program that nets qualified state homeowners up to $5000 at completion of a short sale or deed in lieu of foreclosure. Click here to check eligibility and get information.

Bank of America Cooperative Short Sale Program. This program is available to any B of A loan holders who are doing a short sale, and provides up to $2500 to those who qualify.  The difference between this program and HAFA is that B of A preapproves the home for short sale, including the list price (which could be an issue). A 4 month time frame is given in which the agent must sell the home, and at the end of that time if the home has not sold B of A will issue an automatic deed in lieu of foreclosure (which could be a problem). Speak with your agent if you are not sure about how this program compares to HAFA, as the market time restrictions could be an issue. Contact B of A to get more information on the program.

Chase and Citi Short Sale Programs. Both of these lenders have initiated aggressive programs that pay up to $20,000-35,000. But don’t get too excited just yet…in order to partake of this program you need to receive a letter from one of these banks. This program is not owner-initiated. The banks find those homeowners whom they feel meet standards to successfully qualify. I know of one case here in La Jolla where a homeowner did receive such a letter.

Other bank programs. Some other banks are jumping on the bandwagon and offering their own short sale versions. Wachovia Bank sends letters to sellers asking them to participate in short sales, with a financial incentive at closing (between $3000-5000). Other banks have their own programs and more are sure to follow.

Many lenders are creating their own programs to bypass the HAFA program, as it limits the liability of the banks to collect money. With their own programs, controlling many of the terms of the short sale (like price and time frames), but if you are going to use any bank programs you need to understand these programs. Your agent needs to explain the differences between the bank program and HAFA, so that you can make an informed decision as to which one to choose. As I always say, knowledge is power.

 

Share
RSS Feed

Don’t Foreclose Yet…You May Have Options!

Thursday, September 29th, 2011

With the economy in turmoil and people scared to make big purchases, the real estate business is undoubtedly challenged. In difficult times some people panic, and I see that happening amongst distressed borrowers, yet there is a process to the situation that you need to follow in order to have a chance to save your home and your credit. I have blogged on this topic before and it is worth repeating.

If you are in a distressed situation you need to approach it methodically, even if you don’t believe that there are options. Foreclosure should be the last resort. Here are some steps you can take to try and avoid it:

1.  Contact your lender. I know this sounds horrible, but you need to start somewhere. Some lenders, like Bank of America, actually have been stepping up to help people avoid foreclosure. You need to have all pertinent information ready when you call – your loan number, employment information, bank statements, etc. You want to see if you can qualify for a loan modification. This will take some time, but you need to get the ball rolling sooner rather than later, as soon as you discover you are unable to pay your mortgage or if you have a change of circumstance.

2.  Contact a counselor if your bank cannot help you. There is a wonderful free counseling organization called HopeNow that can help you evaluate your situation and see what options may be out there for you to peruse. You can reach them at 888-995-HOPE. You can find them on the web at http://www.HopeNow.com.

3.  Investigate ALL other possible options. If you are in the military, there are options that may be available to you. You may be able to qualify for a deed in lieu of foreclosure, refinancing, postponement, or a reverse mortgage if you are older and have equity in your home. There are stalling tactics you may be able to use while you find a way to get yourself on track. There are government programs that may help you if you are unemployed. Investigate all options, but do not feel overwhelmed. If you speak with your lender or a counselor you can whittle down the available options.

4.  Short sale. When there is no other option a short sale is better than going through foreclosure. You need to speak with an experienced agent if you are considering this option. Make sure you understand all tax and credit consequences – speak with your accountant or an attorney. Many lenders will bless short sales, and it is a good idea to work with someone experienced because they can try to get lender approval at the get-go. Some lenders are even evaluating homes now and telling the homeowners what price they will accept on the short sale BEFORE the home is listed. You may also qualify for programs like HAFA (Home Affordable Foreclosure Alternatives Program), which allows you to collect up to $3000 from your lender toward moving expenses.

It is important to understand the foreclosure laws in your state and the consequences they carry. If you are having difficulties with your mortgage please do not just give up – you need to try and find a solution before succumbing to foreclosure. Do not walk away from your home either, as that is a voluntary foreclosure. If you spend a little time you may find a solution that lets you avoid foreclosure, so hang in there.

If there are any distressed property issues you would like to see addressed in this blog, please let me know in the comment section below. If you do not see the comment section, simply click on the title to this blog and then scroll back down.

Share
RSS Feed

Do Loan Modifications Raise Debt?

Sunday, December 26th, 2010

Could it be that loan modifications are actually raising debt? I read a short article today by Dean Calbreath in the San Diego Union Tribune that stated yes, they are. Mr.Calbreath points out that more foreclosures could be prevented if, instead of increasing the debt on the principal of troubled mortgages, the lenders reduced the principal. This makes sense, right?

A study released last week by a Federal Reserve branch points out that principal reductions over time have a lower chance of loan redefaults than do those with mere payment changes. But this scenario is not the case in the majority of modifications. The norm is for the lender to reduce payments only, rolling any missed payments into the loan balance. This is obviously a problem, especially for those living in homes where the value has dropped substantially. It’s simple logic: if you are given a loan modification based on current market value, meaning not only your payments but your principal balance is reduced, you may be more motivated to keep making payments.

This refusal to follow logic will not only limit the effectiveness of loan modifications, but will lead to more foreclosures down the road. According to the recent study the current loan modification practice tacks on between $7400 and $8160 to the balance of the loan. So, you ask, why are the lenders not following this logic? That seems to be another million dollar question in the sea of million dollar questions when referring to lender behavior over the last several years.

The potentially good news is that the current investigation into how banks handle loan modifications and foreclosures may have some bearing on future cases. Currently less than 40% of the potential foreclosures in San Diego county have been prevented through permanent loan modifications this year under the federal HAFA program. Maybe reducing the principal on troubled mortgages will be the new foreclosure prevention method that helps get that number up. I sure hope so.

Share
RSS Feed